Editor’s note: Rhys Lenarduzzi is a final semester Bachelor of Law (LL.B) and Bachelor of Philosophy (B.Phil.) student, at the University of Notre Dame, Sydney, Australia. As a former professional athlete, then international sports agent and consultant, Rhys is interested in international sports law, policy and ethics. He is currently undertaking an internship at the T.M.C. Asser Institute with a focus on Transnational Sports Law.

Having considered the history and justifications for the FIFA training compensation and solidarity mechanisms in my previous blog, I will now consider these systems in the African context. This appears to be a worthwhile undertaking given these global mechanisms were largely a result of European influence, so understanding their (extraterritorial) impact beyond the EU seems particularly important. Moreover, much has been written about the “muscle drain” affecting African football and the need for such drain to either be brought to a halt, or, more likely and perhaps more practical, to put in place an adequate system of redistribution to ensure the flourishing of African football that has essentially acted as a nursery for European football for at least a century. In the present blog, I intend to draw on my experiences as a football agent to expand on how FIFA’s redistributive mechanisms function in practice when an African player signs in Europe via one of the many kinds of entities that develop or purport to develop talent in Africa. I will throughout address the question of whether these mechanisms are effective in a general sense and more specifically in relation to their operation in Africa.

1.     The context: African players’ pattern of migration to Europe

There is a substantial body of work on player migration from Africa to Europe. The history of this movement is important context but just one element to the composition of this blog, so for a more comprehensive unpacking I recommend turning to Darby and Poli’s work. Briefly though, much of the movement began in the early 1900s, with an axiomatic nexus between African countries and their colonial ruler. These connections and channels live on and as one author noted, old colonial ties continue to structure the flow’.[1] This is of little surprise given the language advantages, cultural and economic connections between countries already in place, though some other explanations for the ongoing and evidently near exclusively one way flow are at play.

Economic prosperity has always been the drawcard for African footballers pursuing the European dream, though as Ungruhe submits, in modernity there is an additionally strong pull and distortion at play.[2] Here Ungruhe apportions considerable blame on Africans and the media painting a picture of football in Europe through the lives of players like Didier Drogba and Samuel Eto’o. The result for young African footballers is a ‘dream of being part of an imagined Euro-American modernity and aspirations of a good life as well as socio-cultural demands of ‘becoming a somebody’ in society.’[3] These dreams don’t always align with the realities and come at the cost of other educational or career pursuits.

Further and perhaps more obvious reasons for the movement is the relatively cheap labour costs an African player presents in opposition to the European player of equivalent footballing quality. Transfer fees, or more relevant to this blog, training compensation, is commonly waived (often in exchange for a less than ideal future sell-on arrangement) making the African player attractive in an economical sense. The way Africa acts as a nursery to European football clubs has been analogised by Darby to the mining of the imperialist colonial period, where the ‘sourcing, refinement, and export of raw materials’ can be compared to the ‘mining and export of indigenous football talent for consumption on the European football market.’[4] Though as has been noted above, this is ongoing and the movement continues to be one way, seemingly pointing to a neo-colonialist dimension to player movement, a term famously used in a Sepp Blatter interview (2003), along with such practice being labelled ‘social and economic rape’.

Though much is made of the movement being nearly exclusively one-directional historically and in a contemporary transfer market, the movement and environment surrounding such transfers might be more defensible if FIFA’s redistributive mechanisms were effective.

2.     Statistics of concern: FIFA redistribution mechanisms and Africa

Quantitative data in this space has historically been hard to come by. In fact, a breakdown of the parties that paid the due training compensation and solidarity contributions, a breakdown of those that did not meet their payment obligations, and the confederations in which the paying and the owing entities sit would be instructive but is currently missing. Nevertheless, the recently published Players’ Status Department Report and Global Transfer Market Report 2019 provide some interesting insights. For instance, the Players’ Status Department Report shows inter alia that clubs from CAF are very rarely a respondent in training compensation and solidarity mechanism claims,[5] the rather obvious result of being largely an export rather than import market. If we focus on 2018-2019 transfers to UEFA clubs (see fig.12), most transfers to these clubs are from within UEFA (8,108), whereas CONMEBOL to UEFA is second (836), then CAF to UEFA (581). Despite there being a gap between CONMEBOL and CAF transfers to UEFA, it is not nearly as significant as the gap between claims brought and resolved at FIFA, for both solidarity contributions and the training compensation mechanism. For instance, the solidarity contribution mechanism claims brought and resolved where CONMEBOL is the claimant and UEFA in the respondent (304) is approximately double that of CAF as claimant and UEFA as respondent (144) (see fig.12). The number of resolved claims with UEFA as respondent for training compensation disputes is again, approximately double, with CONMEBOL (131) and CAF (70). (see fig.19) This disproportionality between total transfers and disputes brought and resolved on the redistributive mechanisms, may point to African clubs being either unaware of their rights under these mechanisms or rendering themselves unable of achieving a remedy when falling victim to a more powerful club from Europe.

In 2018, it was reported that just USD$67.7m of the USD$351.5m due to be distributed in solidarity contributions, was actually paid. That is a mere 19.3% of what should have trickled down and perhaps just as alarming is that this percentage has been worsening. Africa, as a poorer continent than most and certainly a poorer continent than Europe to which it provides football talent more than it provides any other confederation, is arguably hurt most from this non-payment. Furthermore, the 2019 FIFA Global Transfer Market Report stated that USD$12.2 million in training compensation was paid,[6] which is a considerable distance from what was paid in solidarity contributions and light-years from what was supposed to be paid in solidarity contributions. So what might this say about these mechanisms in general and in the African context specifically, if one is to conclude that Africa provides a wealth of talent for Europe and other confederations and is hence in most need of redistribution for fulfilling the role of talent nursery?

3.     The Operation of Training Compensation in the African Context

More than any other confederation, Africa has found itself with an array of different entities undertaking football training and education, most commonly referred to as academies. Not all have questionable intentions, however this range of non-conventional arrangements of registering or attaching young players to a particular entity is usually for profit. This often results in some regulatory gymnastics, and particularly in relation to both the training compensation and solidarity mechanisms when profit is on the line.  I will borrow Darby’s four categories of training structures in Africa and apply my understanding of the industry. I would submit that we can look at these arrangements and form conclusions on how training compensation may operate in each scenario if a young player from either of these environments is recruited to Europe. I will keep the players and clubs involved in the following anecdotes anonymous, in the interest of confidentiality and professionalism. I will pay particular attention to scenarios (1) and (3) as what takes place in practice behind the scenes in these categories can be less obvious and perhaps more interesting for the purpose of this blog.

Darby’s four categories of training structures in Africa are; ^[7]

1)    African academies, organized and run by African club sides or African national federations

2)    Afro-European academies, which involve either a partnership between an existing academy and a European club or an arrangement whereby a European club takes a controlling interest in an African club[8]

3)    Private or corporate-sponsored academies, which have well-established foundations and operate with the support and sponsorship of private individuals

4)     Non-affiliated, improvised academies, which are set up on an ad hoc basis and involve poorly qualified staff and lack proper facilities[9]

3.1. Scenario 1: Training compensation and African club academies

In my experience as a football agent and that of my colleagues and competitors that I’ve spoken with on the topic, scenario (1) is the most likely to result in some redistribution, though it is still not always commonplace for clubs to stand their ground and demand training compensation. Instead, what regularly happens is a gamble of sorts, where African clubs waive their right to training compensation initially, in exchange for a percentage of future sell-on value. This can be pitched by a new club to be an amount that would be greater than what a club would receive in training compensation, but is simultaneously often a condition of a “take it or leave it” offer from a buying club, meaning that the player will no longer be of interest if they are not free. This “fee” or piece of future sell-on value is then at times contingent on things such as the new club’s success or first team appearances of the player in question. Unfortunately with the latter, there have been instances when clubs have stopped selecting the player in question when his number of appearances is coming close to the threshold of that clause.  

Scenario (1) type clubs can appear to be the most legitimate entities of the four categories to claim training compensation, though perhaps the following two anecdotes taken from my practice will shed light on how the mechanism operates in practice, with particular attention to it’s waiver and the ‘hindrance effect’[10] it might have. For instance, a former youth national team captain from Ghana had been on the edge of a transfer to a myriad of small-medium size clubs in Europe. The interest had been intense since his 16^th birthday and the plan was for him to move at 18 when the regulations permitted. However, due to a short-term injury around age 18, the interest for an immediate transfer diminished. The player recovered and struggled to generate the same interest in Europe as before, but became of interest in Australia, where the strategy would have been to play at a club within a country that was arguably a better stepping stone to Europe than his current club. When the interest was from Europe, his club was open to waiving training compensation in exchange for a future sell-on benefit and saw this as a safer bet. However,when the interested club was an Australian one, the training club saw the chances of the player moving on to Europe as less likely and the chance to profit substantially from future sell on fees unlikely, hence it refused to waive the training compensation. The player is still at the same club years later, in his mid-twenties and with little prospects of playing outside of his home nation. The result in this instance is that the player's career was strongly affected by the training compensation mechanism, his training clubs and community will never be the beneficiaries of redistribution, and the Australian club who was only interested if the player was free missed out on a player who wanted to come to the club. Can such a strong restriction on a player’s ability to move to seek employment as a professional player outside of his home country really be justified by the redistributive goal of the training compensation mechanism? Especially, when in many cases this mechanism is being waived and perhaps not considered necessary by FIFA itself. 

In another example of a scenario (1) legitimate club with a youth academy involving the ‘hindrance effect’, an arguably unfortunate outcome can result if a training club refuses to waive its rights to training compensation. Indeed, often only a small group of big clubs with well above average financial resources can afford the entire bill for compensation between the ages of 12 and 21.  I recall a top youth prospect from Mali who had attracted lots of interest from clubs in Europe following strong performances at both the under 17 and the under 20 World Cup. Yet, training compensation due had acted as a hindrance until he had a strong season around age 20. The player’s training club(s) in Mali had stood their ground and insisted training compensation be paid if the player was to transfer. Here, it took a relatively big club that regularly plays Champions League or Europa League football with the financial resources to pay it.  The club has an enormous squad, many international players, and would not generally be thought of as an ideal destination for a youth prospect as they have a history of parking players. Since his signing, the player has played little football as loan options have fallen through and he has been unable to find himself in the first team. In this case the player's development has stagnated, having ended up at a big club, and not at other more suitable destinations despite interest and offers, nearly exclusively because training compensation acted as a barrier for him to be signed by a club that most would deem a more appropriate stepping stone.

3.2. Scenario 3: Training compensation and African private academies

Scenario (3) has become an incredibly common environment for young African footballers to find themselves in, given the abundance of these academies throughout the continent.  Players enter these entities either by paying their way if they have the means and aspirations but lack the talent or having been scouted for their above average potential. This creates for an interesting dynamic come transfer time and considerable controversy. These academies are generally created for profit but are of course non-FIFA entities, requiring they get creative if a player becomes the subject of interest from Europe. Some less than ideal sequences of events can follow from this arrangement.  Examples include academies affiliating themselves with clubs through ‘under the table’ arrangements, handing the player back to a FIFA recognised club before transferring, or having the player registered at that club for the duration of their stay with the academy to simplify a transfer if it eventuates, perhaps then attracting training compensation to the club but more likely arranging an agreement like those alluded to above, where compensation for training a player will only be realised down the track on future sell-on fees. Academies want immediate money as well though so there are instances where a club will pay to have the players current registration and share a percentage of future sell on fees with the academy.  There are a number of other arrangements however one can probably get the picture, that the FIFA training compensation mechanism is regularly being circumvented or tweaked significantly so as to make a deal happen, rather than having it fall through. In this instance, the academies are paid in some form now or later, as well as the clubs that help them facilitate the transfer.

For instance, a star of a recent under 17s World Cup from Nigeria had spent the majority of his youth at one of the more famous scenario (3) type academies. When interest flooded in following the World Cup, there was nearly a year worth of assessing what would be the best move for the player.  A lot of the interest was from medium sized clubs and from destinations outside of the big 5 leagues, and these destinations were arguably a better stepping-stone. However, most of these preferable destinations demanded the player be free or they would not make an offer and some of this interest hinged on an assumption the player would be free given he was the product of a private academy and not a FIFA recognised club.[11] After much dispute and controversy with the academy trying to get in the way of a deal or be the beneficiaries of such a deal, the player managed to get away free from the academy and sign for free with a club. It is difficult to emphasise how tricky it was to fend off attempts from this academy to stop the deal or be a part of it, as well as how important it was that the player be free for a more suitable deal to eventuate. The player has already transferred again within Europe to a bigger club, as he was able to get plenty of first team football to display his abilities. This can sound great for the player and the clubs, but what about the far-reaching societal benefits that training compensation and solidarity is geared towards achieving? In many, perhaps most, analogous cases, the academy would have successfully got in the way of the deal or benefitted from it. In both cases, the deal that happened, or the scenario that usually happens as unpacked above, the objectives of the redistributive mechanisms are bypassed. The ‘hindrance effect’ would have almost certainly played a part in this players journey had compensation been due, or a big club that could afford compensation may have come forward, though it would then have been unlikely that the player would have played first team football to the same extent, and his career might have faltered.

My experience shows that the fact that training compensation can be waived has turned it into a subject of speculation and market negotiation between the more powerful European club and the economically vulnerable African club. The latter are often happy to forego their claim for training compensation if it is necessary to close a deal that would include some future potential benefit. Thus, it can hardly be said that African clubs can rely on this right to training compensation to guarantee stable funding to support their investment in educating players. Furthermore, while being relatively ineffective as a mechanism of redistribution, it nevertheless acts as a hindrance on the movement of African football players. Hence, the continent experiences the worst of both worlds, limited training compensation for its clubs and limited freedom of movement for its players.

4.     Africa’s missing solidarity contributions

The solidarity mechanism is mandatory and cannot be waived like the training compensation mechanism, though as is clear from the gap between what is paid and what ought to have been, there are issues with regard to its implementation. In the African context, there are a number of reasons why payments are not made. On the one hand, it is clear that the differing capacity of administration and the quality of legal advice accessible to African clubs plays a role. Sometimes African clubs are simply unaware that they are even owed solidarity. Further, if they are aware, the task of taking on a European club in a legal battle can be too expensive or too daunting to pursue, ultimately rendering this an access to justice issue as well.

On the other hand, as is true of both solidarity and training compensation mechanisms, funds are channelled through the national association and this has been problematic on occasions. I was once involved in a situation with a club within an African league with a notoriously controversial national body. The club was due to receive solidarity contributions given a player it had registered between the ages of 12 and 21 had signed with a club from one of the big 5 leagues for a fee into the tens of millions of euros. The African club had changed names but remained the same legal entity between the time the player had been at the club and his subsequent transfer. This was common knowledge to the football community within this African country and the national federation. It appeared on this occasion that the national governing body was attempting to argue the club ‘ceased to participate in organised football’ per Annex 5(2)3 of the RSTP which outlines that an association is entitled to receive the proportion of solidarity contribution, though it shall be reserved for youth football development programmes in the association. Given this particular associations track record, suspicions linger as to what the money would have been used for.

It is clear that in general a lot of solidarity money is lost or not paid, and it ultimately does not reach the African grassroots where it is needed most. It seems some, if not most, of this loss can be attributed to the costs attached to the process of obtaining this solidarity funds. If FIFA were serious about redistribution, it would ensure that solidarity transfers be almost automatic. Otherwise all the talk about solidarity is hypocritical at best, as those who need it the most are the least likely to enjoy it.

5.     Concluding remarks

This blog has highlighted various issues that surface in the African context with regard to FIFA’s redistributive systems. While on the face of it solidarity between the richest European football clubs and African training clubs can only be applauded, it remains to be seen whether the current regulatory set-up achieves the desired solidarity.

I have seen first-hand that training compensation acts as a real hindrance for the professional career of African footballers. Players suffer from being unable to go to clubs of suitability, and it is clear that the mechanism has become a regular bargaining chip in the wider transfer market, where a waiver in exchange for a future sell-on fee  may be as common an occurrence as actual payment of a training compensation. In practice and because it can be waived, the training compensation is part and parcel of a speculative transfer market rather than an effective instrument of solidarity between clubs. Moreover, insofar as the solidarity mechanism is concerned, its effectiveness seems to be blunted by the administrative burden that comes with its implementation. All too commonly, African clubs have simply too little means to be able to ensure the rights they should derive from it. Ultimately, from the training compensation mechanism arises a transactional dilemma, whilst in the event of non-payment of solidarity contributions, arises an administrative predicament.

There is a neo-colonial flavour to the fact that the training compensation can be waived. Indeed, (European) buyers are often in a strong bargaining position, as they can (collectively) put pressure on training clubs with ‘take it or leave it’ options. In doing so, they shift some of the risks related to the future development of the player back onto the shoulders of African clubs. Instead of getting an immediate fee for training the player, the African clubs get only a potential opportunity of a future fee that will be dependent on a player’s capacity to adapt to his new club and a myriad of other factors. One could see this as a free choice, yet, such a view would paper over the massive power imbalance between European clubs and African ones. If the objective of FIFA’s regulations is truly to foster solidarity and redistribution then they ought to be devised in a way that takes better account of this power imbalance between clubs from different parts of the world. African clubs must be able to systematically claim their training compensation fee without fearing to miss out on a transfer entirely, and to seamlessly receive the solidarity contributions owed. If not, it becomes extremely hard to justify burdening the (African) players’ right to move and take employment around the world. Indeed, one is left to wonder whether FIFA’s redistributive mechanisms could not be entirely uncoupled from the players’ movement and from the transfer market.

[1] Raffaele Poli, ‘Migrations and Trade of African Football Players: Historic, Geographical and Cultural Aspects’ (2006) Vol. 41, No. 3 The Other Game: The Politics of Football in Africa, at 409.

[2] Christian Ungruhe, 'Mobilities At Play: The Local Embedding Of Transnational Connections In West African Football Migration' (2016) 33 The International Journal of the History of Sport.

[3] Ibid 1770.

[4] Paul Darby, 'Out of Africa: The Exodus of Elite African Football Talent to Europe' (2007) 10 WorkingUSA 445-446.

[5] CAF was not even listed in Fig.11 of the report “Confederation of respondent club for claims resolved in 2019/2020”.

[6] 2019 FIFA Global Transfer Market Report, 12.

[7] Paul Darby, et al, Football Academies and the Migration of African Football Labor to Europe (2007) 31 Journal of Sport & Social Issues, 149-150.

[8] Scenario (2) is ultimately an example of European clubs being commercially savvy and the entire arrangement is to avoid costs or fees like training compensation.  This probably needs little more explanation as one can see that a European club may essentially be paying themselves if they are the main stakeholder in the African club or academy from which their new player has graduated.

[9] Scenario (4) academies are arguably the most detrimental in terms of their societal effects. They often purport to be a channel for ambitious players but lack the quality of facility and coaching, let alone contacts or ability to spring board players onto bigger and better things. They are never the recipient of redistribution given they are not FIFA recognised yet take money for their services and cannot fulfil promises.

[10] Jakub Laskowski, 'Solidarity Compensation Framework In Football Revisited' (2018) 18 The International Sports Law Journal, 168, 178, 182.

[11] The player spent a small amounts of time registered to a club to be eligible for the national team.

In June 2014, two prominent Dutch speed skaters, Mark Tuitert (Olympic Champion 1500m) and Niels Kerstholt (World Champion short track), filed a competition law complaint against the International Skating Union (ISU) with the European Commission.

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Today, the European Commission announced that it has opened a formal antitrust investigation into International Skating Union (ISU) rules that permanently ban skaters from competitions such as the Winter Olympics and the ISU World and European Championships if they take part in events not organised or promoted by the ISU. The Commissioner for Competition, Margrethe Vestager, stated that the Commission "will investigate if such rules are being abused to enforce a monopoly over the organisation of sporting events or otherwise restrict competition. Athletes can only compete at the highest level for a limited number of years, so there must be good reasons for preventing them to take part in events."

Since the case originates from legal advice provided by the ASSER International Sports Law Centre, we thought it would be helpful to provide some clarifications on the background of the case and the main legal issues at stake. 

1. What are the events leading to the complaint? 

In December 2011, a private entity, Icederby International, informed the ISU of its intentions to start organising international speed skating events with an innovative competition format, combining long track and short track skating. At that time, Icerderby International was considering hosting betting activities on the races alongside the tracks. 

In January 2012, the ISU issued a revised Code of Ethics stipulating that persons subjected to the Code ought “to refrain from participating in all forms of betting or support betting or gambling related to any event/activity under the jurisdiction of the ISU”. 

In November 2013, Dubai is awarded the organisation of the World Expo 2020. Icederby International secured a contract to organise an annual speed skating event in Dubai as part of the programme leading up to the World Expo. The first Dubai Icederby Grand Prix Exhibition 2014 was to take place in October 2014. The organisers clarified that there would be no on-site betting activities during the planned Icederby events since betting activities are strictly prohibited in Dubai. 

In March 2014, the ISU nonetheless issued a statement (Communication No. 1853) saying that, because the competitions organised by Icederby International are “possibly being closely connected to betting”, they would not sanction them. The ISU also threatened that anyone participating in events organised by Icederby International would become persona non grata within the ISU. 

2. Persona non grata … what does that mean?  

According to the ISU Eligibility rules,[1] a person skating or officiating in an event not sanctioned by the ISU and/or its Members (i.e. the individual national associations) becomes ineligible to participate in ISU activities and competitions (Rule 102, para. 2 (ii)). This sanction applies not only to the skaters, but also to coaches, trainers, doctors, team attendants, team officials, judges, referees, volunteers, and anyone else engaging in a relation with the ISU.  

A person who is or has been ineligible may be reinstated as an eligible person (Rule 103, para. 1). However, this does not apply to a skater that participated in a non-sanctioned event (Rule 103, para. 2). In other words, once a skater participates in an event not organised or promoted by the ISU, he or she is banned for life from participating in the Winter Olympic Games or any of the ISU events such as the World and European Championships. In practice this would put an end to the athlete’s sporting career. 

3. Why is the ISU allegedly violating the EU competition rules? 

The complainants contend that the ISU Eligibility Rules, in particular Rule 102, as well as its enforcement by the ISU in the case at hand, constitutes a violation of Articles 101 and 102 TFEU. The main premise of the complaint is that the sanction of a lifelong ban cannot be considered inherent and proportionate to the pursuit of any legitimate objective.

The ISU Eligibility Rules are laid down in the ISU General Regulations, which the Members of the ISU have adopted. This is a decision taken by an association of associations of undertakings, within the meaning of Article 101(1) TFEU. By their very nature, the restrictions imposed by the Eligibility Rules have the potential to restrict competition because they raise virtually insurmountable barriers to entry and expansion on the market for the organisation of international speed skating events (i.e. the organisation of such events require access to the human resources controlled by the ISU). This directly and manifestly affects the interests of the skaters (and ultimately has the potential to harm the welfare of sports fans). 

Additionally, the ISU and its Members enjoy a position of collective dominance, which amounts to an absolute monopoly, on the market for the organisation of international speed skating events.[2] The ISU Eligibility Rules enable the ISU (and its Members) to prevent or impede effective competition on the market for international speed skating events. In short, the complainants argue that the ISU effectively abuses its powers to foreclose competitors on this and other related markets. The ISU Eligibility Rules are not simply there “on the books” but are actively invoked by the ISU to deter skaters (and officials etc.) from breaching these rules by participating/officiating in non-sanctioned events.[3] 

The initiative to launch the Icederby International Competitions exemplifies that there is a demand for more international speed skating events in addition to those that the ISU administers, both in terms of new competition formats and competing events. This need is also evident from the limited prize money that is available for long track and short track skaters in ISU sanctioned international speed skating events. The prize money available for individual skaters in a typical season with 21 international speed skating competitions (13 long track / 8 short track) is a minimum of $ 0 and maximum of $ 109,000 (long track) / $ 31,900 (short track). If speed skaters would be able to participate in the Dubai Icederby Grand Prix, which is but one out-of-season single event, they would earn individually a minimum of $ 37.650 and a maximum of $ 130,000. In other words, a short track skater could earn more by simply participating in the Icederby event than he/she would be able to earn by winning all of the ISU sanctioned international competitions during an entire season. 

While the ISU’s decision not to sanction the Icederby International Competitions is an important contextual element, the complainants are not asking the European Commission to denounce that decision. Rather, their complaint focuses entirely on the disproportionate sanction prescribed by Rule 102(2) of the ISU General Regulations. Because Icederby International is the first major organisation that wishes to organise international speed skating events without the ISU’s approval, the radical anti-competitive nature of the ISU Eligibility Rules has only now manifested itself. Any other (future) initiative to organise a non-sanctioned international speed skating event would likewise face the disproportionate restrictions imposed by the ISU Eligibility Rules. 

It is undisputed that an international sports federation, such as the ISU, may legitimately assert the interests of the sport it administers. Yet it is doubtful that the ISU could rely on its Code of Ethics (that only applies to events and activities “under the jurisdiction of the ISU”) to render ineligible any person skating or officiating in events in compliance with national laws. Sole participation in a non-sanctioned speed skating event should not constitute a threat to the integrity of speed skating that would justify a total ban. 

4. What is the remedial scope of EU competition law? 

The ISU Eligibility rules and the ISU’s conduct deprive speed skaters from the benefits that a situation of fair and open competition on the market for the organisation of international speed skating events would offer them. The scope for intervention on the basis of EU competition law is evident from previous decisional practice. 

In the FIA case, the European Commission was confronted with similar rules contained in several regulations notified by the Fédération International de l’Automobile (FIA). The International Sporting Code of the FIA provided that no licence holder could participate in an international Formula One event that is not entered on the FIA calendar. Anyone that would not comply with this provision would have their licence withdrawn and thus would be excluded from any event authorized by FIA. This and other restrictive rules led the Commission to make, in its Statement of Objections, the preliminary assessment that FIA “was using its regulatory powers to block the organization of races which competed with the events promoted or organized by FIA (i.e. events from which FIA derived a commercial benefit”.[4] The Commission eventually closed the case after having reached a settlement with FIA, which provided inter alia that FIA no longer would prevent teams and circuit owners to participate in and organise other races provided that essential requisite safety standards are met.[5] 

More recently, National Competition Authorities (NCAs) have also intervened on the basis of national and EU competition law. For example: 

• In Sweden, the Market Court confirmed that two clauses in the Swedish Automobile Sports Federation (SBF)’s Common rules, according to which its members were forbidden from participating as drivers and event staff in races not sanctioned by the SBF, violated Article 101 TFEU.^[6] The Court therefore upheld the decision of the Swedish NCA, which obliged the SBF to amend its Common rules so that they no longer prevent licence holders from applying for, participating in or being functionaries at unsanctioned motor races.^[7] In 2014, the Swedish NCA also closed an investigation into a loyalty clause applied by the Swedish Bodybuilding Association (SKKF) after the SKFF committed no longer to suspend or fine athletes, coaches, officials or judges for participating in non-sanctioned competitions.^[8]

In Italy, the NCA launched antitrust investigations into the regulations and conduct of the national motor sports federation (ACI) and equestrian sports federation (FISE) under Articles 101 and 102 TFEU. The FISE investigation focused on clauses forbidding FISE members from participating in equestrian events and activities organized by other entities (subject to exclusion from the federation). The investigation was closed after FISE committed to remove the anti-competitive clauses from its statutes. FISE also committed to allow the use of its affiliated clubs’ facilities by independent event organizers.[9] The ACI investigation focused on several regulatory and statutory provisions intended to limit access to the market for the organization of motor sport events for competitors. In 2009, the NCA adopted a commitment decision after the ACI undertook to inter alia allow its members to participate in events not organized by the federation.[10]

In Ireland, the NCA opened an investigation into a rule of Show Jumping Ireland (SJI) that prevented members of the SJI to compete at unaffiliated show jumping events. The case was closed after the SJI committed to amend the rule to address the competition concerns. Since then, members of SJI who enter into unaffiliated show can only be penalized if the show has not signed up to the specified Health and Safety Standards and has not provided the SJI with evidence of adequate insurance.[11] 

Two important lessons can be drawn from this decisional practice. 

First, save for compliance with objective technical safety standards, the decisional practice has consistently found that rules prohibiting the participation of its members in non-sanctioned events violated Articles 101 and/or 102 TFEU and had to be abolished. Evidently, to be deemed proportional, the sports federation would still be required to prove that a certain non-sanctioned event would be less safe than its own events.[12] 

Second, all national cases dealt with rules of national federations. In the Swedish bodybuilding case (2014), the contested rule was the national equivalent of a clause contained in the Constitution of the International Bodybuilding Federation. Yet the remedial action was purely national in scope. The SKKF committed no longer to apply the restriction in Sweden, but the rule continues to be enforced by the IFBB and all other European member federations. The much wider scope of the parties affected by a rule from an international sports federation makes it necessary to tackle the restriction at the EU level. 

5. What are the next procedural steps? 

Since this is the first time in more than a decade that the European Commission is conducting an in-depth antitrust investigation in the field of (regulatory aspects of) sport, the decision to open proceedings delivers a powerful message. 

The opening of an in-depth antitrust investigation does not prejudice the finding of a violation of the European competition rules, however. It only signals that (1) the initial assessment led to the conclusion that there are “reasonable indications of a likely infringement” and (2) the Commission will further pursue the case as a matter of priority with a view to adopting a decision.[13] The Commission will thus allocate recourses on the case and endeavour to resolve the case in a timely manner.

Unless the Commission would in the end conclude that there is not sufficient evidence to find an infringement, the case will be resolved through the adoption of a prohibition or commitment decision.  

The ISU could offer commitments suitable to address the competition concerns arising from the investigation. The Commission might then conclude that there are no longer grounds for actions. Instead of formally establishing a violation of the EU competition rules, a commitment decision will simply make those commitments legally binding. In the alternative, the Commission will proceed to a prohibition decision, requiring the ISU to bring the infringements to an end. For this purpose, it may impose on the ISU remedies proportionate to the infringement committed and necessary to bring the infringement to an end and impose a fine. 

6. Why is this case so important? 

Needless to say, the stakes are significant and extend well beyond the sport of speed skating. 

Only a handful of international sport federations have truly experienced the “Bosman effect” and faced scrutiny of their regulatory overreach under the European competition rules. The fact that most international sports federations are based in Switzerland, outside the EU, may further explain a lack of awareness about the need to comply with EU competition law. Of course, this does not mean they are immune: anti-competitive practices that appreciably affect the EU market are drawn into the net of EU competition law. 

While the compliance of sporting rules with EU competition law needs to be assessed on a case-by-case basis, the European Commission did present an indicative list of sporting rules that are likely to infringe Articles 101 and 102 TFEU in its 2007 White Paper on Sport. Rules shielding sports associations from competition are mentioned. Other than in the area of revenue generating activities related to sport (in particular the sale of sports media rights), however, the body of competition case law at the EU level dealing with organisational sporting rules is limited. Even though sports associations usually have practical monopolies in a given sport, the remedial potential of EU competition law to influence their regulatory actions (that often have significant economic consequences) remains underexplored.[14]  

The Commission’s decision to pursue this case therefore has an important precedent-setting value. This is particularly true for the numerous international sports federations that also disproportionally restrict athlete participation in unsanctioned events with penalties ranging from fines, periods of ineligibility, and lifetime bans. For instance: 

• International Federation of Volleyball (FIVB): since 2009, all athletes that take part in unauthorized beach volleyball events will have their membership withdrawn for all FIVB competitions (period of ineligibility up to a life ban).[15] Surprisingly, different sanctions apply to participation in volleyball competitions of non-FIVB recognized organizations (e.g. a fine on the club involved of CHF 30.000 and suspension of the club, teams, players, and officials involved for a period up to two years).[16]

International Swimming Federation (FINA): any affiliated member having any kind of relationship with non-affiliated bodies shall be suspended for a minimum period of one year up to a maximum period of two years.[17]

International Netball Federation (INF): any person participating in any capacity in an unsanctioned event is automatically ineligible to participate in INF events for a minimum of 12 months thereafter.[18]

International Gymnastics Federation (FIG): gymnasts taking part in unsanctioned competitions or exhibitions may not claim to be eligible to participate in the Olympic Games.[19]

International Cricket Council (ICC): other than in exceptional circumstances, a person participating in unofficial cricket events shall not be selected or permitted to participate in official events for a minimum of one year thereafter.[20]

International Hockey Federation (FIH): any athlete or other individual participating in an unsanctioned event is automatically ineligible for one year to participate in any FIH event.[21]

The mere threat of drastic sanctions, combined with the general lack of objective, transparent, and non-discriminatory rules governing the authorization of international sports events, enables federations to de facto block events that could compete with the events they organise and promote. In the absence of sufficient procedural safeguards, this clearly raises concerns about a conflict of interest between a federation’s power to authorise the organisation of events and the federation’s commercial interests in promoting its own events.

The ISU case will hopefully provide a much-needed reminder to sports federations that without valid justifications they cannot use their private regulatory power to foreclose competitors or hinder the freedom of EU athletes and sports personnel to exercise economic activities. 

Disclaimer: the author represents and advises the complainants in their antitrust proceedings.

[1] ISU General Regulations (2014), available at http://static.isu.org/media/165642/constitution-and-general-regulations-version-july-31-2014.pdf

[2] This has already been recognized by the German courts in the Pechstein case.

[3] In its 2014 statement (Communication No. 1853), the ISU found it opportune to remind all its members “that participation in any international ice skating competition not sanctioned by the ISU will result in the loss of eligibility of the participants”.

[4] Notice published pursuant to Article 19(3) of Council Regulation No 17 concerning Cases COMP/35.163, Notification of FIA Regulations, COMP/36.638, Notification by FIA/FOA of agreements relating to the FIA Formula One World Championship, COMP/36.776  GTR/FIA & others (2001/C 169/03), OJ C169/6-7

[5] European Commission, XXXIst Report on Competition Policy 2001, para. 221 et seq.

[6]  Swedish Market Court's ruling 2012:16 in Case A 5/11, Svenska Bilsportförbundet v Konkurrensverket (December 20, 2012) available at http://www.kkv.se/t/NewsArchive.aspx?id=529  (see also e.g. http://www.kkv.se/t/NewsPage____8672.aspx ).

[7] Konkurrensverket (Swedish Competition Authority) Decision of 13 May 2011 in Case 709/2009, available at http://www.kkv.se/upload/Filer/Konkurrens/2011/Beslut/09-0709.pdf.

[8] Konkurrensverket (Swedisch Competition Authority) Decision of 28 May 2014 in Case 590/2013, available at http://www.konkurrensverket.se/upload/Filer/Konkurrens/2014/13-0590.pdf.

[9] Autorità Garante della Concorrenza e del Mercato, Federitalia/Federazione Italiana Sport Equestri (FISE), Decision n°18285 of 28 July 2008, Bolletino n° 19/2008. 

[10] Autorità Garante della Concorrenza e del Mercato, Gargano Corse/ACI, Decision n° 19946 of 30 June 2009, Bolletino n° 23/2009.

[11] The Competition Authority, Show Jumping Ireland, case summary available at http://www.tca.ie/images/uploaded/documents/201205%20Case%20Summary%20-%20SJI.pdf

[12] Swedish Market Court's ruling 2012:16 in Case A 5/11, Svenska Bilsportförbundet v Konkurrensverket (December 20, 2012) available at http://www.kkv.se/t/NewsArchive.aspx?id=529; The Competition Authority, Show Jumping Ireland, case summary available at http://www.tca.ie/images/uploaded/documents/201205%20Case%20Summary%20-%20SJI.pdf.

[13] European Commission, Antitrust Manual of Procedures (2012), available at http://ec.europa.eu/competition/antitrust/antitrust_manproc_3_2012_en.pdf

[14] Ben Van Rompuy, "The role of EU competition law in tackling abuse of regulatory power by sports associations" (2015) 22 Maastricht Journal of European and Comparative Law 2, 174-204.

[15] FIVB, Beach Volleyball Handbook 2013, Article 9.1 and 11.3. 

[16] FIVB, Disciplinary Regulations, Article 15.2 and Sports Regulations Volleyball, Article 46.6.

[17] FINA, General Rules 2013-2017, Rule GR4.

[18] INF, General Regulations – Appendix – Regulations on Sanctioned & Unsanctioned Events: Guidance Notes (August 2013).

[19] FIG, Technical Regulations, Appendix B (Rules of Eligibility for the International Gymnastics Federation).

[20] ICC, Regulations for Approved/Disapproved Cricket and Domestic Cricket Events, Section 32.4.

[21] FIH, Regulations on Sanctioned & Unsanctioned events, Article 2.

Editor's note: Rusa Agafonova is a PhD Candidate at the University of Zurich, Switzerland   

The Olympic Games are the cornerstone event of the Olympic Movement as a socio-cultural phenomenon as well as the engine of its economic model. Having worldwide exposure,[1] the Olympic Games guarantee the International Olympic Committee (IOC) exclusive nine-digit sponsorship deals. The revenue generated by the Games is later redistributed by the IOC down the sports pyramid to the International Federations (IFs), National Olympic Committees (NOCs) and other participants of the Olympic Movement through a so-called "solidarity mechanism". In other words, the Games constitute a vital source of financing for the Olympic Movement.

Because of the money involved, the IOC is protective when it comes to staging the Olympics. This is notably so with respect to ambush marketing which can have detrimental economic impact for sports governing bodies (SGBs) running mega-events. The IOC's definition of ambush marketing covers any intentional and non-intentional use of intellectual property associated with the Olympic Games as well as the misappropriation of images associated with them without authorisation from the IOC and the organising committee.[2] This definition is broad as are the IOC's anti-ambush rules.

Rule 40 of the Olympic Charter

The famous Rule 40[3] of the Olympic Charter was introduced in 1991 prohibiting competitors[4] from any use of name, image or sports performances for advertising purposes during the Olympic Games and since then has been critised for its disproportionality.

The blanket ban covered all types of advertising during the "blackout" ("frozen") period of almost a month, starting nine days before the Opening Ceremony and ending three days after the Closing of the Games. Any Olympic-related terms varying from quite specific "Olympia" and "games" to more generic "medal", "gold", "pedestal" and to very questionable "summer", "challenge" and "victory" were banned from use in an advertising context. These restrictions are even more drastic knowing that violation of the Olympic Charter can entail temporary or permanent ineligibility or exclusion from the Olympic Games.[5]

Legal challenges

While companies still managed to find loopholes in the regulations,[6] a legal challenge was expected on both sides of the Atlantic. In the US, the antitrust lawsuit against the USA Track and Field and the US Olympic Committee (USOC) brought to the U.S. District Court by a runner Nick Symmonds[7] was dismissed on the basis of the 1978 Amateur Sports Act, which granted an implied antitrust immunity to the USOC.

In Europe, however, the complaint filed with the German Competition Authority (Bundeskartellamt) by the German Athlete Commission and the Federal Association of the German Sports Goods Industry was successful and resulted in a series of commitments undertaken by the German NOC (DOSB) and the IOC, but only German athletes could benefit from it.

Bundeskartellamt refers to the ISU and Kristoffersen cases admitting the protection of the solidarity mechanism as a potential justification for a measure restricting competition, but only "if the financial support granted by the system is sufficiently transparent for the participants who contributed their performance", i.e. when they are "in a position to understand and assess the volume of income generated" and "whether this income, or at least most of it, has in fact been spent to the benefit of those athletes who are disadvantaged in terms of opportunities to participate in the Olympic Games". The Olympic solidarity plan does not attain this high standard of "sufficient transparency".[8] Hence, Rule 40 and its German analogue were preliminarily assessed as violating Art. 102 of the Treaty on the Functioning of the European Union (TFEU) (abuse of dominant position) and Sections 18 and 19 GWB (German Competition Act).

The German decision gave the green light to advertising campaigns by non-Olympic sponsors during the frozen period and replaced the authorisation procedure by the requirement to notify the NOC of the intended campaigns. The list of protected terms was narrowed down, and only sanctions of economic nature, i.e. contractual damages and/or penalties, became admissible.

Reconsidering Rule 40

In summer 2019, the IOC amended Rule 40 for the first time in many years. Its new wording was akin to a 180-degree turn and allowed competitors, team officials and other team personnel to use their person, name, picture, and sports performances for advertising purposes during the Olympic Games as far as the principles determined by the IOC Executive Board were respected.  

NOCs should concretise the rule for their Olympic team in accordance with the Key Principles on the application of by-law 3 to Rule 40 of the Olympic Charter (Tokyo 2020 Key Principles) which give the NOCs some guidance but also leave them a considerable leeway.

In terms of substance, non-Olympic sponsors can now undertake "generic advertising", i.e., campaigns launched at least 90 days before the Event, which create association with the Olympic Games only through an athlete's image, and which should avoid any unusual activity during the Games. What is considered unusual is to be determined on a case-by-case basis.

Regarding the procedure, non-Olympic partners must now only notify in advance the IOC or the respective NOCs of their advertising plans. The NOCs are free to decide on the form and modalities of this notification. It can be a simple notice, such as in Switzerland, a two-step notification (i.e. a pre-registration and a further notification) as in South Africa, or a more complex legal structure consisting of a notification accompanied by a personal sponsor commitment agreement (PSC) concluded by and between an athlete's sponsor and the NOC, as is the case in the USA or in Ireland. In the latter case, the NOC obtains additional contractual guarantees in case of a violation of the Rule 40.[9]

All these discrepancies put athletes on an unequal footing. The commercial rights of those sportspeople who already struggle to find sponsors due to the limited exposure of their sports disciplines might be curtailed even further by the non-attractiveness of their NOCs' regimes in respect to Olympic sponsorship.

Finally, the IOC recommends that NOCs adopt monetary rather than sporting measures to sanction violations.[10] But recommendations are non-binding, while it seems that such a crucial issue as sanctions should be covered by a uniform rule more than anything else.

Conclusion

Athletes have, at times in history, been precluded from fully monetising their economic potential during the most important - and the most marketable - moments  of their careers, which themselves are relatively short. The amended Rule 40 has been welcomed as a big achievement and fits well with the overall trend for athletes' growing engagement in policy-making processes and the increasing role of competition law in shaping sports governance. However, it seems that Rule 40 is not yet at its final destination. To get there, it should find the balance between the individual athlete’s right to generate income in relation to their sporting career and the collective interest in protecting the solidarity model. It is indeed important to remember that there are many athletes, including those at the grassroots level, who are supported by the solidarity mechanism rather than by sponsors' financial backing.

Conversely, while the concept of the Olympics has not been distorted by allowing professionals to compete in the Games, why would it be inadvisable to reconsider the idea of commercialisation of sport? The outbreak of COVID-19 and the postponement of the 2020 Tokyo Olympic Games drew attention to the insecurity of athletes in many senses, and the relationship between an athlete and a sponsor acquired a deeper significance: despite the uncertainties of the sports calendars, epidemiologic regimes, and impossibility of long-term planning, the parties - or rather the partners - maintained mutual support and shared common values. 

All regulatory instruments should be adjusted accordingly. Rule 40 as it existed before 2019 appeared archaic. When it entered into force, neither the internet nor social media existed. As of today, Twitter and especially Instagram have shaped a new paradigm of hashtags, likes, reposts, and followers.[11] 

Rule 40, as it exists in 2021, leaves a risk of unequal implementation due to the fact that NOCs and athletes' associations have different degrees of bargaining power across the globe and, in the absence of a uniform clause imposed by the international regulator, give divergent interpretations to the scope of the rule. The country-to-country approach can sometimes allow for necessary flexibility in order to ensure optimal implementation of the regulations, in particular, regarding compliance with the national legislation of each state. However, some issues, such as the sanctioning regimes, should be handled in a centralised and harmonised way.

The German example has set the trend, but many NOCs may be reluctant to follow it. In this respect, the European Commission may play an important role in reconciling athletes' economic interests and the SGBs' interests with due consideration to the specificity of sport. It remains to be seen how the situation will be resolved outside the European Union. Meanwhile, during the period from 13 July to 10 August 2021, we will most likely witness a dramatic change in advertising as the new Rule 40 will be applied. It is possible that the focus on sports competitions will be slightly diluted by additional commercial ads, but even this scenario seems appealing after the silence of quarantine. 

[1] The geographic market for the organisation and exploitation of the Olympic Games has been defined as worldwide. See Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17 (25 February 2019), para. 56. The version in English is available at https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/Missbrauchsaufsicht/2019/B2-26-17.pdf?__blob=publicationFile&v=2. Accessed on 30 May 2021.

[2] Brand Protection Guidelines, Tokyo Organising Committee of the Olympic and Paralympic Games, Version 5.0. February 2020, Pt. 6. Ambush Marketing.

[3] Here and hereafter: Rule 40 refers to Bye-law 3 to Rule 40 of the Olympic Charter.

[4] In 2003, the rule was expanded to coaches and officials.

[5] Olympic Charter, Rule 59 (2.1).

[6] For example, in the pre-London-2012 campaign “Find Your Greatness”, Nike shows athletes from the towns named London situated in the US, Canada, Jamaica, and Nigeria and never mentions London in the UK. 

[7] Gold Medal LLC v. USA Track & Field, 187 F. Supp. 3d 1219, 1222 (D. Or. 2016).

[8] Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17, 25 February 2019, para. 103.

[9] McKelvey Steve, Grady John, Moorman Anita M., Ambush Marketing and Rule 40 for Tokyo 2020: A Shifting Landscape for Olympic Athletes and Their Sponsors, Journal of Legal Aspects of Sport, 2021, 31, pp. 94 – 122.

[10] Commercial Opportunities for Athletes. Rescheduled Olympic Games Tokyo 2020 (in 2021), p. 14. Frequently Asked Questions for Athletes.

[11] It is, for example, the key tool for fans' engagement. See Ennis Sean (2020) Understanding Fans and Their Consumption of Sport. In: Sports Marketing. Palgrave Macmillan, Cham, pp 75-100.