Since the release of the earth-shattering ARD documentary two years ago, the athletics world has been in a permanent turmoil. The International Athletics Association Federation (IAAF) is faced with both a never-ending corruption scandal (playing out in front of the French police authorities) and the related systematic doping of Russian athletes. The situation escalated in different phases led by the revelations of Russian insiders. First, in December 2014 with the ARD documentary, which demonstrated how widespread (and organized) the recourse to doping was in Russian athletics. It triggered the Pound investigation financed by the World Anti-Doping Agency (WADA), which led to two damaging reports (available here and here) for the Russian anti-doping system and the IAAF itself. Thereafter, in November 2015, the IAAF had no other choice but to provisionally suspend the Russian athletics federation (ARAF then RusAF) and its members from IAAF competitions. Yet, this was only the beginning as shortly after the former head of Moscow’s anti-doping laboratory provided a detailed sketch to the New York Times of the operation of a general state-led doping scheme in Russia. The system was designed to avert any positive doping tests for top-level Russian sportspeople and was going way beyond athletics. These allegations were later largely confirmed and reinforced by the McLaren investigation initiated by WADA in May 2016, and which published its first report in July 2016 shortly before the Rio Olympics. In June 2016, the IAAF anticipated the conclusions of the report (it had received most of McLaren’s evidence beforehand) and decided to maintain the ineligibility of Russian athletes for IAAF competitions, and for the Rio Olympics. It did, however, foresee a narrow exception for Russian athletes able to show that they were properly tested outside of Russia. Nonetheless, the athletes using this exception were to compete under a neutral flag at the Olympics. Unsurprisingly, Russian athletes led by pole superstar (and now IOC member), Yelena Isinbayeva, and the Russian Olympic Committee decided to challenge this decision in front of the Court of Arbitration for Sport (CAS). Interestingly, while the decision was rendered on 21 July 2016, the full text of the award was publically released only on 10 October 2016. In September, I analysed the Rio CAS Ad Hoc Decisions involving Russian athletes aiming to participate to the Olympics. I will now turn to the IAAF decision, which is of great importance to the future of the anti-doping system. Indeed, it lays out the fundamental legal boundaries of the capacity of international federations to impose sanctions on their members (and their members) in order to support the world anti-doping fight.

My blog will provide first a chronological narrative of the decisions taken by the IAAF to sanction the RusAF and its athletes. Thereafter, I will analyse the key aspects of the scope of the review of the IAAF’s ineligibility decision by the CAS.

I.              From the ARD documentary to the ineligibility of Russian athletes for the Rio Olympics

The IAAF started acting upon the suspicions of doping in Russian athletics only after the publication of the first part of the Pound report on 9 November 2015. In its first press release after the publication of the report, the president of the IAAF, Sebastian Coe, announced that he had “taken the urgent step of seeking approval from his fellow IAAF Council Members to consider sanctions against the Russian Athletics Federation (ARAF)”. He was considering “provisional and full suspension and the removal of future IAAF events”. This announcement was quickly followed on 13 November 2015 with the provisional suspension of the ARAF by the Council of the IAAF. Consequently, Russian athletes, and athlete support personnel were banned from competing in international competitions including World Athletics Series competitions and the Olympic Games. Furthermore, Russia lost the right to host the 2016 World Race Walking Team Championships (Cheboksary) and 2016 World Junior Championships (Kazan), while ARAF were to delegate the conduct of all outstanding doping cases to CAS. The provisory ban was based on IAAF Constitution Article 6.11(b) and Article 14.7. The ARAF could have challenged the decision of the Council but declined to do so (as is explained in a letter accessible here) and accepted the sanctions. Simultaneously, the decision also included a specific procedure for RusAF to regain IAAF membership. It foresaw that an inspection team led by an Independent Chair, Rune Andersen, would verify whether RusAF complies with a long list of precise criteria.

In early 2016, the IAAF taskforce started its verifications based on the aforementioned criteria. In March 2016, after its first visit to Moscow in January, the taskforce considered that “the Russian delegates have made significant progress towards meeting many of the Verification Criteria established by IAAF Council”. Yet, it also added that “there is significant work still to be done to satisfy the Reinstatement Conditions and so RusAF should not be reinstated to membership at this stage”. However, after the revelations of the New York Times in May 2016, the IAAF taskforce recommended in June that “RusAF should not be reinstated to membership at this stage, because several important Verification Criteria have not been met”. The taskforce considered that:

• The deep-seated culture of tolerance (or worse) for doping that led to RusAF being suspended in the first place appears not to have changed materially to date.
• A strong and effective anti-doping infrastructure capable of detecting and deterring doping has still not been created. 
• There are detailed allegations, which are already partly substantiated, that the Russian authorities, far from supporting the anti-doping effort, have in fact orchestrated systematic doping and the covering up of adverse analytical findings.

This meant “that Russian athletes remain[ed] ineligible under IAAF Rules to compete in International Competitions including the European Championships and the Rio 2016 Olympic Games”. The taskforce also recommended that RusAF remains suspended, i.e. that no “representatives of RusAF (i.e. officials, athlete support personnel, etc.) should take part in International Competition or in the affairs of the IAAF”. The IAAF Council unanimously endorsed the recommendations. At the same meeting, and also upon recommendation of the taskforce, the IAAF Council passed a rule amendment “to the effect that if there are any individual athletes who can clearly and convincingly show that they are not tainted by the Russian system because they have been outside the country, and subject to other, effective anti-doping systems, including effective drug-testing, then they should be able to apply for permission to compete in International Competitions, not for Russia but as a neutral athlete”. These changes were introduced in Rule 22.1A IAAF Competition Rules (Rule 22.1A).[1] Finally, the IAAF also decided to let Yuliya Stepanova compete due to her “extraordinary contribution to the fight against doping in sport”.

On 23 June, the IAAF published a set of guidelines on the basis of which Russian athletes could request a permission to compete in IAAF events (and the Olympics) if they could demonstrate not being tainted by the Russian state doping system as provided under the exception enshrined in Rule 22.1A. However, athletes using this exception would be allowed to compete only as neutral athlete. Stepanova was the first athlete authorized to compete at the Rio Games by the IAAF (ironically, she would later be blocked by the IOC) based on the rule 22.1A. She was joined only by Darya Klishina (the IAAF later rescinded this eligibility in light of her involvement in the McLaren Report, but the CAS decided against all odds to let her compete in Rio).

The IAAF felt comforted in its decisions by the release of the McLaren Report on 18 July. Yet, the Russian athletes and the Russian Olympic Committee were obviously extremely dissatisfied with this outcome. Both sides agreed to submit the matter, through the ordinary arbitral procedure, to the CAS, which held a quick hearing on 19 July.

II.            The Key Legal Questions at the CAS

While the decision to reject the demands of the Russian athletes was publicized immediately (on 21 July) on the CAS’ website, it is only three months later that the full text of the award was made available for all to see. For analytical purposes, and following the award’s internal structure, I will deal with the following four key questions:

1. Does the suspension of the RusAF extend to the eligibility of the Russian athletes?
2. Is the new IAAF rule 22.1.A a sanction?
3. Can the ROC nominate athletes to the Olympic Games without the assent of the IAAF?
4. Will the Russian athletes falling under rule 22.1.A compete as neutral athletes in Rio?

1.     Does the suspension of the RusAF under Rule 22.1(a) extend to the eligibility of the Russian athletes?

The Russian athletes challenged first the application by IAAF of Rule 22.1(a) IAAF Competition rules. The Rule provides for the IAAF-wide ineligibility of “[a]ny athlete, athlete support personnel or other person whose National Federation is currently suspended by the IAAF”. In other words, the claimants “want an exception to the rule for doping cases, so that the ineligibility for the athletes affiliated to a suspended national federation, a member of the IAAF, would not apply if the suspension is imposed for the federation’s failure to ensure an effective doping control system”[2]. 

i.               Rule 22.1(a) is a valid rule extending the ineligibility of a federation to its athletes

The Panel rejects this challenge.

First, it considers that it is not its duty to rewrite the IAAF’s rules. Instead, the “rule- making power, and the balance to be struck in its exercise between the competing interests involved, is conferred on the competent bodies of the sport entity, which shall exercise it taking into account also the overall legislative framework”[3].

Second, it highlights “that the suspension of the Russian track and field federation is not disputed in this arbitration”[4]. This is due to the fact that ARAF did not contest the original decision of IAAF in November 2015. Consequently, “the dispute heard by the Panel regards only the consequences for the athletes affiliated to the Russian federation of the suspension imposed on their federation and not the reasons for the suspension”[5].

Thirdly, the Panel rejects the view that Rule 22.1(a) is a doping sanction. Rather, “it is a rule which affects the eligibility of athletes to enter into International Competitions and is a consequence of the organizational structure of international sport; national federations are members of international federations, and have the duty to respect the obligations deriving from such membership; athletes participate in organized sport, as controlled by an international federation, only on the basis of their registration with a national federation, which is a member of the international federation in question”[6]. Thus, “Rule 22.1(a) is a rule of general application, not specific to doping cases, and would apply equally to athletes who are members of federations that fail to pay their membership dues as to athletes who are members of federations that engage in other breaches of federation obligations to the IAAF as a member thereof” [7]. The claimants sought to frame Rule 22.1.(a) and Rule 22.1A as a package applying specifically to anti-doping cases. But the Panel disagreed, highlighting instead that “Rule 22.1(a) is not part of a new package of rules”, as it “has existed since at least 2000, whereas Rule 22.1A is a recent amendment”.[8] The Panel sees Rule 22.1(a) as “a necessary consequence of the sanction imposed on RusAF”. [9] In sum, the “athletes are ineligible because RusAF has been sanctioned, and accepted that sanction, not because of what the athletes have done”. [10]

ii.              Rule 22.1(a) is not contrary to the World Anti-Doping Code

The Panel also rejects the argument that Rule 22.1(a) would be contrary to the World Anti-Doping Code (WADC). First, because it is not an additional doping sanction (and therefore is not covered by the Osaka rule jurisprudence of the CAS[11]) and second because it is consistent with the WADC’s mandate to international federations to introduce sanctions in case their members do not comply with the Code.[12] Furthermore, “it is a fundamental principle of the law of associations in all applicable jurisdictions that members of associations have an obligation to satisfy the requirements for membership in the association and if they fail to do so those members may have their association membership adversely affected”[13]. The Panel refuses to “disturb these well-accepted principles” [14].

iii.            IAAF is not estopped to enforce Rule 22.1(a) on the Russian athletes

The Panel further refused to find that the IAAF was estopped from considering the Russian athletes ineligible based on Rule 22.1(a).[15] It is true that some IAAF employees/executives might have been involved in a corruption scheme to cover-up doping cases, however “[t]here is no suggestion that the IAAF officials were involved in the systemic doping of Russian athletes” [16]. Moreover, “none of the Claimant Athletes has argued that they knew about the IAAF’s wrongdoing and relied on it to their detriment, or that they believed that RusAF would not be suspended in the event of misconduct” [17]. The arbitrators also deny that the Rule 22.1(a) was too uncertain. In particular, the fact that the length of the ineligibility is indeterminate is deemed a “simple consequence of the fact that it is contingent on the National Federation (“NF”) being reinstated”.[18]

iv.            The ineligibility of Russian athletes under Rule 22.1(a) is proportionate

Finally, even though it considers that “Rule 22.1(a) is not a sanction”, and, therefore, “it does not have to pass any test of proportionality”[19], the Panel engages in a very interesting exercise to assess its putative proportionality. It finds “that the effect (ineligibility to compete at International Competitions) on the athletes registered with a national federation suspended by IAAF is a proportionate consequence of the national federation’s suspension for its failure to put in place an adequate system to protect and promote clean athletes, fair play and integrity of sport”. [20] In the view of the arbitrators, “eradication of doping in sport, protection and promotion of clean athletes, fair play and integrity are undeniably legitimate objectives of extreme importance for the viability of sport at any level”.[21] In this regard, “the measure taken by IAAF, and the effect it produces, is capable of achieving those objectives, as it prevents athletes under the jurisdiction of the suspended national federation (for having failed to promote a doping-free environment) from competing with athletes registered with federations that have not been the subject of an exclusion”. [22] Furthermore, “the measure taken by IAAF is necessary to reach the envisaged goal: if the IAAF could not take a step having the mentioned effect, the suspension of the Russian federation would have no meaningful impact”. [23] Thus, “the constraints which the affected athletes, including the Claimant Athletes, will suffer as a consequence of the measure are justified by the overall interest to achieve the envisaged goal, which outweighs them, and do not go beyond what is necessary to achieve it”. [24] Finally, the Panel highlight the role played by Rule 22.1A. This provisions shows “that the effect produced by the suspension of a national federation (in force since at least 2000) was recently made more flexible, to take into account individual cases, in a way consistent with the sought purpose of eradication of doping, protection and promotion of clean athletes, fair play and integrity”. [25]

The Panel, thus, concludes “that IAAF Competition Rule 22.1(a) is valid and enforceable in the circumstances of the present dispute”. [26]

2.     Is IAAF Competition Rule 22.1A valid and enforceable in the circumstances of the present dispute?

The Claimants were also challenging the validity of Rule 22.1A, as they were constructing the rule as an unforeseeable sanction against athletes who would not comply with the requirements enshrined in it. Yet, the Panel wondered from the outset “what interest the Claimants would have in seeing it set aside, given that it is a rule which allows athletes to be included, not excluded”[27]. Indeed, if the Panel “struck down Rule 22.1A, the only consequence for the Claimants would be that any athlete who made him/herself eligible pursuant to Rule 22.1A would still be ineligible: the Claimant Athletes, on the other hand, would not regain the eligibility denied by Rule 22.1(a)”[28]. The Claimants argued that both rules were intimately connected and amounted to one sanction: if one would be deemed invalid the other would fall too.[29] However, the Panel noted in response to this argument “that (i) the legality of Rule 22.1(a) and its applicability in the present circumstances has already been confirmed, as per the considerations above, [and] (ii) the Claimants’ submissions as to the legality of Rule 22.1A have no merit […]”[30]. Thus, the Panel finds Rule 22.1.A not to be inconsistent with the WADC as it does not constitute a sanction. Similarly, not being a sanction its proportionality is not into doubt, nor does it appear to be discriminatory. The Claimant Athletes could not rely on any legitimate expectations to be eligible if they met the Verification Criteria published on 11 December 2015, as “they would have also known that RusAF would have to be reinstated before they became eligible”[31]. Indeed, “Rule 22.1A did not change the way in which the Claimant Athletes could make themselves eligible”, rather “it provided another route to eligibility, one which could be pursued even though RusAF had not been reinstated in accordance with the Reinstatement Conditions”.[32]

In the end, the Panel only criticized the lack of legal certainty provided by “Rule 22.1A(b), as its terms may appear vague and retroactive in nature”[33]. Nonetheless, “no matter how concerning it may be for the Panel that the vague terms of Rule 22.1A(b) allow for retroactive application, this does not help the Claimants in having the application of this rule set aside in the given case”[34]. Even if “retroactive criteria in general are to be avoided as unfair and contrary to fundamental notions of due process and good sportsmanship” [35], the Panel notes that “Rule 22.1A is an inclusionary rule, and only created an opportunity, not a bar, for the Claimant Athletes”. [36] Hence, disapplying it “would only have the effect of harming any other Russian athlete who satisfied Rule 22.1A(b)”. [37]

3.     Can the ROC nominate athletes to the Olympic Games without the assent of the IAAF?

The third question raised by the Claimants was whether the Russian Olympic Committee could bypass the IAAF’s decision and nominate athletes without its approval to participate in the Rio Olympics. Here again the Panel from the outsets finds “that, under the Olympic Charter, the ROC is not entitled to nominate athletes who are not eligible under IAAF Competition Rules 22.1(a) and 22.1A”[38]. To come to this conclusion the Panel focuses on the Olympic Charter, it notes that “Rule 40 of the Olympic Charter restricts participation in the Olympic Games to those who comply with the Olympic Charter and the WADC, including the conditions of participation established by the IOC, “as well as the rules of the relevant IF as approved by the IOC””.[39] It interprets the latter sentence as implying “mandatory compliance with IF rules”^[40]. Furthermore, the Panel finds that “the Olympic Charter makes it clear that an NOC shall only enter competitors upon the recommendations for entries given by national federations (Rule 44.4), and that as a condition precedent to participation in the Olympic Games every competitor has to comply not only with the provisions of the Olympic Charter, but also with “the rules of the IF governing his sport” (Bye-law 4 to Rule 44)”^[41]. It concluded that “the NOCs can only exercise their right to send personnel to the Olympic Games if they comply with the rules of the relevant International Federation (“IF”) because otherwise they would be contravening Rule 40 of the Olympic Charter”.[42] Consequently, “ROC cannot enter into the 2016 Olympic Games athletes who do not comply with the IAAF’s rules, including those athletes who are not eligible under Competition Rules 22.1(a) and 22.1A.” [43] Even in the unlikely event RusAF is deemed not to exist anymore for the purpose of the application of the Olympic Charter, and Bye-law 5 to Rule 44[44] of the Olympic Charter is deemed applicable, “the ROC would need the IAAF’s, and IOC Executive Board’s, approval to send competitors”[45].

Therefore, with or without RusAF, “the ROC cannot enter athletes who are ineligible pursuant to the IAAF’s rules”[46].

4.     Will the Russian athletes enjoying the exception enshrined in Rule 22.1A compete as neutral athletes?

Finally, the last interrogation posed by the claimants is whether Russian athletes regaining eligibility through Rule 22.1.A can compete as representatives of Russia. It is the only point on which the claimants are found by the Panel to prevail. Indeed, it finds “that, under the Olympic Charter, if there are any Russian track and field athletes who are eligible to compete at the 2016 Olympic Games under IAAF Competition Rule 22.1A, the ROC is entitled to enter them to compete as representatives of Russia”[47]. In its view, “under the Olympic Charter it is not for an IF to determine whether an athlete, eligible for entry to the Olympic Games, has to compete as a “neutral” athlete, or as an athlete representing the NOC that entered him or her” [48]. In other words, “athletes which are sent to the Olympic Games are not entered as neutrals, but are sent by an NOC” [49]. Moreover, “an athlete does not represent his/her national federation; the federation’s suspension does not prevent an athlete from being entered into the Olympic Games as a representative of his/her NOC” [50].

The Panel does recognize, however, that the fact “that the ROC is entitled, under the Olympic Charter, to enter into the Olympic Games as representatives of Russia any Russian track and field athletes who are eligible to compete under IAAF Competition Rule 22.1A does not mean that the IOC is bound to accept such designation as athletes representing Russia” [51]. In sum, it was not IAAF’s job to declare the athletes neutral but the IOC’s and it declined to do so.

Conclusion

The IAAF has faced a hurricane of negative news in the last two years. Its former president, Lamine Diack, is under investigation in France on corruption charges, its internal anti-doping activities have been shown to be at best inefficient and at worse corrupted, and Russia, one of its biggest suppliers of talents and legends, is exposed as engaged in a State sponsored doping programme. The least one can say is that cleaning these ‘Augean Stables’ was, and still is, an awful task. However, unlike the IOC, which has shown little willingness to seriously crack down on Russia after the scandal, the IAAF has adopted a tough line. It sidelined Russia’s athletics federation as soon as the suspicions voiced by whistle-blowers were substantiated. Furthermore, it refused to let Russian athletes participate in the Rio Olympics, thus reinforcing the anti-doping fight with a symbolically important sanction. Indeed, the world anti-doping system will remain a paper tiger if Russia’s systematic breach of anti-doping rules and spirit is not followed by truly deterrent sanctions. Surely, the system as a whole deserves a comprehensive reform addressing the massive deficiencies highlighted by the Russian scandal.

In this regard, the lessons from this CAS award rejecting the demands of the Russian athletes are threefold:

• First, the athlete’s eligibility to international sporting competitions cannot be severed from the status of his or her national federation. In other words, the athletes, as members of a national federation, bear part of the responsibility for a federation’s failure to comply with, for example, its duties under the WADC. This does not preclude the introduction of mechanisms that, as the one introduced by the IAAF, would enable athletes to discharge this responsibility in specific situations.

• Second, international federations can impose painful sanctions upon their affiliates in case of noncompliance with their duties under the WADC. The CAS recognized that in order to function properly the WADC needs to be supported at the local level, and to be supported at the local level noncompliance must be met with deterrent sanctions that will necessarily extend to the athletes affiliated with the noncompliant local body. Again, the athletes are not passive members of a national federation. They bear a share of the political (and in the end legal responsibility) attached to its governance.

• Third, and finally, the CAS has demonstrated that there was no fatality in taking a lenient road to deal with the Russian State doping scandal. The Panel even left open the possibility for the IOC to decide that Russian athletes would have to compete under a neutral flag. This is a good reminder that the IOC’s decisions to let the Russians compete at the Rio Olympics, and thus dilute the negative effects of being caught organizing a comprehensive State doping system (as was very recently evidenced by the second McLaren Report) was not a legally mandated decision but a political choice that deserves critical scrutiny. The precedent force of this award is even greater in the light of its endorsement by the Swiss Federal Tribunal, which rejected in early August the Claimants request for provisory measures against it.

[1] The rule reads as follows:

1A. Notwithstanding Rule 22.1(a), upon application, the Council (or its delegate(s)) may exceptionally grant eligibility for some or all International Competitions, under conditions defined by the Council (or its delegate(s)), to an athlete whose National Federation is currently suspended by the IAAF, if (and only if) the athlete is able to demonstrate to the comfortable satisfaction of the Council that:

(a)  the suspension of the National Federation was not due in any way to its failure to protect and promote clean athletes, fair play, and the integrity and authenticity of the sport; or                 

(b)  if the suspension of the National Federation was due in any way to its failure to put in place adequate systems to protect and promote clean athletes, fair play, and the integrity and authenticity of the sport, (i) that failure does not affect or taint the athlete in any way, because he was subject to other, fully adequate, systems outside of the country of the National Federation for a sufficiently long period to provide substantial objective assurance of integrity; and (ii) in particular the athlete has for such period been subject to fully compliant drug-testing in- and out-of-competition equivalent in quality to the testing to which his competitors in the International Competition(s) in question are subject; or

(c)  that the athlete has made a truly exceptional contribution to the protection and promotion of clean athletes, fair play, and the integrity and authenticity of the sport.

The more important the International Competition in question, the more corroborating evidence the athlete must provide in order to be granted special eligibility under this Rule 22.1A. Where such eligibility is granted, the athlete shall not represent the suspended National Federation in the International Competition(s) in question, but rather shall compete in an individual capacity, as a 'Neutral Athlete'.

[2] CAS 2016/O/4684 The Russian Olympic Committee (“ROC”) et al v.  The International Association of Athletics Federations (IAAF), 21 July 2016, para.115. [where I use Para in the following footnotes I refer to this award]

[3] para.117

[4] Para.118

[5] Ibid.

[6] Para 119.

[7] Ibid.

[8] Para 120.

[9] Para 121.

[10] Ibid.

[11] See CAS 2011/O/2422 United States Olympic Committee (USOC) v. International Olympic Committee (IOC), 4 October 2011.

[12] Para.122-124

[13] Para. 124.

[14] Ibid.

[15] Para.125-127

[16] Para. 126.

[17] Para. 127.

[18] Para.128

[19] Para. 129.

[20] Para. 131.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Para. 132.

[25] Ibid.

[26] Para. 136.

[27] Para.137.

[28] Ibid.

[29] Para.138

[30] Para.140

[31] Para. 151

[32] Para.152

[33] Para.143

[34] Para. 146

[35] Para. 146.

[36] Para. 147.

[37] Ibid.

[38] Para. 155

[39] Para. 157

[40] Para. 157

[41] Para. 158

[42] Para. 159

[43] Para. 161

[44] Stating : “Should there be no national federation for a particular sport in a country which has a recognised NOC, the latter may enter competitors individually in such sport in the Olympic Games subject to the approval of the IOC Executive Board and the IF governing such sport”

[45] para.164

[46] para.165

[47] para.167

[48] para.168

[49] para.170

[50] Ibid.

[51] ibid.

Editor’s note: Thomas Terraz is a third year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

1.     Introduction

The organizational structure of sports in Europe is distinguished by its pyramid structure which is marked by an open promotion and relegation system. A truly closed system, without promotion and relegation, is unknown to Europe, while it is the main structure found in North American professional sports leagues such as the NFL, NBA and the NHL. Recently, top European football clubs along with certain members of UEFA have been debating different possibilities of introducing a more closed league system to European football. Some football clubs have even wielded the threat of forming an elite closed breakaway league. Piercing through these intimidations and rumors, the question of whether a closed league system could even survive the scrutiny of EU competition law remains. It could be argued that an agreement between clubs to create a completely closed league stifles competition and would most likely trigger the application of Article 101 and 102 TFEU.[1] Interestingly, a completely closed league franchise system has already permeated the European continent. As outlined in my previous blog, the League of Legends European Championship (LEC) is a European e-sports competition that has recently rebranded and restructured this year from an open promotion and relegation system to a completely closed franchise league to model its sister competition from North America, the League Championship Series. This case is an enticing opportunity to test how EU competition law could apply to such a competition structure.

As a preliminary note, this blog does not aim to argue whether the LEC is a ‘real’ sport competition and makes the assumption that the LEC could be considered as a sports competition.[2]

2.     LEC’s Position in the League of Legends Competitive Structure

The LEC is the pinnacle of League of Legends (LoL) competition in Europe that is organized by its developer, Riot Games. Currently, the LEC is the only path to the League of Legends World Championship. Its previous name was the EU League Championship Series (EU LCS), and it featured a promotion and relegation system with the EU Challenger Series. The EU Challenger Series has been replaced with the European Masters, which is a tournament that places the top seed from European regional leagues against each other. It is important to highlight that the teams in the LEC do not compete on behalf of their region (although some of the organizations from the LEC have their second team competing in a regional leagues).

The franchise agreement between the LEC and the participant e-sport organizations required organizations to buy-in at 10.5 million euros into the LEC. The ensuing partnership lasts three years and ensures that the organization is guaranteed a spot in the LEC during this period, unless there are “consistent poor performance or disciplinary issues”. The agreement effectively prevents any other European organization/team from the regional leagues and the European Masters from accessing the highest LoL championship in Europe (the LEC) and completely cuts off any opportunity to reach the League of Legends World Championships for at least three years.

The previous system of relegation and promotion has helped foster talent and create new successful European e-sports organizations. Currently, the winners of Mid-Season Invitational 2019 (a mid-year world championship) is G2 Esports, which was able to rise to the EU LCS through the EU Challenger Series in late 2015. As a result, concerns have been expressed that by adopting the closed league model, the LEC will not be able to nurture new talent and competitive organizations. This worry goes to the heart of Article 165 TFEU’s aim to develop the ‘openness’ of sporting competitions and gives merit to analyzing the LEC under EU competition law rules.[3]

3.     EU Competition Law and its Application to Sports

Generally speaking, EU competition law seeks to ensure ‘effective’ competition between undertakings in Europe. Concerning the field of sports, the CJEU asserted that rules of sport governing bodies fall under the inspection of EU competition law even if they are purely sporting in nature.[4] However, the CJEU left room for sport governing bodies to defend their measures which fall within the scope of competition rules. Sporting rules can escape the prohibitions of EU competition law if it can be shown that the concerned measures are inherent to the objectives it seeks to achieve and that they are “proportionate to the legitimate genuine sporting interest pursued”.  In other words, the specificity of sport must be taken into account.[5] Additionally, the CJEU has recognized that the participation in sport competitions can constitute economic activity because of the exposure that participation may provide.[6] Thus, preventing other organizations and their athletes from taking part in a league competition and as a consequence, the world championships, can have detrimental economic impacts on that organization and its athletes.

For this reason, the organizational structure of sport competitions may have colossal economic ramifications and easily fall within the scope of the Treaties. Articles 101 and 102 TFEU are the two cornerstones of EU competition law that prima facie would be applicable to this case. Essentially, Article 101 TFEU prohibits agreements between undertakings that restrict competition, and Article 102 TFEU forbids an undertaking or group of undertakings (collective dominance) from abusing its dominant position on the relevant market. So when a group of undertakings hold a dominant position in the relevant market and make an agreement which abuses their dominant position, the CJEU has recognized that both Article 101 and 102 TFEU may be applied. Nevertheless, the following analysis will concentrate on Article 102 TFEU.

4.     Does LEC (and its participant organizations) have a Dominant Position?

4.1.Are the LEC (and its participant organizations) undertakings?

As a preliminary point, the European Commission and the CJEU has repeatedly qualified sport governing bodies as undertakings under EU competition law.[7] The key criteria to determine whether an entity is an undertaking under EU law is whether the entity is engaged in ‘economic activity’. In MOTOE, the CJEU ruled that ELPA, a body that was organizing motorcycling events, was engaged in economic activity because it entered into “sponsorship, advertising and insurance contracts designed to exploit those events commercially”.[8] In the present case, there is little doubt that the League European Championship Limited, which is a private company limited by shares incorporated in the Republic of Ireland controlled by Riot Games, could be considered an undertaking since it concludes sponsorships and advertises its events.

The organizations that have signed the franchise agreement with Riot Games are mainly private limited companies.[9] These organizations enter into sponsorship agreements, and as stated earlier, the CJEU found that the participation in a sport competition could constitute economic activity. It follows that these e-sport organizations would easily be considered as undertakings.

4.2.What is the relevant market?

The next issue is determining the relevant market, including the relevant product and geographic market, the LEC and its participant organizations occupy. To identify the relevant product market, EU competition law examines the substitutability of the product or service. For example, in defining the relevant product or service market, the CJEU in MOTOE quite readily found that ELPA was “engaged ... in the organisation of motorcycling events and … their exploitation by means of sponsorship, advertising and insurance contracts”.[10]

From the outset, it should be underlined that games considered as e-sports greatly differ from one another.[11] E-sports usually fall within different genres of games, such as Real-Time Strategy (RTS), First-Person Shooter (FPS), Fighting, and Sports games. LoL falls within the Multiplayer Online Battle Arena (MOBA) genre. Thus, one may argue the relevant market in this case is e-sports competitions in the MOBA market. One way to test this market definition would be examining the ability of e-sports players to move from one e-sport to another.

Unfortunately, there has not been a complete study on the maneuverability of e-sport professionals between games of the same genre or of a different genre. As a result, it is difficult to have a complete view on the issue. Nevertheless, while there have been cases where certain players from e-sports of a different genre were able to move to LoL successfully (Ggoong [e-sports players are known by their own made up player names]) and others who have moved from LoL to another e-sport (Gesture, Bischu), there have been others who have attempted such moves without success (Destiny). On the other hand, when examining ‘traditional’ sports there are also many examples of athletes who have moved from one sport to another. For example, Primož Roglič was a high-level ski jumper, and even won the Junior Ski World Championship in this discipline, who then moved into professional road cycling and most recently came third in the Giro d’Italia. Ski jumping and road cycling arguably have very little in common, and it would be highly doubtful that the Commission or the CJEU would include both in the same market. Such an extreme example demonstrates that focusing on the maneuverability of e-sports athletes between e-sports may not always be the best way to define an e-sport market, and perhaps a more suitable approach would be to examine the specific features of the e-sport.

In this sense, it should be borne in mind that e-sports in the same genre, while sharing many basic characteristics and many of the fine motor skills, still diverge in terms of gameplay and strategy. If this were not the case, a professional LoL player could become a professional DOTA 2 (another MOBA e-sport) player without any extra effort. In reality, to make a transition, the professional LoL player would have to learn the intricacies and nuances of DOTA 2 compared to LoL, e.g. the champions and their builds, the pace of play, meta (the best strategies to win the game) etc. All of these differences support the argument that perhaps defining the product or service market in this case to MOBA e-sport competitions may be too broad, and it could be more appropriate to narrow the definition to LoL e-sport competitions.

Lastly, the geographic market is much more straightforward to define since the LEC Regulations define the EU Competitive Region in its 2019 Season Official Rules.[12] Therefore, the relevant geographic market would most likely be the EU Competitive Region.

4.3.Does LEC (and its participating organizations) have a dominant position in this market?

The Commission provides the most relevant criteria to ascertain whether an undertaking or undertakings hold a dominant position on the relevant market in its Guidance on enforcement of Article 82 of the EC Treaty (now Article 102 TFEU). Pertinent benchmarks include the “position of the dominant undertaking and its competitors”, “expansion and entry” of actual or future competitors, and the “bargaining strength of the undertaking’s customers” (countervailing buyer power). Usually, market shares are used to give a preliminary indication whether an undertaking occupies a dominant position in the market. The minimum threshold market share for which an undertaking or undertakings may be found to hold a dominant position is around 40-50%.[13]

If the relevant market was defined as the e-sport competitions in the MOBA market in the EU Competitive Region, one would have to examine competitive LoL in comparison to other e-sport competitions in the MOBA genre in Europe. For the purposes of this blog, there is rather limited information on the market share of LoL competitions in comparison to other MOBA e-sports in Europe. However, to at least give an idea of the size and dominance of LoL in the general MOBA market, LoL was projected to have an estimated 66% market share in 2016. When one compares this share to the second place, DOTA 2 with 14 %, it is evident that LoL generally holds a powerful position in the MOBA market and this most likely extends to its e-sports competitions.

In contrast, if the relevant market is narrowed to LoL e-sport competitions in the EU Competitive Region only, there would be an even higher chance of the LEC and its participant organizations being found to hold a dominant position. It could be argued that the European Masters (although Riot Games is a co-organizer) and the LoL regional leagues could be seen as ‘competitors’. Once more, direct information on market shares is scant. However, if one observes the viewership numbers of the LEC versus the European Masters, the LEC completely dwarfs the European Masters. The LEC in its 2019 Spring Split had a peak viewership of over 475,000 viewers and an average concurrent viewership of over 200,000 viewers. By comparison, the European Masters Spring 2019 competition had a peak viewership of just over 60,000 viewers and an average concurrent viewership of 32,000 viewers. From these numbers, it is evident that the LEC is overwhelmingly more popular and as a corollary, it may indicate that the LEC’s market share is likely to also reflect this.

5.     Does LEC abuse its Dominant Position?

5.1.Is the dominant position being abused and can it be justified (sporting exceptions)?

The finding of a dominant position is not enough to constitute a breach of EU competition law. Article 102 TFEU also requires that the dominant undertaking or undertakings abuse its dominant position, and it allows the dominant undertaking(s) to demonstrate how the relevant measures may be justified and proportionate. Within the sport context, the sport governing body must explain how the conduct which restricts competition pursues a legitimate objective and the anti-competitive effects must be “inherent in the pursuit of those objectives … and are proportionate to them”.[14]  There are a variety of ways an undertaking may abuse its dominant position, but in the present case, the LEC and its participant organizations agreement to seal the LEC and the LoL World Championship from any other European competitors would most likely fall under a non-price based exclusionary abuse. More specifically, exclusionary conduct must constitute ‘anti-competitive foreclosure’ which according to the Commission’s Guidance Paper is “a situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated as a result of the conduct of the dominant undertaking whereby the dominant undertaking is likely to be in a position to profitably increase prices to the detriment of consumers” (emphasis added).[15] 

The foreclosure requirement in this case is quite evidently satisfied since the LEC and its participant organizations have effectively excluded other organizations in Europe from the highest European competition of LoL and as a result, the LoL World Championship. Actually assessing whether there has been an increase in price to the detriment of consumers is not necessary, and the CJEU has ruled that “Article 102 TFEU must be interpreted as referring not only to practices which may cause damage to consumers directly, but also to those which are detrimental to them through their impact on competition”.[16] Moreover, a dominant undertaking “has a special responsibility not to allow its conduct to impair genuine undistorted competition in the internal market” and “[Article 102 TFEU] is aimed not only at the practices which may cause prejudice to consumers directly, but also at those which are detrimental to them through their impact on the competition structure”.[17] Therefore, it is not necessary to show direct harm to consumers, but that the foreclosure effects damage competition to a sufficient degree to their disadvantage.

As discussed earlier, the former promotion and relegation system helped promote new talent and organizations that were able to develop new fanbases, giving the opportunity for the European LoL viewers to get behind up and coming organizations. By stifling the prospects of new organizations from emerging in the LEC or the Worlds stage, market development may be hindered in contravention with Article 102 (b) TFEU at the European LoL e-sport’s expense.

Nonetheless, the LEC hopes that the closed structure “provides teams with more security to make longer investments that will strengthen and support pros, and provide better experiences for fan (sic)”, to “unlock revenue sharing” and “to focus on shaping the long-term future”. Basically, the LEC and its members seek greater financial security for themselves in order to invest more in its players and fans. The question is then whether the restrictions of competition resulting from the closed league described above are inherent to the pursuit of the aforementioned objectives.[18] While “the ensuring of financial stability of sport clubs/teams” could be a legitimate objective,[19] it is possible to envisage less restrictive means to achieve financial stability without completely excluding other European organizations from competing for the final LEC title and the LoL World Championship. For example, perhaps the LEC play-offs could give the opportunity for teams number 5 and 6 from the regular season to first face off against the top two teams of the European Masters Tournament.[20] A similar play-in format could easily be introduced for the LoL World Championships. Despite these changes, new organizations would still be precluded from joining the LEC. Perhaps this would require the LEC to come up with new creative structures that allow new organizations to join the LEC after having proven their worth. An example of such a system can be found in the top European basketball competition, EuroLeague, which issues different license/partner tiers for its participating clubs in order to provide better financial security for itself and its participants but still provides the possibility for a better performing national team to participate in the EuroLeague.[21] Based on my analysis, it is probable that the anti-competitive effects of a completely closed league will not be found to be entirely ‘inherent’ in the pursuit of financial stability.

6.     Conclusion

Taken altogether, the issue with EU competition law does not solely materialize because the LEC aims to provide greater financial stability for itself and its partners. Instead, the problems arise when there are no or very limited avenues for new competitors, in this case European e-sport organizations and their cyberathletes, to progress to the highest levels of competitive LoL in Europe. The closed league structure of the LEC precludes any outside organizations from playing in the LEC Playoffs and Finals, and as a result, they also may never participate in the LoL World Championship. On the other hand, it is understandable that the LEC seeks to create further financial stability for itself, the organizations and ultimately the cyberathletes. However, this should not come at the detriment of new competitors who could help elevate the level of competition in the LEC.

By extending this analysis to the wider sports world, it would be advisable for sports governing bodies who wish to create a more closed competitive league to pay close attention to the anti-competitive effects such restructuring could produce. Moreover, these effects would have to be proportionate and in the sporting context, “inherent in the pursuit of those objectives”.[22] All things considered, it does seem rather difficult to reconcile a completely closed league, as the one found in the LEC, with EU competition law.

[1] Stephen Weatherill, Principles and Practice in EU Sports Law (1st edn, Oxford University Press 2017) 282-283.

[2] See my previous blog for an analysis of whether LoL and the LEC could be a sport.

[3] Weatherill (n 1) 283.

[4] Case C-519/04 David Meca-Medina and Igor Majcen v Commission of the European Communities [2006] ECR I-06991 para. 27; White Paper on Sport, COM (2007) 391, 11 July 2007, 13.

[5] White Paper on Sport ibid.

[6] Joined Cases C-51/96 and C-191/97 Christelle Deliège v Ligue francophone de judo et disciplines associées ASBL, Ligue belge de judo ASBL, Union européenne de judo [2000] ECR I-02549 para 57.

[7] Cases IV/33.384 and IV/33.378 FIFA-distribution of package tours during the 1990 World Cup [1992] European Commission, OJ L326/31; Meca-Medina (n 4); Case C-49/07 Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio [2008] ECR I-04863.

[8] MOTOE (n 7) para 23.

[9] See for example: Fnatic (Private limited company), G2 Esports (GmbH) and Origen Esports (ApS).

[10] MOTOE (n 7) para 33.

[11] Cem Abanazir, ‘E-sport and the EU: the view from the English Bridge Union’ (2019) International Sports Law Journal 102.

[12] The LEC 2019 Season Official Rules Glossary defines the EU Competitive Region as: “Albania, Andorra, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom (UK), Vatican City (Holy See)”.

[13] Alison Jones and Brenda Sufrin, EU Competition Law: Text, Cases, and Materials (6^th edn, Oxford University Press 2016) 325.

[14] Meca-Medina (n 4) para 42; also see Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings [2009] OJ C45/02 para 28.

[15] Guidance on the Commission’s enforcement priorities in applying Article 82 (n 14) para 19.

[16] Case C-52/09 Konkurrensverket v TeliaSonera Sverige AB [2011] ECR I-00527 para 24.

[17] ibid; Case C-95/04 British Airways plc v Commission of the European Communities [2007] ECR I-02331 para 106.

[18] Meca-Medina (n 4) para 42; Commission Staff Working Document - The EU and Sport: Background and Context - Accompanying document to the White Paper on Sport (2007) COM 391 at 2.1.5.

[19] White Paper on Sport (n 4) 68.

[20] See here for the current format of the 2019 LEC Playoffs.

[21] See Chapter II and III of the EuroLeague Bylaws.

[22] Meca-Medina (n 4) para 42.