Competition Legal Insights on transfers in football the proposed European Super League

We often hear lawyers described as being “the Champions League of lawyers” (also surprising frequently as “the Pope of antitrust” but that’s less relevant to this topic…) but what competition law issues might the Champions League itself or other sporting bodies and events face? 

To find out what is currently happening before the European Commission, I spoke to Benoit Keane of Keane Legal and Denis Fosselard and Denis Waelbroeck of Ashurst as part of our research in Belgium and, in advance of our research into the Swiss market, I also spoke with Christophe Rapin of Kellerhals Carrard to find out what is happening before the CAS. 

Competition law affects all sports – apart from baseball.  Just over 100 years ago in 1922, the US Supreme Court determined that the Sherman Antitrust Act should not apply to baseball as the sport was not involved in interstate commerce.  Why they felt baseball was sufficiently different to basketball or American football to merit being the sole exemption is perhaps a question for another day.   

However, given the limited number of baseball fields dotted across Europe, the overlap between European competition law and the world of sports has been strong for some time, with issues around sponsorship and media rights being seen as the ‘classic’ area for competition lawyers to become involved. 

Recent years though have seen a particularly large number of high-profile cases hitting the headlines, so what are the biggest cases and issues currently?  

Possibly the most significant issue has been around the formation of breakaway leagues, with the European Super League in football and the LIV tour in golf.  Both have highlighted the difference between a corporate-run approach to organising sporting events and the public body approach of events run by federations such as FIFA or UEFA. 

The new tournaments have attempted to ‘plug in’ to the existing tournaments and remove the leading players or teams to set up a new tournament.  The European Super League in particular has raised interesting competition law issues on both sides. 

Firstly, is it anti-competitive to have a league that is open only to the ‘big’ clubs, with little or no chance of new members entering, and would the potential financial gains from this afford the member clubs an unfair advantage when competing in other tournaments? 

On the other hand, does UEFA have a dominant position in the ‘market’, and would refusing entry to its competitions be an abuse of this dominance?  The recent Advocate General’s opinion on the case has focused on the protection of sporting integrity and supports UEFA’s position – though this is still only the opinion stage and the final decision is not expected until the summer. 

(For anyone who thinks the above paragraph is more about the ESL than LIV despite the title, please suggest any puns involving ESL because I couldn’t think of any!) 

One of the key factors behind the proposal for the European Super League was to help clubs recover financially in the aftermath of Covid, and so in an attempt to fight this argument as well as the sporting integrity argument, UEFA has recently formed a joint venture with the European Club Association. 

The hope is that this will provide greater value for selling commercial rights to tournaments.  This has also raised competition concerns, though of the more traditional variety concerning issues of joint selling under Article 101 – though as the Commission had already ruled favourably in several similar cases, this did not cause any major concerns. 

Another particularly controversial topic is the transfer of players.  Ever since the Bosman ruling led to a generation of English county cricket fans finding out a lot more about Slovakian handball players, transfers have been a key legal area for sporting bodies to deal with.  FIFA is currently in the process of introducing new regulations for football agents, given that the current situation has been described as being a ‘Wild West’.  The new regulations would predominantly focus on reducing conflicts of interest (where an agent acts for multiple parties in the deal) and also introduce a cap on the remuneration of agents.

Perhaps unsurprisingly, this is being challenged at a national level in a number of jurisdictions with the expectation being that it will ultimately have to be decided before the Court of Justice.   

UEFA is also being challenged on its regulations that promote the number of locally produced players and encourage clubs to invest in their academies – which is also a topical issue given recent comments from the managers of both Italy and England bemoaning the lack of domestic players in their countries’ top divisions. 

An Advocate General’s opinion has also recently been given on the challenge brought against this, which was slightly more nuanced than in the European Super League case as it did not go as far on the constitutional nature of the relevant article of the TFEU, but did agree that it provided a guiding principle in sporting cases. 

The decision by the World Anti-Doping Agency to exclude Russian athletes from competing was challenged on a number of grounds, one of which was the restriction of competition. 

However, in a decision in December 2020, the arbitral tribunal found that firstly competition law did not apply to WADA (as it is not an association of undertakings defined by Article 101) and that even if competition law did apply, the sanctions imposed on the Russian athletes were not intended to restrict or distort competition, but rather to promote compliance with wider sporting rules. 

An area which has not yet hit the headlines, but has the potential to be very high-profile if it does, is the new European Union Foreign Subsidies Control Regime.  Next month’s article will look in more depth at the intentions behind the regime and the early reactions to it, but in brief it has been introduced to allow European entities to compete on a more even playing field with non-EU companies that may receive considerable state backing. 

Very little of the initial focus has been on how this might affect clubs like Paris Saint Germain that are owned by funds closely associated with Middle Eastern states.  It would however, be a surprise if this is not something that certain lawyers and clubs may already be considering. 

What all of these cases show is that competition law can play a key role in preserving sporting integrity, both as a means to complain against the governing body and as a way for the governing body to defend its decisions. 

Ultimately sport relies on entertainment and this largely derives from at least some unpredictability around the possible outcome.  It is therefore possible for governing bodies to take decisions that may appear restrictive and anti-competitive (such as excluding individuals, teams or even suppliers) in order to preserve the overall integrity of the event.