Competition law in sports is full of interesting paradoxes. When I was at the Competition and Markets Authority, the news around the creation of the Super League broke, and many stakeholders contacted us because, they said, surely this is a cartel between the participating teams.
Of course there was a question then about whether competition enforcement really was the answer the opponents of the Super League needed. Indeed, if UEFA or FIFA blocked the creation of the league, that could in itself be anti-competitive. From a competition law perspective, it is problematic if football clubs can never be in a position to break away and create a rival league (even if there may be very good reasons why, as a society, we may not like that).
The issue is typically approached under the Meca Medina line of case law. The case-law holds that measures taken by sports bodies that restrict athletes’ or clubs’ ability to compete in the relevant sport must pursue a legitimate objective (e.g., as in the case of Spanish long-distance swimmer David Meca Medina, a ban on doping), the measure (for example suspension) must be “inherent” in the pursuit of that objective, and the rules must be “limited to what is necessary to ensure the proper conduct of competitive sport”. Thus, it is legitimate to prohibit doping, penalties such as the suspension of players caught using doping can be inherent in that objective, but any such penalty has to be proportionate.
It seemed doubtful that the sanctions that UEFA and FIFA were threatening to impose on the clubs and players would withstand the Meca Medina test, notwithstanding the important role played by the Premier League and its members in fostering grassroots football in the UK, which could be undermined if the best clubs broke away. In the end, the CMA’s work was cut short because Boris Johnson threatened to “drop a legislative bomb” on the Super League, which led to the English clubs pulling out of the project 48 hours after it was announced.
The Super League has its day in court
Now, almost three years on, the Court of Justice of the European Union has ruled on the measures taken by FIFA and UEFA against the Super League, after the competition’s organisers challenged the football associations before a Spanish Court and the national judges decided to make a preliminary reference.
And indeed, the Meca Medina case-law features heavily in the judgment, as does the Court’s case-law on situations where one undertaking has the power to determine the conditions under which potentially competing undertakings may gain access to the market such as OTOC. What is striking, however, is that all these cases involved Article 101 (the prohibition on anti-competitive agreements and decisions by an “association of undertakings”, such as a football league), whereas the measures threatened against the Super League are approached in part under Article 102 (the prohibition on abuse of a dominant position).
According to the Court, the dominant position of UEFA and FIFA is such that it is impossible to create a viable league outside of their ecosystems. This seems correct to me. Even if such a league were set up, players active in it would still want to play for their country in the Euros or World Cup, for example.
FIFA and UEFA objected to the Super League, threatening to impose sanctions on clubs and players who might decide to participate. These were not based on any pre-existing rulebook, nor did the clubs and players have any right to be heard or to appeal the sanctions. Thus, FIFA and UEFA effectively created new rules for prior authorisation of a new league, featuring severe sanctions and no procedural rights for the clubs and players involved.
The Court however holds that although football is of considerable social and cultural importance in the EU and it is legitimate to have common rules to make international professional football work in a way that ensures that competitions function on equal opportunities and merit, there is nothing so special about football that rules on prior authorisation can be imposed without limits, obligations and supervision, and ungoverned by transparent, objective, precise and non-discriminatory procedures. Where rules are imposed in this way by a dominant undertaking, preventing competing undertakings from gaining access to the market, this infringes Article 102. The same goes for the sanctions imposed by FIFA and UEFA.
For FIFA and UEFA to have rules on prior authorisation of rival leagues that are lawful, the Court holds that the rules must be governed by transparent, objective and precise criteria, and by transparent and non-discriminatory procedural rules which do not hinder effective access to the market. For this to be the case, the rules must have been laid down in an accessible form, prior to any implementation of said rules.
For the criteria and procedures to be non-discriminatory, the Court holds that it is important that FIFA and UEFA themselves carry on economic activities on the market to which their rules on prior authorisation apply. Therefore, the criteria and procedures must not subject a rival league, or the participation of clubs and players therein, to requirements that are different from those applicable to the competitions organised and marketed by FIFA and UEFA, or identical or similar but impossible or excessively difficult to fulfil in practice.
Finally, for the associated sanctions to be lawful, they must be governed by transparent, objective, precise and non-discriminatory criteria, which are determined in each specific case in compliance with the principle of proportionality.
Make no mistake, these findings by the Court mark a significant development in the application of Article 102. The question is whether the Super League judgment will be relevant only in similar situations involving rule-setting bodies that may also compete with initiatives set up by their members, or could have wider application to platforms that set terms of access for their business users, with whom they often compete. Some of the Court’s statements are careful to continue explicitly to refer to sports competitions, whereas others seem like they could be applied more broadly. The equivalent Article 101 cases (Wouters, Meca Medina and OTOC) were limited to bodies regulating professionals and the IOC, but generally speaking issues around access to platforms will be more an issue of abuse of dominance, since these usually do not involve associations of undertakings.
Back to 101
But the Spanish court’s preliminary reference did not only refer to Article 102, it also asked questions about Article 101, namely whether the prior authorisation rules and sanctions imposed by FIFA and UEFA were decisions by an association of undertakings that has the object or effect of restricting competition.
The Court of Justice recalls again that FIFA and UEFA’s prior authorisation rules give those entities the power to authorise, control or condition the access of any potentially competing undertaking to the market, and to determine both the degree of competition which may exist on that market and the conditions under which any competition may be exercised. The rules are therefore likely to deprive professional football clubs and players of any possibility of participating in those competitions, even though they could offer an innovative format while respecting all the principles, values and rules of the game. The sanctions that accompany the rules only reinforce their impact.
For all these reasons, the Court holds that where prior authorisation rules are not governed by transparent, objective, precise, non-discriminatory and proportionate criteria and procedures, they are, by their very nature, sufficiently harmful to competition to form restrictions “by object”, i.e., the most serious form of anti-competitive coordination under Article 101.
Unjustifiable
The judgment has a final sting in its tail, which is also present in yesterday’s International Skating Union judgment. The Spanish court asked whether there could be circumstances where the rules and sanctions imposed by FIFA and UEFA could be objectively justified so that they would fall outside the prohibition in Article 101(1).
The Court recalls that under case law such as Meca Medina, Wouters and OTOC, where professional associations or sports associations adopt rules pursuing certain ethical or professional objectives and, more generally, to regulating the pursuit of a professional activity, if it can be shown that the rules do not pursue anti-competitive objectives, are genuinely necessary and any restrictive effects do not go beyond what is necessary, then the rules may fall outside of Article 101. This is generally known as “objective necessity”, a test that is also applied to ancillary restraints.
However, according to the Court, this case-law does not apply to conduct that “by its very nature infringes Article 102”, irrespective of whether it is carried out by such an association. Because Article 101 and 102 must be interpreted and applied in a consistent manner, the Court holds for the first time that the Meca Medina, Wouters and OTOC case-law does not apply in the case of conduct that has “a degree of harmfulness justifying the view that its very ‘object’ is to prevent, restrict or distort [competition]”. Only if the conduct does not have as its object to restrict competition can it be determined whether it falls within the scope of that case-law. For object restrictions, only Article 101(3) can save the agreement from being prohibited. This is a new development, as it was generally considered that even restrictions “by object” could be objectively necessary under the ancillary restraints doctrine. It remains to be seen if this part of the judgment relates only narrowly to the cases similar to Meca Medina and Wouters, or whether it applies more broadly.
Where next for the Super League?
It would go too far to say that this judgment paves the way for the Super League. First, there are measures that FIFA and UEFA can legitimately put in place to address concerns around the institution of such a league. These measures must meet the criteria set by the Court, but that does not mean they would be toothless. The current set-up within football functions like an ecosystem where it is true that enormous amounts of money are made, but it is also true that a significant chunk of that money flows to amateur clubs, youth players, etc. The current system is also based on merit. In principle, a team could start in a low league and climb its way to the top. That system is disrupted where the best (or richest?) teams break away and form their own league, with uncertain rules as to whether there will be ways for other teams to join them, or for participating teams to be demoted. There are, in short, aspects of the way football is currently organised that are worth protecting with proportionate rules.
Second, competition law cannot stop national governments or the EU from regulating football (provided this does not constitute a breach of the Treaties by making Articles 101 and 102 ineffective). Non-EU governments may play a role in this respect, as happened with Boris Johnson’s threat to drop a “legislative bomb” on the Super League. Indeed, Rishi Sunak seems ready to step in if any English clubs decide to join any new Super League initiatives.
Finally, it appears that the participating clubs had underestimated just how unpopular the Super League was with their fans. The media furore and political storm around the breakaway competition was so severe, with Alex Ferguson, Pep Guardiola and other famous managers and players publicly denouncing it, that within 48 hours, some of the clubs started to pull out. It is unknown what their current view is of the Super League, but many of them may think twice before throwing themselves into such an adventure again.
On the other hand, the company behind the Super League came out swinging, with a new proposal that would feature 64 men’s teams and 32 women’s teams. and promotion and relegation. They will undoubtedly feel emboldened by this judgment, and will likely have learned from the previous experience more generally.
The company also has the possibility of suing FIFA and UEFA for damages. As is well known, anyone who suffers damages from anti-competitive conduct has the right to claim compensation. Damages are calculated by comparing the real world to a counterfactual world without the anti-competitive conduct. Arguably, without the infringements identified by the Court, the Super League would not have been restricted by FIFA and UEFA. But what about Johnson’s legislative bomb and the wider football community’s vehement reaction? A core question in any damages case would be whether even without the restrictions by FIFA and UEFA, the Super League would have fallen apart anyway. A counterfactual that may turn on whether Boris Johnson would have kept his promise to legislate. Good luck with that one!
The Thicket 