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

Blog Symposium: FIFA’s TPO ban and its compatibility with EU competition law - Introduction - Antoine Duval & Oskar van Maren

Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

On 22 December 2014, FIFA officially introduced an amendment to its Regulations on the Status and Transfers of Players banning third-party ownership of players’ economic rights (TPO) in football. This decision to put a definitive end to the use of TPO in football is controversial, especially in countries where TPO is a mainstream financing mechanism for clubs, and has led the Portuguese and Spanish football leagues to launch a complaint in front of the European Commission, asking it to find the FIFA ban contrary to EU competition law.

Next week, we will feature a Blog Symposium discussing the FIFA TPO ban and its compatibility with EU competition law. We are proud and honoured to welcome contributions from both the complainant (the Spanish football league, La Liga) and the defendant (FIFA) and three renowned experts on TPO matters: Daniel Geey ( Competition lawyer at Fieldfisher, aka @FootballLaw), Ariel Reck (lawyer at Reck Sports law in Argentina, aka @arielreck) and Raffaele Poli (Social scientist and head of the CIES Football Observatory). The contributions will focus on different aspects of the functioning of TPO and on the impact and consequences of the ban. More...





The CAS and Mutu - Episode 4 - Interpreting the FIFA Transfer Regulations with a little help from EU Law

On 21 January 2015, the Court of arbitration for sport (CAS) rendered its award in the latest avatar of the Mutu case, aka THE sports law case that keeps on giving (this decision might still be appealed to the Swiss Federal tribunal and a complaint by Mutu is still pending in front of the European Court of Human Right). The decision was finally published on the CAS website on Tuesday. Basically, the core question focuses on the interpretation of Article 14. 3 of the FIFA Regulations on the Status and Transfer of Players in its 2001 version. More precisely, whether, in case of a dismissal of a player (Mutu) due to a breach of the contract without just cause by the player, the new club (Juventus and/or Livorno) bears the duty to pay the compensation due by the player to his former club (Chelsea). Despite winning maybe the most high profile case in the history of the CAS, Chelsea has been desperately hunting for its money since the rendering of the award (as far as the US), but it is a daunting task. Thus, the English football club had the idea to turn against Mutu’s first employers after his dismissal in 2005, Juventus and Livorno, with success in front of the FIFA Dispute Resolution Chamber (DRC), but as we will see the CAS decided otherwise[1]. More...

The UCI Report: The new dawn of professional cycling?

The world of professional cycling and doping have been closely intertwined for many years. Cycling’s International governing Body, Union Cycliste Internationale (UCI), is currently trying to clean up the image of the sport and strengthen its credibility. In order to achieve this goal, in January 2014 the UCI established the Cycling Independent Reform Commission (CIRC) “to conduct a wide ranging independent investigation into the causes of the pattern of doping that developed within cycling and allegations which implicate the UCI and other governing bodies and officials over ineffective investigation of such doping practices.”[1] The final report was submitted to the UCI President on 26 February 2015 and published on the UCI website on 9 March 2015. The report outlines the history of the relationship between cycling and doping throughout the years. Furthermore, it scrutinizes the role of the UCI during the years in which doping usage was at its maximum and addresses the allegations made against the UCI, including allegations of corruption, bad governance, as well as failure to apply or enforce its own anti-doping rules. Finally, the report turns to the state of doping in cycling today, before listing some of the key practical recommendations.[2]

Since the day of publication, articles and commentaries (here and here) on the report have been burgeoning and many of the stakeholders have expressed their views (here and here). However, given the fact that the report is over 200 pages long, commentators could only focus on a limited number of aspects of the report, or only take into account the position of a few stakeholders. In the following two blogs we will try to give a comprehensive overview of the report in a synthetic fashion.

This first blogpost will focus on the relevant findings and recommendations of the report. In continuation, a second blogpost will address the reforms engaged by the UCI and other long and short term consequences the report could have on professional cycling. Will the recommendations lead to a different governing structure within the UCI, or will the report fundamentally change the way the UCI and other sport governing bodies deal with the doping problem? More...

Book Review - Camille Boillat & Raffaele Poli: Governance models across football associations and leagues (2014)

Camille Boillat & Raffaele Poli: Governance models across football associations and leagues (2014)

Vol. 4, Centre International d'Etude du Sport, Neuchâtel, Switzerland, softback, 114 pages, ISBN 2-940241-24-4, Price: €24




Source: http://www.cies.ch/en/cies/news/news/article/new-publication-in-the-collection-editions-cies-governance-models-across-football-associations-an/

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The aftermath of the Pechstein ruling: Can the Swiss Federal Tribunal save CAS arbitration? By Thalia Diathesopoulou

It took only days for the de facto immunity of the Court of Arbitration for Sport (CAS) awards from State court interference to collapse like a house of cards on the grounds of the public policy exception mandated under Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards . On 15 January 2015, the Munich Court of Appeals signalled an unprecedented turn in the longstanding legal dispute between the German speed skater, Claudia Pechstein, and the International Skating Union (ISU). It refused to recognise a CAS arbitral award, confirming the validity of a doping ban, on the grounds that it violated a core principle of German cartel law which forms part of the German public policy. A few weeks before, namely on 30 December 2014, the Court of Appeal of Bremen held a CAS award, which ordered the German Club, SV Wilhelmshaven, to pay ‘training compensation’, unenforceable for non-compliance with mandatory European Union law and, thereby, for violation of German ordre public. More...

‘The reform of football': Yes, but how? By Marco van der Harst

'Can't fight corruption with con tricks
They use the law to commit crime
And I dread, dread to think what the future will bring
When we're living in gangster time'
The Specials - Gangsters


The pressing need for change 

The Parliamentary Assembly (PACE) of the Council of Europe (CoE), which is composed of 318 MPs chosen from the national parliaments of the 47 CoE member states, unanimously adopted a report entitled ‘the reform of football’ on January 27, 2015. A draft resolution on the report will be debated during the PACE April 2015 session and, interestingly, (only?) FIFA’s president Sepp Blatter has been sent an invitation

The PACE report highlights the pressing need of reforming the governance of football by FIFA and UEFA respectively. Accordingly, the report contains some interesting recommendations to improve FIFA’s (e.g., Qatargate[1]) and UEFA’s governance (e.g., gender representation). Unfortunately, it remains unclear how the report’s recommendations will actually be implemented and enforced. 

The report is a welcomed secondary effect of the recent Qatargate directly involving former FIFA officials such as Jack Warner, Chuck Blazer, and Mohamed Bin Hammam[2] and highlighting the dramatic failures of FIFA’s governance in putting its house in order. Thus, it is undeniably time to correct the governance of football by FIFA and its confederate member UEFA – nolens volens. The real question is how to do it.



            Photograph: Fabrice Coffrini/AFP/Getty Images                   Photograph: Octav Ganea/AP

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SV Wilhelmshaven: a Rebel with a cause! Challenging the compatibility of FIFA’s training compensation system with EU law

Due to the legitimate excitement over the recent Pechstein ruling, many have overlooked a previous German decision rendered in the Wilhelmshaven SV case (the German press did report on the decision here and here). The few academic commentaries (see here and here) focused on the fact that the German Court had not recognized the res judicata effect of a CAS award. Thus, it placed Germany at the spearhead of a mounting rebellion against the legitimacy of the CAS and the validity of its awards. None of the commentators weighed in on the substance of the decision, however. Contrary to the Court in Pechstein, the judges decided to evaluate the compatibility of the FIFA rules on training compensations with the EU free movement rights. To properly report on the decision and assess the threat it may constitute for the FIFA training compensation system, we will first summarize the facts of the case (I), briefly explicate the mode of functioning of the FIFA training compensation system (II), and finally reconstruct the reasoning of the Court on the compatibility of the FIFA rules with EU law (III).More...

In Egypt, Broadcasting Football is a Question of Sovereignty … for Now! By Tarek Badawy, Inji Fathalla, and Nadim Magdy

On 15 April 2014, the Cairo Economic Court (the “Court") issued a seminal judgment declaring the broadcasting of a football match a sovereign act of State.[1]


Background

In Al-Jazeera v. the Minister of Culture, Minister of Information, and the Chairman of the Board of Directors of the Radio and Television Union, a case registered under 819/5JY, the Al-Jazeera TV Network (the “Plaintiff” or “Al-Jazeera”) sued the Egyptian Radio and Television Union (“ERTU” or the “Union”) et al. (collectively, the “Respondents”) seeking compensation for material and moral damages amounting to three (3) million USD, in addition to interest, for their alleged breach of the Plaintiff’s exclusive right to broadcast a World Cup-qualification match in Egypt.  Al-Jazeera obtained such exclusive right through an agreement it signed with Sportfive, a sports marketing company that had acquired the right to broadcast Confederation of African Football (“CAF”) World Cup-qualification matches.

ERTU reportedly broadcasted the much-anticipated match between Egypt and Ghana live on 15 October 2013 without obtaining Al-Jazeera’s written approval, in violation of the Plaintiff’s intellectual property rights.

More...


Why the European Commission will not star in the Spanish TV rights Telenovela. By Ben Van Rompuy and Oskar van Maren

The selling of media rights is currently a hot topic in European football. Last week, the English Premier League cashed in around 7 billion Euros for the sale of its live domestic media rights (2016 to 2019) – once again a 70 percent increase in comparison to the previous tender. This means that even the bottom club in the Premier League will receive approximately €130 million while the champions can expect well over €200 million per season.

The Premier League’s new deal has already led the President of the Spanish National Professional Football League (LNFP), Javier Tebas, to express his concerns that this could see La Liga lose its position as one of Europe’s leading leagues. He reiterated that establishing a centralised sales model in Spain is of utmost importance, if not long overdue.

Concrete plans to reintroduce a system of joint selling for the media rights of the Primera División, Segunda División A, and la Copa del Rey by means of a Royal Decree were already announced two years ago. The road has surely been long and bumpy. The draft Decree is finally on the table, but now it misses political approval. All the parties involved are blaming each other for the current failure: the LNFP blames the Sport Governmental Council for Sport (CSD) for not taking the lead; the Spanish Football Federation (RFEF) is arguing that the Federation and non-professional football entities should receive more money and that it should have a stronger say in the matter in accordance with the FIFA Statutes;  and there are widespread rumours that the two big earners, Real Madrid and FC Barcelona, are actively lobbying to prevent the Royal Decree of actually being adopted.

To keep the soap opera drama flowing,  on 30 December 2014, FASFE (an organisation consisting of groups of fans, club members, and minority shareholders of several Spanish professional football clubs) and the International Soccer Centre (a movement that aims to obtain more balanced and transparent football and basketball competitions in Spain) filed an antitrust complaint with the European Commission against the LNFP. They argue that the current system of individual selling of LNFP media rights, with unequal shares of revenue widening the gap between clubs, violates EU competition law.


Source:http://www.gopixpic.com/600/buscar%C3%A1n-el-amor-verdadero-nueva-novela-de-televisa/http:%7C%7Cassets*zocalo*com*mx%7Cuploads%7Carticles%7C5%7C134666912427*jpg/

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The 2014 Dortmund judgment: what potential for a follow-on class action? By Zygimantas Juska

Class actions are among the most powerful legal tools available in the US to enforce competition rules. With more than 75 years of experience, the American system offers valuable lessons about the benefits and drawbacks of class actions for private enforcement in competition law. Once believed of as only a US phenomenon, class actions are slowly becoming reality in the EU. After the adoption of the Directive on damages actions in November 2014, the legislative initiative in collective redress (which could prescribe a form of class actions) is expected in 2017.[1] Some pro-active Member States have already taken steps to introduce class actions in some fashion, like, for example, Germany.

What is a class action? It is a lawsuit that allows many similar legal claims with a common interest to be bundled into a single court action. Class actions facilitate access to justice for potential claimants, strengthen the negotiating power and contribute to the efficient administration of justice. This legal mechanism ensures a possibility to claim cessation of illegal behavior (injunctive relief) or to claim compensation for damage suffered (compensatory relief).  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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