Tomáš Grell holds an LL.M.
in Public International Law from Leiden University. He contributes to
the work of the ASSER International Sports Law Centre as a research
13 September 2017, more than 40,000 people witnessed the successful debut of
the football club RasenBallsport Leipzig (RB Leipzig) in the UEFA Champions
League (UCL) against AS Monaco. In the eyes of many supporters of the
German club, the mere fact of being able to participate in the UEFA's flagship
club competition was probably more important than the result of the game
itself. This is because, on the pitch, RB Leipzig secured their place in the
2017/18 UCL group stage already on 6 May 2017 after
an away win against Hertha Berlin.
However, it was not until 16 June 2017 that the UEFA Club Financial Control
Body (CFCB) officially allowed RB Leipzig to participate in the 2017/18 UCL alongside its sister club,
Austrian giants FC Red Bull Salzburg (RB Salzburg).
As is well known, both clubs have (had) ownership links to the beverage company
Red Bull GmbH (Red Bull), and therefore it came as no surprise that the idea
of two commonly owned clubs participating in the same UCL season raised
concerns with respect to the competition's integrity.
phenomenon of multi-club ownership is nothing new in the world of football. As
will be seen below, the English company ENIC plc. (ENIC)
established itself as a pioneer in this type of business activity, having
acquired in the late 1990s, through subsidiaries, controlling interests in
several European clubs, including SK Slavia Prague in the Czech Republic (Slavia),
AEK Football Club in Greece (AEK) or Vicenza Calcio in Italy (Vicenza).
Apart from ENIC and Red Bull, a more recent example of a global corporation
investing in multiple football clubs worldwide is the City Football Group owned
by Sheikh Mansour bin Zayed Al Nahyan. In August 2017, the City Football Group acquired 44.3% stake in Girona FC, a Spanish club that had just been
promoted to La Liga for the first time in their history, thereby adding a sixth
club to its portfolio consisting of Manchester City, New York City, Melbourne
City, Yokohama Marinos
(Japan) and Club Atlético Torque (Uruguay).
Private individuals may also become owners of two or more football clubs, the
most prominent examples being Giampaolo Pozzo and his son Gino who are in possession of the Italy's second
oldest club Udinese Calcio and the English top-flight club Watford FC
or Roland Duchâtelet, a Belgian millionaire whose dubious management of
his five clubs, namely Charlton Athletic (England), Carl Zeiss Jena (Germany),
AD Alcorcón (Spain), Sint-Truiden (Belgium) and Újpest FC (Hungary), has been
met with considerable opposition. Moreover, clubs themselves have acquired
stakes in other clubs, including, for instance, Atlético Madrid's investment in RC Lens (France) and Club Atlético de San Luis (Mexico), or AS Monaco's recent takeover of the Belgian second-division club Cercle
Leaving commercial and marketing aspects aside, the investment in
multiple football clubs is often driven by the vision of recruiting talented
players at low cost, preferably in Latin American or African countries, and
subsequently facilitating their development in smaller European clubs to
prepare them for the level required at the lead club. Hence, should Manchester
City discover in Uruguay a 'new Luis Suárez', it will not take much effort (and
money) to convince such a player to join the academy of Club Atlético Torque, especially if
he is promised further development at language-barrier-free Girona and sees
himself wearing the Citizens' sky blue shirt one day. Along these lines, it
could well be argued that the phenomenon of multi-club ownership in fact
creates a supply chain for talent.
For reasons suggested above, qualification for a UEFA club competition is
normally not the primary objective of clubs like Girona, which find themselves
somewhere in the middle of this supply chain. This at least partially explains
why, to the best of my knowledge, only twice the prospect of two or more
commonly owned clubs participating in the same UEFA club competition became so
imminent that it required UEFA's direct intervention. The first intervention
dates back to May 1998 when the UEFA Executive Committee adopted a landmark
rule entitled 'Integrity of the UEFA Club Competitions: Independence of the
Clubs' (Original Rule) in
response to Slavia and AEK, both under ENIC's control, having qualified for the
1998/99 UEFA Cup. The Red Bull case, for its part, revolved around the
interpretation of 'decisive influence in the decision-making of a club', a
concept that could not be found in the Original Rule.
background, this two-part blog will focus on the UEFA rule(s) aimed at ensuring
the integrity of its club competitions. The first part will take a closer look
at how the Court of Arbitration for Sport (CAS) and the European Commission (Commission)
dealt with ENIC's complaints alleging that the Original Rule was incompatible, inter alia, with EU competition law. The
second part will then examine the relevant rule as it is currently enshrined in
Article 5 of the UCL Regulations 2015-18 Cycle, 2017/18 Season (Current Rule) and describe how the
CFCB Adjudicatory Chamber interpreted the aforementioned concept of decisive influence in
the Red Bull case. Finally, in light of the conclusions reached by the CFCB
Adjudicatory Chamber, the second part of this two-part blog will discuss
whether any modification of the Current Rule is desirable.
The ENIC saga: How the Original Rule survived EU
competition law scrutiny
It has already been
noted that the adoption of the Original Rule was prompted, first and foremost,
by the fact that ENIC-controlled Slavia and AEK qualified on sporting merit for
the 1998/99 UEFA Cup. However, what needs to be added is that the initial impulse
came a season before, when Slavia, AEK and Vicenza all reached the
quarter-final of the UEFA Cup Winners' Cup. Although UEFA was fortunate that
time as the clubs were not drawn to play against each other and only Vicenza
advanced to the semi-final, it learnt its lesson and as a result of this
situation adopted robust rules aimed at ensuring the integrity of its club
The Original Rule
The Original Rule made
admission to the UEFA club competitions conditional upon fulfilment of three
specific criteria. First, a club participating
in a UEFA club competition must have refrained from (i) holding or dealing in
the securities or shares; (ii) being a member; (iii) being involved in any
capacity whatsoever in the management, administration, and/or sporting
performance; and (iv) having any power whatsoever in the management,
administration and/or sporting performance of any other club participating in
the same UEFA club competition.
Second, the Original Rule stipulated that no person could be simultaneously involved in any capacity whatsoever
in the management, administration and/or sporting performance of more than one
club participating in the same UEFA
club competition. Third, an individual
or legal entity was prohibited from
exercising control over more than one club participating in the same UEFA club
competition. The Original Rule further clarified that an individual or legal
entity was deemed to have control over a club, and thus the third
criterion was not satisfied, where he/she/it (i) held a majority of the
shareholders' voting rights; (ii) was authorized to appoint or remove a
majority of the members of the administrative, management or supervisory body;
or (iii) was a shareholder and single-handedly controlled a majority of the
shareholders' voting rights. In principle, under this third criterion, it was
permissible for an individual or legal entity to hold up to 49% of the
shareholders' voting rights in multiple clubs participating in the same UEFA
Proceedings before the CAS
It was the third criterion that was applicable to ENIC, a company listed
on the London Stock Exchange. Given that both Slavia and AEK were owned as to
more than 50% by ENIC, the respective criterion was not satisfied.
Consequently, the Committee for the UEFA Club Competitions, a body responsible
for monitoring fulfilment of the aforementioned criteria, ruled that only
Slavia was eligible to take part in the 1998/99 UEFA Cup on account of its
higher club coefficient. Not content
with this decision, Slavia and AEK filed a request for arbitration with the CAS
on 15 June 1998, challenging the validity of the Original Rule, inter alia, under Articles 81 and 82 of
the Treaty Establishing the European Community (TEC) (now Articles 101
and 102 of the Treaty on the Functioning of the European Union (TFEU)).
On the same day, the clubs also lodged a request for interim relief which was
eventually granted on 16 July 1998. As
a result, UEFA was barred from giving effect to the Original Rule for the
duration of the arbitration procedure and both Slavia and AEK were given the
green light to participate in the 1998/99 UEFA Cup. On 20 August 1999, the CAS
rendered its award in which it upheld the
validity of the Original Rule and allowed UEFA to apply the rule in question as
of the 2000/01 season.
Before embarking on a
comprehensive analysis of the compatibility of the Original Rule with EU
competition law, the Panel recognized that participation of two or more
commonly owned clubs in the same UEFA club competition creates fertile ground
for conflicts of interest, and thus ''represents
a justified concern for a sports regulator and organizer''.
The Panel then confirmed that EU law was applicable to the case before it as
the Original Rule could not benefit from any 'sporting
That being clarified, the Panel moved on to examine the relevant market
potentially affected by the Original Rule. It defined the relevant product
market as the ''market for ownership
interests in football clubs capable of taking part in UEFA competitions''
which would include, on the supply side, ''all
the owners of European football clubs which can potentially qualify for a UEFA
competition'', and, on the demand side, ''any individual or corporation potentially interested in an investment
opportunity in a football club which could qualify for a UEFA competition''.
The relevant geographic market, for its part, was confined to the territories
of national football federations affiliated to UEFA.
Analysis under Article 81 TEC
Article 81 TEC (now Article 101 TFEU) prohibits ''all agreements between undertakings, decisions by associations of
undertakings and concerted practices which […] have as their object or effect the prevention, restriction or distortion
of competition within the internal market''. While it is evident that UEFA
could be classified as an undertaking
or an association of undertakings (representing national football federations)
within the meaning of Article 81 TEC, it is less clear whether UEFA could also
be regarded, through national football federations representing both
professional and amateur clubs, as an association of 'club undertakings'. This
question is of crucial importance because if UEFA was not to be regarded as an association
of 'club undertakings', the Original Rule would not be considered as the
product of a horizontal collusion between clubs and, as a result, would fall
outside the scope of Article 81 TEC.
The role of UEFA in such a case would not go beyond a mere sports regulator.
In this context, Advocate General Lenz insisted in the Bosman case that even though national football federations
encompass a sheer number of amateur clubs not engaged in economic activities,
this does not alter the conclusion that (i) national football federations are
to be regarded as associations of undertakings in accordance with Article 81
TEC; and consequently that (ii) UEFA, through these national football
federations, is to be regarded as an association of 'club undertakings'. Although
not entirely persuaded by the respective argument, the Panel assumed for the
purposes of conducting an analysis under Article 81 TEC that the Original Rule
represented a decision by an association of 'club undertakings' and, as such,
did not fall outside the scope of Article 81 TEC.
The Panel then turned
to the question lying at the heart of the dispute, that is, whether the
Original Rule had as its object or effect the prevention, restriction or
distortion of competition within the internal market. It found that the
Original Rule was only designed to ''prevent
the conflict of interest inherent in commonly owned clubs taking part in the
same competition and to ensure a genuine athletic event with truly uncertain
results'', thereby excluding any anti-competitive object of the Original Rule.
With respect to the effect of the
Original Rule, the Panel asserted that even though the rule in question may
have discouraged an owner who had already been in possession of a high-level
European club from acquiring controlling interest in another such club, its
overall effect was pro-competitive in that it enabled more undertakings to
enter the relevant market, and thus stimulated investment in professional
football. Moreover, the Panel was
concerned that, in the absence of the Original Rule, high-level European clubs
would potentially be concentrated in few hands which would, in turn, lead to an
increase in prices for ownership interests in those clubs.
Having found that
neither the object nor the effect of the Original Rule was anti-competitive,
the Panel was further not required to pronounce itself on whether the Original
Rule was necessary and proportionate to the legitimate aim
pursued. Yet, it held that the Original Rule was ''an essential feature for the organization of a professional football
competition and [was] not more
extensive than necessary to serve the fundamental goal of preventing conflicts
In a similar vein, the Panel could not identify any plausible less restrictive
alternative to the Original Rule, and therefore it declared that the Original
Rule was proportionate to the stated aim of preventing conflicts of interest.
Based on the above
considerations, the Panel ultimately concluded that the Original Rule was
compatible with Article 81 TEC.
Analysis under Article 82 TEC
Article 82 TEC (now
Article 102 TFEU) prohibits abusive conduct by companies that have a dominant
position on a relevant market. Since UEFA cannot become an owner of a football
club, the Panel maintained that it was not present on the relevant market for
'ownership interests in football clubs capable of taking part in UEFA
competitions', and for that reason UEFA could not be held to enjoy a dominant
position. Accordingly, the Panel
concluded that the Original Rule did not violate Article 82 TEC.
Proceedings before the Commission
In the wake of the CAS award, ENIC's business strategy suffered a blow.
However, the English company was not yet ready to give up and lodged a
complaint with the Commission on 18 February 2000, again claiming that the
Original Rule infringed Articles 81 and 82 TEC.
In its decision, the Commission relied
to some extent on the CAS award, adopting the definition of the relevant market
or confirming that the Original Rule could not benefit from any 'sporting
exception'. As far as the object of
the Original Rule was concerned, the Commission articulated that the rule was
not intended to distort competition, but rather to ''avoid conflicts of interest that may arise from the fact that more than
one club controlled by the same owner […] play in the same competition''.
With respect to the Original Rule's effect,
the Commission referred to the Wouters
case in which the European Court of Justice held that an agreement between
undertakings or a decision of an association of undertakings restricting the
freedom to act may nevertheless fall outside the scope of Article 81 TEC,
provided that its restrictive effects are inherent in the pursuit of a
Applied to the case before it, the Commission ruled that the restrictive
effects of the Original Rule were ''inherent
in the pursuit of the very existence of credible pan-European football competitions''.
Consequently, the Commission found no violation of Article 81 TEC. Turning to
Article 82 TEC, the Commission briefly noted that ''if one were to assume that UEFA enjoys a dominant position in whatever
market, the fact that UEFA has adopted such a rule does not appear to
constitute in itself an abuse of dominant position''.
It is quite intuitive
that the aim of preserving the integrity of the UEFA club competitions should
outweigh the restriction introduced by the Original Rule which essentially
rendered owners of high-level European clubs unable to acquire controlling
interests in similar clubs. However, the fact that the Original Rule appeared
bullet-proof under EU competition law does not mean that it was entirely
without flaws. As will be seen in the second part of this blog, UEFA later
decided to make the Original Rule more stringent since it realized that even if
an individual or legal entity does not have de
jure control over a club, it may still be able to exercise de facto control over such club.