Antitrust law and sport: They just want to play?

Recent rulings in sports antitrust echo far beyond the sidelines

Since the ECJ’s “hat-trick” in the European Super League, International Skating Union (ISU) and Royal Antwerp Football Club (RAFC) cases in December 2023, the ball keeps rolling in sports antitrust law. In this newsletter, we provide an overview of the latest decisions in sports antitrust law and examine what conclusions can be drawn beyond the playing field – and how many puns a newsletter can reasonably tolerate.

Basic principles of sports antitrust law – Old but gold: The Meca-Medina test

According to the established case law of the European courts, antitrust law also applies to the sports sector.¹ The central element of the examination of agreements and decisions by associations of undertakings (such as FIFA or the DFB, the German football association) is the so-called Meca-Medina test according to which an exemption from the cartel prohibition or the prohibition of an abuse of dominance applies to certain types of conduct. The test consists of three questions:

• What is the overall context of the conduct in question and what is its legitimate objective (in the field of sport: e.g., fairness, team stability or promotion of young talents)?
• Is the restriction of competition necessary and in a close relation to achieve the stated objectives?
• Is the restriction of competition proportionate to these objectives?

This three-staged test is not only applied to agreements, decisions or regulations of sports federations, but also to professional associations such as notary or bar associations.² According to Advocate General Emiliou in the Rogon case³, the Meca-Medina test is not a “get out of jail for free” card. However, it does give certain self-governing bodies that pursue legitimate objectives of public interest a somewhat greater scope for action than business associations that pursue purely economic objectives.

Regulations of associations with a dominant market position

In the European Super League⁴ and ISU⁵ cases, the ECJ held that dominant associations may, in principle, issue rules for the prior authorization of competing sports competitions (such as a the newly planned “Super League” competing with FIFA’s own Champions League). However, this requires (i) clearly defined substantive conditions and (ii) detailed procedural rules that ensure that the authorization requirement is handled in a transparent, objective, non-discriminatory and proportionate manner.

The Rogon⁶ and RRC Sports⁷ proceedings currently pending before the ECJ deal with FIFA’s and DFB’s regulations on the framework for the remuneration, activities and conduct of players’ agents. The legal question is whether the Meca-Medina test can also apply to regulations that potentially have a restrictive effect on a market other than the market on which the members of the association are active (here: the organization of football competitions). Advocate General Emiliou proposes in his recent opinion to apply the Meca-Medina test if the services on an upstream or downstream market (here: player agents) have a direct and significant influence on the core activities of the association.

Restriction of competition by object or effect

The ECJ’s most recent decisions in the sports sector – and beyond⁸ – focus on the important difference between restrictions of competition by object and restrictions of competition by effect. In the “decision hat-trick” at the end of 2023, the ECJ consolidated its previous case law in this regard and provided helpful and clear guidance for the practice on the criteria for determining whether a conduct is to be classified a restriction by object. The decisive factors are (i) the content of the agreement, (ii) its economic and legal context and (iii) the objectives it is intended to achieve.⁹ According to the ECJ, the Meca-Medina test is only applicable to restrictions of competition by effect and not by object.¹⁰

Antitrust and labor markets

The cases RAFC¹¹ (on so-called Homegrown Players Rules), Diarra¹² (on FIFA transfer rules) and Tondela¹³ (on no-poach agreements) deal with restrictive agreements or decisions by associations of undertakings with an impact on the labor market.¹⁴ In its Diarra ruling, the ECJ – in line with the EU Commission’s competition policy brief of May 2024¹⁵ – for the first time assessed no-poach agreements (here: restrictions on the recruitment of contracted players) as restrictions of competition by object and examined their impact on demand-side competition between clubs as employers. In Tondela¹⁶, Advocate General Emiliou proposes to classify no-poach agreements as restrictions of competition by object, too. In the underlying case in Tondela, however, an agreement between the Portuguese leagues and the national soccer association not to hire players who unilaterally terminated their contract during the Covid-19 pandemic was, according to Emiliou, not classified as a restriction of competition by object due to the special circumstances under which the agreement was made (the pandemic).¹⁷

Antitrust and arbitration proceedings

The Royal Football Club Seraing case concerns the possibility for a de novo review of awards of the Court of Arbitration for Sport (“CAS”), which has exclusive jurisdiction to hear appeals against measures taken by various international sports federations. Advocate General Ćapeta¹⁸ proposed in her opinion that competent EU courts must be able to fully review CAS awards in order to ensure their compatibility with EU law. Otherwise, the principle of effective legal protection would be violated. According to Ćapeta, an arbitration award by CAS (confirmed by the competent Swiss Federal Tribunal) in the same case could therefore not have the force of res judicata in proceedings before an EU court. The Advocate General’s opinion is in line with the German Federal Court of Justice’s view on the necessity of reviewing arbitration awards under antitrust law.¹⁹

From the commentary booth

The ECJ’s recent “sports cases” contain important clarifications regarding the distinction between restrictions of competition by object and by effect, the classification of no-poach agreements as restrictions by object, and the antitrust reviewability of arbitral awards. These issues are of broader significance beyond the playing field of sports. It appears likely that the ECJ will follow the Opinions of the Advocates General in the pending cases. In any event, the legal standards for assessing potential restrictions of competition in their economic context – as well as for evaluating measures pursuing non-economic objectives such as ESG, standardization, or public health – will be further refined.