Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

FIFA's Human Rights Agenda: Is the Game Beautiful Again? – By Tomáš Grell

Editor’s note: 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 intern.

 

Concerns about adverse human rights impacts related to FIFA's activities have intensified ever since its late 2010 decision to award the 2018 and 2022 World Cup to Russia and Qatar respectively. However, until recently, the world's governing body of football had done little to eliminate these concerns, thereby encouraging human rights advocates to exercise their critical eye on FIFA. 

In response to growing criticism, the Extraordinary FIFA Congress, held in February 2016, decided to include an explicit human rights commitment in the revised FIFA Statutes which came into force in April 2016. This commitment is encapsulated in Article 3 which reads as follows: ''FIFA is committed to respecting all internationally recognized human rights and shall strive to promote the protection of these rights''. At around the same time, Professor John Ruggie, the author of the United Nations Guiding Principles on Business and Human Rights ('UN Guiding Principles') presented in his report 25 specific recommendations for FIFA on how to further embed respect for human rights across its global operations. While praising the decision to make a human rights commitment part of the organization's constituent document, Ruggie concluded that ''FIFA does not have yet adequate systems in place enabling it to know and show that it respects human rights in practice''.[1]

With the 2018 World Cup in Russia less than a year away, the time is ripe to look at whether Ruggie's statement about FIFA's inability to respect human rights still holds true today. This blog outlines the most salient human rights risks related to FIFA's activities and offers a general overview of what the world's governing body of football did over the past twelve months to mitigate these risks. Information about FIFA's human rights activities is collected primarily from its Activity Update on Human Rights published alongside FIFA's Human Rights Policy in June 2017. More...

International and European Sports Law – Monthly Report – June 2017. By Tomáš Grell

 Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

 

The Headlines

 
ISLJ Annual Conference on International Sports Law

On 26 and 27 October, the T.M.C. Asser Institute in The Hague will host the first ever ISLJ Annual International Sports Law Conference. This year’s edition will feature panels on the Court of Arbitration for Sport, the world anti-doping system, the FIFA transfer regulations, human rights and sports, the labour rights of athletes, and EU law and sport. More...



Mitigating Circumstances and Strict Liability of Clubs in Match-fixing: Are We Going in the Wrong Direction? An Analysis of the Novara and Pro Patria Cases - By Mario Vigna


Editor’s note: Mario Vigna is a Senior Associate at Coccia De Angelis Vecchio & Associati in Rome, Italy. His main practice areas are sports law, commercial law, and IP law. He also has extensive experience in the Anti-doping field, serving as Deputy-Chief Prosecutor of the Italian NADO and as counsel in domestic and international sports proceedings. He is a frequent speaker at various conferences and workshops. He was not involved in either of the cases discussed below.


I.               Introduction 

Gambling in football is a popular and potentially lucrative activity. It also raises numerous issues. When faced with the issue of gambling, the European Court of Justice (now Court of Justice of the EU) determined that gambling was economic activity per se, notwithstanding gambling’s vulnerability to ethical issues, and thus could not be prohibited outright.[1] With the legality of gambling established, it was left to the proper legislative bodies (national legislatures, national and international federations, etc.) to regulate gambling in order to guard against fraud and corruption. Gambling was not going to disappear; the dangers inherent to gambling would require attention.  More...




Overdue payables in action: Reviewing two years of FIFA jurisprudence on the 12bis procedure – Part 2. By Frans M. de Weger and Frank John Vrolijk.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

This second blog will focus specifically on the sanctions available for FIFA under Article 12bis. It will provide explanatory guidelines covering the sanctions imposed during the period surveyed.


Introduction

The possibility to impose sanctions under article 12bis constitutes one of the pillars of the 12bis procedure. Pursuant to Article 12bis of the RSTP, edition 2016, the DRC and the PSC may impose a sanction on a club if the club is found to have delayed a due payment for more than 30 days without a prima facie contractual basis[1] and the creditor have put the debtor club in default in writing, granting a deadline of at least 10 days.[2] The jurisprudence in relation to Article 12bis also shows that sanctions are imposed ex officio by the DRC or the PSC and not per request of the claimant.More...





Overdue payables in action: Reviewing two years of FIFA jurisprudence on the 12bis procedure – Part 1. By Frans M. de Weger and Frank John Vrolijk.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

In this first blog, we will try to answer some questions raised in relation to the Article 12bis procedure on overdue payables based on the jurisprudence of the DRC and the PSC during the last two years: from 1 April 2015 until 1 April 2017. [1] The awards of the Court of Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis that are published on CAS’s website will also be brought to the reader’s attention. In the second blog, we will focus specifically on the sanctions applied by FIFA under Article 12bis. In addition, explanatory guidelines will be offered covering the sanctions imposed during the period surveyed. A more extensive version of both blogs is pending for publication with the International Sports Law Journal (ISLJ). If necessary, and for a more detailed and extensive analysis at certain points, we will make reference to this more extensive article in the ISLJ. More...

International and European Sports Law – Monthly Report – May 2017. By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

The Headlines

The end of governance reforms at FIFA?

The main sports governance story that surfaced in the press (see here and here) during the last month is related to significant personal changes made by the FIFA Council within the organization’s institutional structure. In particular, the FIFA Council dismissed the heads of the investigatory (Mr Cornel Borbély) and adjudicatory (Mr Hans-Joachim Eckert) chambers of the Independent Ethics Committee, as well as the Head (Mr Miguel Maduro) of the Governance and Review Committee. The decision to remove Mr Maduro was taken arguably in response to his active role in barring Mr Vitaly Mutko, a Deputy Prime Minister of Russia, from sitting on the FIFA Council due to an imminent conflict of interests. These events constitute a major setback to governance reforms initiated by the football’s world governing body in 2015. For a more detailed insight into the governance reforms at FIFA, we invite you to read the recent blog written by our senior researcher Mr Antoine Duval. More...

The Olympic Games and Human Rights – Part II: Human Rights Obligations Added to the Host City Contract: Turning Point or Empty Promise? – By Tomáš Grell


This is a follow-up contribution to my previous blog on human rights implications of the Olympic Games published last week. Together with highlighting some of the most serious Olympic Games-related human rights abuses, the first part has outlined the key elements of the Host City Contract ('HCC') as one of the main legal instruments regulating the execution of the Olympic Games. It has also indicated that, in February 2017, the International Olympic Committee ('IOC') revised the 2024 HCC to include, inter alia, explicit human rights obligations. Without questioning the potential significance of inserting human rights obligations to the 2024 HCC, this second part will refer to a number of outstanding issues requiring clarification in order to ensure that these newly-added human rights obligations are translated from paper to actual practice. More...


The Olympic Games and Human Rights – Part I: Introduction to the Host City Contract – By Tomáš Grell

Editor’s note: Tomáš Grell is currently an LL.M. student in Public International Law at Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a part-time intern.


In its press release of 28 February 2017, the International Olympic Committee ('IOC') communicated that, as part of the implementation of Olympic Agenda 2020 ('Agenda 2020'), it is making specific changes to the 2024 Host City Contract with regard to human rights, anti-corruption and sustainable development. On this occasion, IOC President Thomas Bach stated that ''this latest step is another reflection of the IOC's commitment to embedding the fundamental values of Olympism in all aspects of the Olympic Games''. Although the Host City of the 2024 Summer Olympic Games is scheduled to be announced only in September this year, it is now clear that, be it either Los Angeles or Paris (as Budapest has recently withdrawn its bid), it will have to abide by an additional set of human rights obligations.

This two-part blog will take a closer look at the execution of the Olympic Games from a human rights perspective. The first part will address the most serious human rights abuses that reportedly took place in connection with some of the previous editions of the Olympic Games. It will also outline the key characteristics of the Host City Contract ('HCC') as one of the main legal instruments relating to the execution of the Olympic Games. The second part will shed light on the human rights provisions that have been recently added to the 2024 HCC and it will seek to examine how, if at all, these newly-added human rights obligations could be reflected in practice. For the sake of clarity, it should be noted that the present blog will not focus on the provisions concerning anti-corruption that have been introduced to the 2024 HCC together with the abovementioned human rights provisions. More...



Exploring the Validity of Unilateral Extension Options in Football – Part 2: The view of the DRC and the CAS. By Saverio Spera

Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law at King’s College London. He is currently an intern at the ASSER International Sports Law Centre. 

This blog is a follow up to my previous contribution on the validity of Unilateral Extension Options (hereafter UEOs) under national and European law. It focuses on the different approaches taken to UEOs by the FIFA Dispute Resolution Chamber (DRC) and the Court of arbitration for sport (CAS). While in general the DRC has adopted a strict approach towards their validity, the CAS has followed a more liberal trend. Nonetheless, the two judicial bodies share a common conclusion: UEOs are not necessarily invalid. In this second blog I will provide an overview of the similarities and differences of the two judicial bodies in tackling UEOs. More...

Nudging, not crushing, private orders - Private Ordering in Sports and the Role of States - By Branislav Hock

Editor's note: Branislav Hock (@bran_hock)  is PhD Researcher at the Tilburg Law and Economics Center at Tilburg University. His areas of interests are transnational regulation of corruption, public procurement, extraterritoriality, compliance, law and economics, and private ordering. Author can be contacted via email: b.hock@uvt.nl.


This blog post is based on a paper co-authored with Suren Gomtsian, Annemarie Balvert, and Oguz Kirman.


Game-changers that lead to financial success, political revolutions, or innovation, do not come “out of the blue”; they come from a logical sequence of events supported by well-functioning institutions. Many of these game changers originate from transnational private actors—such as business and sport associations—that produce positive spillover effects on the economy. In a recent paper forthcoming in the Yale Journal of International Law, using the example of FIFA, football’s world-governing body, with co-authors Suren Gomtsian, Annemarie Balvert, and Oguz Kirman, we show that the success of private associations in creating and maintaining private legal order depends on the ability to offer better institutions than their public alternatives do. While financial scandals and other global problems that relate to the functioning of these private member associations may call for public interventions, such interventions, in most cases, should aim to improve private orders rather than replace them. More...



Asser International Sports Law Blog | Multi-Club Ownership in European Football – Part I: General Introduction and the ENIC Saga – By Tomáš Grell

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Multi-Club Ownership in European Football – Part I: General Introduction and the ENIC Saga – By Tomáš Grell

Editor’s note: 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 intern.

 

Introduction

On 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).[1] 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.

The phenomenon of multi-club ownership is nothing new in the world of football. As will be seen below, the English company ENIC plc. (ENIC)[2] 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[3] (Japan) and Club Atlético Torque (Uruguay).[4] 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 respectively,[5] 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 Brugge.

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.

Against this 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[6] 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

Background

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 competitions.

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 club competition.

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.[7] 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''.[8] The Panel then confirmed that EU law was applicable to the case before it as the Original Rule could not benefit from any 'sporting exception'.[9] 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''.[10] The relevant geographic market, for its part, was confined to the territories of national football federations affiliated to UEFA.[11]

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[12] 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.[13] The role of UEFA in such a case would not go beyond a mere sports regulator.[14] 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'.[15] 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.[16]

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.[17] 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.[18] 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.[19]

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 of interest''.[20] 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.[21]

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.[22] 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''.[23] 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 legitimate objective.[24] 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''.[25] 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''.[26]


Conclusion

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.


[1]   RB Salzburg were eliminated by HNK Rijeka in the third qualifying round.

[2]   ENIC is currently a majority shareholder of the English top-flight club Tottenham Hotspur.

[3]   Among the clubs listed, Yokohama Marinos is the only club in which the City Football Group holds a minority stake (20%).

[4]   Furthermore, Manchester City have a formal cooperation agreement with Dutch side NAC Breda.

[5]   The Pozzo family also owned Spanish side Granada FC, before selling the club to a Chinese firm in 2016.

[6]   UCL Regulations 2015-18 Cycle, 2017/18 Season, Article 5.01(c)(iv).

[7]   According to the CAS, the fact that UEFA enacted the Original Rule shortly before the start of the 1998/99 season contravened the principles of good faith, procedural fairness and legitimate expectations. See CAS 98/200 AEK Athens and SK Slavia Prague / UEFA, Award of 20 August 1999, p. 5.

[8]   CAS 98/200 AEK Athens and SK Slavia Prague / UEFA, Award of 20 August 1999, para. 48.

[9]   Ibid. para. 83. According to the well-established jurisprudence of the European Court of Justice, ''the practice of sport is subject to [EU] law only in so far as it constitutes an economic activity''. See Case 36/74 Walrave [1974] ECR 1405, Judgment of 12 December 1974, para. 4. See also Case C-415/93 Bosman [1995] ECR I-4921, Judgment of 15 December 1995, para. 73. On the 'sporting exception', see also Richard Parrish and Samuli Miettinen, The Sporting Exception in European Union Law (T.M.C. Asser Press 2008).

[10] AEK Athens and SK Slavia Prague / UEFA (n 8) paras 101-104.

[11] Ibid. para. 108.

[12] According to the European Court of Justice, ''the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed''. See Case C-41/90 Höfner [1991] ECR I-1979, Judgment of 23 April 1991, para. 21.

[13] AEK Athens and SK Slavia Prague / UEFA (n 8) para. 88.

[14] Ibid.           

[15] Bosman, Opinion of Advocate General Lenz delivered on 20 September 1995, para. 256.

[16] AEK Athens and SK Slavia Prague / UEFA (n 8) para. 94.

[17] Ibid. para. 113.

[18] Ibid. paras 114-119.

[19] Ibid.

[20] Ibid. para. 136.

[21] Ibid.

[22] Ibid. para. 141. It should be noted, however, that this assertion was later challenged, albeit in the context of FIFA, by the Court of First Instance in the Piau case. The Court held in this case that the fact that FIFA is not itself an economic operator on the market for the services provided by players' agents was ''irrelevant as regards the application of Article 82 TEC, since FIFA is the emanation of the national associations and the clubs, the actual buyers of the services of players' agents''. See Case T-193/02 Piau [2005] ECLI:EU:T:2005:22, Judgment of 26 January 2005, para. 116.

[23] Case COMP/37 806: ENIC / UEFA [2002] Commission, para. 28.

[24] Case C-309/99 Wouters [2002] ECR I-1577, Judgment of 19 February 2002, para. 97.

[25] See Commission decision (n 23) para. 32.

[26] Ibid. para. 45.

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