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

ISLJ International Sports Law Conference 2019 - Conference Report - By Thomas Terraz

On October 24th and 25th 2019, the T.M.C. Asser Institute and the International Sports Law Centre hosted the International Sports Law Journal (ISLJ) Conference for a third year in a row, bringing together a group of academics and practitioners from around the world. This year’s conference celebrated the 20th year of the International Sports Law Journal, which was originally started by Robert Siekmann. Over the past 20 years, the ISLJ has aimed to be a truly international journal that addresses global topics in sports law while keeping the highest academic standards.

With this background, the conference facilitated discussions and exchanges over six differently themed panels on international sports law’s most pertinent issues and gave participants wide opportunities to engage with one another. Additionally, this year’s edition also had the great honor of hosting two distinguished keynote speakers, Moya Dodd and Ulrich Haas, who were able to share their wealth of experience and knowledge with the conference participants.

The following report aims to give an overview of the ISLJ Conference 2019 to extract and underline the fundamental ideas raised by the different speakers.More...

International and European Sports Law – Monthly Report – August and September 2019 - By Thomas Terraz

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

 

The Headlines

Another Russian Doping Crisis? Inconsistencies Uncovered in the Data from the Moscow Lab

Storm clouds are brewing once more in the Russian Doping Saga, after several inconsistencies were uncovered by WADA from data retrieved from the Moscow Laboratory. More specifically, a certain number of positive tests had been removed from the data WADA retrieved from the Moscow Laboratory compared to the one received from the original whistleblower. WADA launched a formal compliance procedure on 23 September, giving three weeks for Russian authorities to respond and provide their explanations. WADA’s Compliance Review Committee is set to meet on 23 October in order to determine whether to recommend declaring Russia non-compliant.

Russian authorities are not the only ones now facing questions in light of these new revelations. Criticism of WADA’s decision to declare Russia compliant back in September 2018 have been reignited by stakeholders. That original decision had been vehemently criticized (see also Edwin Moses’ response), particularly by athlete representative groups.

The fallout of these data discrepancies may be far reaching if Russian authorities are unable to provide a satisfying response. There are already whispers of another impending Olympic Games ban and the possibility of a ban extending to other sports signed to the WADA Code. In the meantime, the IAAF has already confirmed that the Russian Athletes would compete as ‘authorised neutral athletes’ at the World Athletics Championship in Doha, Qatar.

Legal Challenges Ahead to Changes to the FIFA Football Transfer Market

FIFA is set to make amendments to its player transfer market that take aim at setting new boundaries for football agents. These changes will prohibit individuals from representing both the buying and selling club in the same transaction and set new limits on agent commissions (3 percent for the buying club and player representative and 10 percent for the selling team). FIFA is already in the process of creating a central clearinghouse through which all transfer payments would have to pass through, including agent commissions. FIFA will be making a final decision on these proposed changes at the FIFA Council meeting on 24 October.

If these proposed changes are confirmed, they will almost certainly be challenged in court. The British trade organization representing football agents, Association of Football Agents, has already begun its preparations for a costly legal battle by sending a plea to its members for donations. It claims that it had not been properly consulted by FIFA before this decision had been made. On the other hand, FIFA claims that ‘there has been a consultation process with a representative group of agents’ and that FIFA kept ‘an open dialogue with agents’. Regardless, if these proposed changes go through, FIFA will be on course to a looming legal showdown.

CAS Public Hearing in the Sun Yang Case: One Step Forward for Transparency?

On 20 August, 2019, the Court of Arbitration for Sport (CAS) announced that the hearing in the appeal procedure of the Sun Yang case will be held publicly. It will be only the second time in its history that a public hearing has been held (the last one being in 1999, Michelle Smith De Bruin v. FINA). WADA has appealed the original decision of the FINA Doping Panel which had cleared Sun Yang from an alleged anti-doping rule violation. The decision to make the hearing public was at the request of both parties. The hearing is set to take place November 15th and is likely to be an important milestone in improving the CAS’ transparency.

Sun Yang, who has already served a doping ban for a previous violation in 2014, has also been at the center of another controversy, where Mack Horton, an Australian swimmer, refused to shake hands and stand on the podium with Sun Yang at the world championships in Gwangju. More...

Caster Semenya’s Legal Battle Against Gender Stereotypes: On Nature, Law and Identity - By Sofia Balzaretti (University of Fribourg)

Editor's note: Sofia Balzaretti is a Graduate research assistant and a PhD candidate at the University of Fribourg (Switzerland) where she is writing a thesis on the Protection against Gender Stereotypes in International Law. In addition to research in human rights and feminist legal theory, she has also carried out some research in legal philosophy and on the relationship between gender and the law.

 

The International Association of Athletics Federations (IAAF), the monitoring body of track and field athletics, regularly submitted South African middle distance runner and Olympic gold medalist Mokgadi Caster Semenya to sex verification tests when it began questioning her sexual characteristics and speculating whether her body belonged on the Disorder of Sex Development (DSD) spectrum. DSD Syndrome is often defined as an “intersex condition” which affects the clear development of either/or genitalia, gonads and chromosomes into one distinctive sex or another. The spectrum of the intersex condition is particularly wide, and the disorder can sometimes be minimal - some cases of female infertility can actually be explained by an intersex condition.

The IAAF deemed the controversial sex verification tests necessary on the grounds that it was required to prove Semenya did not have a “medical condition” which could give her an “unfair advantage”. It was eventually found that, because of an intersex trait, Semenya did have abnormally high levels of testosterone for a woman, which, in the IAAF’s opinion, justified a need for regulatory hormonal adjustments in order for her to keep competing in the women’s category. The IAAF also funded research to determine how ‘hyperandrogenism’ affects athletic performance. In 2018, it issued Eligibility Regulations on Female Classification (“Athlete with Differences of Sexual Development”) for events from 400m to the mile, including 400m, hurdles races, 800m and 1’500m. The IAAF rules indicated that in case of an existing high level of testosterone, suppression or regulation by chemotherapy, hormonal castration, and/or iatrogenic irradiation was mandatory in order to take part in these events.

Semenya and her lawyers challenged the IAAF Regulations in front of the CAS, who, in a very controversial decision, deemed the Regulations a necessary, reasonable and proportionate mean “of achieving the aim of what is described as the integrity of female athletics and for the upholding of the ‘protected class’ of female athletes in certain events” (§626). More...

International and European Sports Law – Monthly Report – June and July 2019 - By Tomáš Grell

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

 

The Headlines

The European Court of Justice finds that rule of a sports association excluding nationals of other Member States from domestic amateur athletics championships may be contrary to EU law

On 13 June 2019, the European Court of Justice (ECJ) delivered a preliminary ruling at the request of the Amtsgericht Darmstadt (Local Court Darmstadt, Germany) filed in the course of the proceedings involving Mr Daniele Biffi, an Italian amateur athlete residing in Germany, and his athletics club TopFit based in Berlin, on the one hand, and the German athletics association Deutscher Leichtathletikverband, on the other. The case concerned a rule adopted by the German athletics association under which nationals of other Member States are not allowed to be awarded the title of national champion in senior amateur athletics events as they may only participate in such events outside/without classification. The ECJ’s task was to decide whether or not the rule in question adheres to EU law.

The ECJ took the view that the two justifications for the rule in question put forward by the German athletics association did not appear to be founded on objective considerations and called upon the Amtsgericht Darmstadt to look for other considerations that would pursue a legitimate objective. In its judgment, the ECJ analysed several important legal questions, including amongst others the applicability of EU law to amateur sport or the horizontal applicability of European citizenship rights (for detailed analysis of the judgment, please see our blog written by Thomas Terraz).

Milan not featuring in this season’s edition of Europa League following a settlement with UEFA

On 28 June 2019, the Court of Arbitration for Sport (CAS) rendered a consent award giving effect to a settlement agreement between UEFA and the Milan Football Club, under which the Italian club agreed to serve a one-year ban from participation in UEFA club competitions as a result of its breaches of UEFA’s financial fair play regulations over the 2015/2016/2017 and the 2016/2017/2018 monitoring periods, while the European football’s governing body agreed to set aside previous decisions of the Investigatory and Adjudicatory Chamber of its Club Financial Control Body which had found Milan guilty of the respective breaches.   

This was not the first intervention of the CAS related to Milan’s (non-)compliance with UEFA’s financial fair play regulations. In July 2018, the CAS annulled the decision of the Adjudicatory Chamber of the UEFA Club Financial Control Body of 19 June 2018 which was supposed to lead to the exclusion of the Italian club from UEFA club competitions for which it would otherwise qualify in the next two seasons (i.e. 2018/2019 and 2019/2020 seasons). Following such intervention of the CAS – which concerned the 2015/2016/2017 monitoring period – it may have appeared that Milan would eventually manage to escape a ban from participation in UEFA club competitions for breaches of UEFA’s financial fair play regulations. However, Milan’s case was again referred to the Adjudicatory Chamber of the UEFA Club Financial Control Body in April 2019 – this time its alleged breaches of UEFA’s financial fair play regulations concerned the 2016/2017/2018 monitoring period – and such referral apparently forced Milan into negotiations with UEFA which led to the settlement agreement ratified by the CAS.      

Swiss Federal Tribunal gives Caster Semenya a glimmer of hope at first but then stops her from running at the IAAF World Championships in Doha

Caster Semenya’s legal team brought an appeal to the Swiss Federal Tribunal in late May against the landmark ruling of the CAS which gave the IAAF the green light to apply its highly contentious Eligibility Regulations for Female Classification (Athlete with Difference of Sexual Development) preventing female athletes with naturally elevated levels of testosterone from participating in certain athletic events unless they take medication to supress such levels of testosterone below the threshold of five nmol/L for a continuous period of at least six months. The appeal yielded some positive partial results for Caster Semenya early on as the Swiss Federal Tribunal ordered the IAAF on 3 June 2019 to suspend the implementation of the contested regulations. However, the Swiss Federal Tribunal overturned its decision at the end of July which means that Caster Semenya is no longer able to run medication-free and this will most likely be the case also when the 2019 IAAF World Athletics Championships kick off in Doha in less than one month’s time. The procedural decisions adopted by the Swiss Federal Tribunal thus far have no impact on the merits of Caster Semenya’s appeal.More...

Book Review - Football and the Law, Edited by Nick De Marco - By Despina Mavromati (SportLegis/University of Lausanne)

 Editor's Note: Dr. Despina Mavromati, LL.M., M.B.A., FCIArb is an Attorney-at-law specialized in international sports law and arbitration (SportLegis) and a Member of the UEFA Appeals Body. She teaches sports arbitration and sports contracts at the University of Lausanne (Switzerland) and is a former Managing Counsel at the Court of Arbitration for Sport.


This comprehensive book of more than 500 pages with contributions by 53 authors and edited by Nick De Marco QC “aims to embody the main legal principles and procedures that arise in football law”. It is comprised of 29 chapters and includes an index, a table of football regulations and a helpful table of cases including CAS awards, UEFA & FIFA Disciplinary Committee decisions and Football Association, Premier League and Football League decisions. 

The 29 chapters cover a wide range of regulatory and legal issues in football, predominantly from the angle of English law. This is logical since both the editor and the vast majority of contributing authors are practitioners from England.

Apart from being of evident use to anyone involved in English football, the book offers additional basic principles that are likely to be of use also to those involved in football worldwide, including several chapters entirely dedicated to the European and International regulatory framework on football: chapter 3 (on International Federations) gives an overview of the pyramidal structure of football internationally and delineates the scope of jurisdiction among FIFA and the confederations; chapter 4 explains European law and its application on football deals mostly with competition issues and the free movement of workers; and chapter 29 deals with international football-related disputes and the Court of Arbitration for Sport (CAS).

In addition to the chapters exclusively dealing with international football matters, international perspectives and the international regulatory landscape is systematically discussed – in more or less depth, as the need might be – in several other chapters of the book, including: chapter 2 on the “Institutions” (from governing bodies to stakeholders groups in football); chapter 6 on the FIFA Regulations on the Status and Transfer of Players (RSTP); chapter 8 dealing with (national and international) player transfers; chapter 11 (on Third Party Investment) and chapter 16 on Financial Fair Play (mostly discussing the UEFA FFP Regulations); chapter 23  on disciplinary matters (very briefly discussing the disciplinary procedures under FIFA and UEFA Disciplinary rules); chapter 24 on domestic and international doping-related cases in football, with an overview of the CAS jurisprudence in this respect; and finally chapter 23 on corruption and match-fixing (with a very short description of the FIFA and UEFA regulations).

Furthermore, the book offers extensive chapters in less discussed – yet of high importance – football topics, including: chapter 13 on image rights and key clauses in image rights agreements; chapter 14 on taxation (referring also to taxation issues in image rights and intermediary fees); chapter 15 on sponsoring and commercial rights, with a guide on the principal provisions in a football sponsoring contract and various types of disputes arising out of sponsorship rights; chapter 17 on personal injury, discussing the duty of care in football cases (from the U.K.); and chapter 18 on copyright law and broadcasting (with short references to the European law and the freedom to supply football broadcasting services).

Some chapters seem to have a more general approach to the subject matter at issue without necessarily focusing on football. These include chapters 27 (on mediation) and 22 (on privacy and defamation), and even though they were drafted by reputable experts in their fields, I would still like to see chapter 27 discuss in more detail the specific aspects, constraints and potential of mediation in football-related disputes as opposed to a general overview of mediation as a dispute-resolution mechanism. The same goes for chapter 22, but this could be explained by the fact that there are not necessarily numerous football-specific cases that are publicly available. 

As is internationally known, “football law” is male-dominated. This is also demonstrated in the fact that of the 53 contributing authors, all of them good colleagues and most of them renowned in their field, only eight are female (15%). Their opinions, however, are of great importance to the book due to the subject matter on which these women have contributed, such as player contracts (Jane Mulcahy QC), player transfers (Liz Coley), immigration issues in football (Emma Mason), broadcasting (Anita Davies) or disciplinary issues (Alice Bricogne).

The book is a success not only due to the great good work done by its editor, Nick De Marco QC but first and foremost due to its content, masterfully prepared by all 53 authors. On the one hand, the editor carefully delimited and structured the scope of each topic in a logical order and in order to avoid overlaps (a daunting task in case of edited volumes with numerous contributors like this one!), while on the other hand, all 53 authors followed a logical and consistent structure in their chapters and ensured an expert analysis that would have not been possible had this book been authored by one single person.  

Overall, I found this book to be a great initiative and a very useful and comprehensive guide written by some of the most reputable experts. The chapters are drafted in a clear and understandable way and the editor did a great job putting together some of the most relevant and topical legal and regulatory issues from the football field, thus filling a much-needed gap in the “football law” literature.

Can a closed league in e-Sports survive EU competition law scrutiny? The case of LEC - By Thomas Terraz

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


1.     Introduction

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

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

More...



I’m A Loser Baby, So Let’s Kill Transparency – Recent Changes to the Olympic Games Host City Selection Process - By Ryan Gauthier (Thompson Rivers University)

Editor's Note: Ryan Gauthier is Assistant Professor at Thompson Rivers University in Canada. Ryan’s research addresses the governance of sports organisations, with a particular focus on international sports organisations. His PhD research examined the accountability of the International Olympic Committee for human rights violations caused by the organisation of the Olympic Games.


Big June 2019 for Olympic Hosting

On June 24, 2019, the International Olympic Committee (IOC) selected Milano-Cortina to host the 2026 Winter Olympic Games. Milano-Cortina’s victory came despite a declaration that the bid was “dead” just months prior when the Italian government refused to support the bid. Things looked even more dire for the Italians when 2006 Winter Games host Turin balked at a three-city host proposal. But, when the bid was presented to the members of the IOC Session, it was selected over Stockholm-Åre by 47 votes to 34. 

Just two days later, the IOC killed the host selection process as we know it. The IOC did this by amending two sections of the Olympic Charter in two key ways. First, the IOC amended Rule 33.2, eliminating the requirement that the Games be selected by an election seven years prior to the Games. While an election by the IOC Session is still required, the seven-years-out requirement is gone.

Second, the IOC amended Rule 32.2 to allow for a broader scope of hosts to be selected for the Olympic Games. Prior to the amendment, only cities could host the Games, with the odd event being held in another location. Now, while cities are the hosts “in principle”, the IOC had made it so: “where deemed appropriate, the IOC may elect several cities, or other entities, such as regions, states or countries, as host of the Olympic Games.”

The change to rule 33.2 risks undoing the public host selection process. The prior process included bids (generally publicly available), evaluation committee reports, and other mechanisms to make the bidding process transparent. Now, it is entirely possible that the IOC may pre-select a host, and present just that host to the IOC for an up-or-down vote. This vote may be seven years out from the Games, ten years out, or two years out. More...


A New Chapter for EU Sports Law and European Citizenship Rights? The TopFit Decision - By Thomas Terraz

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

 

1.     Introduction

Christmas has come very early this year for the EU sports law world in the form of the Court of Justice of the European Union’s (CJEU) judgment in TopFit eV, Daniele Biffi v Deutscher Leichtathletikverband eV by exclusively analyzing the case on the basis of European citizenship rights and its application to rules of sports governing bodies that limit their exercise. The case concerned an Italian national, Daniele Biffi, who has been residing in Germany for over 15 years and participates in athletic competitions in the senior category, including the German national championships. In 2016, the Deutscher Leichtathletikverband (DLV), the German Athletics Federation, decided to omit a paragraph in its rules that allowed the participation of EU nationals in national championships on the same footing as German citizens. As a result, participation in the national championship was subject to prior authorization of the organizers of the event, and even if participation was granted, the athlete may only compete outside of classification and may not participate in the final heat of the competition. After having been required to compete out of classification for one national championship and even dismissed from participating in another, Mr. Biffi and TopFit, his athletics club based in Berlin, brought proceedings to a German national court. The national court submitted a request for a preliminary ruling to the CJEU in which it asked essentially whether the rules of the DLV, which may preclude or at least require a non-national to compete outside classification and the final heat, are contrary to Articles 18, 21 and 165 TFEU. Articles 18 and 21 TFEU, read together, preclude discrimination on the basis of nationality against European citizens exercising their free movement. The underlying (massive) question here is whether these provisions can be relied on by an amateur athlete against a private body, the DLV.

Covered in a previous blog, the Advocate General’s (AG) opinion addressed the case from an entirely different angle. Instead of tackling the potentially sensitive questions attached with interpreting the scope of European citizenship rights, the opinion focused on the application of the freedom of establishment because the AG found that participation in the national championships was sufficiently connected to the fact Mr. Biffi was a professional trainer who advertised his achievements in those competitions on his website. Thus, according to the AG, there was a sufficient economic factor to review the case under a market freedom. The CJEU, in its decision, sidelined this approach and took the application of European citizenship rights head on.

The following will dissect the Court’s decision by examining the three central legal moves of the ruling: the general applicability of EU law to amateur sport, the horizontal applicability of European citizenship rights, and justifications and proportionality requirements of access restrictions to national competitions. More...

International and European Sports Law – Monthly Report – April and May 2019. By Tomáš Grell

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

 

The Headlines 

Caster Semenya learns that it is not always easy for victims of discrimination to prevail in court

The world of sport held its breath as the Secretary General of the Court of Arbitration for Sport (CAS) Matthieu Reeb stood before the microphones on 1 May 2019 to announce the verdict reached by three arbitrators (one of them dissenting) in the landmark case involving the South African Olympic and world champion Caster Semenya. Somewhat surprisingly, the panel of arbitrators came to the conclusion that the IAAF’s regulations requiring female athletes with differences of sexual development to reduce their natural testosterone level below the limit of 5 nmol/L and maintain that reduced level for a continuous period of at least six months in order to be eligible to compete internationally at events between 400 metres and a mile, were necessary, reasonable and proportionate to attain the legitimate aim of ensuring fair competition in female athletics, even though the panel recognised that the regulations were clearly discriminatory. Ms Semenya’s legal team decided to file an appeal against the ruling at the Swiss Federal Tribunal. For the time being, this appears to be a good move since the tribunal ordered the IAAF at the beginning of June to suspend the application of the challenged regulations to Ms Semenya with immediate effect, which means that Ms Semenya for now continues to run medication-free.

 

Champions League ban looms on Manchester City

On 18 May 2019, Manchester City completed a historic domestic treble after defeating Watford 6-0 in the FA Cup Final. And yet there is a good reason to believe that the club’s executives did not celebrate as much as they would under normal circumstances. This is because only two days before the FA Cup Final the news broke that the chief investigator of the UEFA Club Financial Control Body (CFCB) had decided to refer Manchester City’s case concerning allegations of financial fair play irregularities to the CFCB adjudicatory chamber for a final decision. Thus, the chief investigator most likely found that Manchester City had indeed misled UEFA over the real value of its sponsorship income from the state-owned airline Etihad and other companies based in Abu Dhabi, as the leaked internal emails and other documents published by the German magazine Der Spiegel suggested. The chief investigator is also thought to have recommended that a ban on participation in the Champions League for at least one season be imposed on the English club. The club’s representatives responded to the news with fury and disbelief, insisting that the CFCB investigatory chamber had failed to take into account a comprehensive body of irrefutable evidence it had been provided with. They eventually decided not to wait for the decision of the CFCB adjudicatory chamber, which is yet to be adopted, and meanwhile took the case to the CAS, filing an appeal against the chief investigator’s referral.

 

The Brussels Court of Appeal dismisses Striani’s appeal on jurisdictional grounds

The player agent Daniele Striani failed to convince the Brussels Court of Appeal that it had jurisdiction to entertain his case targeting UEFA’s financial fair play regulations. On 11 April 2019, the respective court dismissed his appeal against the judgment of the first-instance court without pronouncing itself on the question of compatibility of UEFA’s financial fair play regulations with EU law. The court held that it was not competent to hear the case because the link between the regulations and their effect on Mr Striani as a player agent, as well as the link between the regulations and the role of the Royal Belgian Football Association in their adoption and enforcement, was too remote (for a more detailed analysis of the decision, see Antoine’s blog here). The Brussels Court of Appeal thus joined the European Court of Justice and the European Commission as both these institutions had likewise rejected to assess the case on its merits in the past.

 

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League of Legends European Championships - Challenging the Boundaries of Sport in EU Law - By Thomas Terraz

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


1.     Introduction

The surge of e-sports has stimulated a lively discussion on the essential characteristics of sport and whether e-sports, in general, can be considered a sport. However, one should not overlook the fact that e-sports encompass a broad range of video games that fundamentally differ from one another. Thus, as one commentator recently underlined, “the position of video games and the e-sport competitions based on them should be analysed on a case-by-case basis.”[1] In this spirit, this blog aims to provide a concise analysis of one of these e-sports, League of Legends (LoL), and one of its main competitions, the League of Legends European Championship (LEC), to assess whether it could be considered a sport in the sense of EU law. The LEC offers a fascinating opportunity to examine this issue especially since the previous European League of Legends Championship Series (EU LCS) was rebranded and restructured this year into the LEC. More...



Asser International Sports Law Blog | Is FIFA fixing the prices of intermediaries? An EU competition law analysis - By Georgi Antonov (ASSER Institute)

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

Is FIFA fixing the prices of intermediaries? An EU competition law analysis - By Georgi Antonov (ASSER Institute)

Introduction

On 1 April 2015, the new FIFA Regulations on Working with Intermediaries (hereinafter referred as the Regulations) came into force. These Regulations introduced a number of changes as regards the division of competences between FIFA and its members, the national associations. A particularly interesting issue from an EU competition law perspective is the amended Article 7 of the Regulations. Under paragraph 3, which regulates the rules on payments to intermediaries (also previously referred to as ‘agents’), it is recommended that the total amount of remuneration per transaction due to intermediaries either being engaged to act on a player’s or club’s behalf should not exceed 3% of the player’s basic gross income for the entire duration of the relevant employment contract. In the case of transactions due to intermediaries who have been engaged to act on a club’s behalf in order to conclude a transfer agreement, the total amount of remuneration is recommended to not exceed 3% of the eventual transfer fee paid in relation to the relevant transfer of the player.

In other words, the new Regulations recommend a benchmark cap on the percentage of remuneration that an intermediary engaged in negotiations with a view to concluding an employment contract or a transfer agreement can receive for his/her service. From the perspective of an antitrust lawyer such a provision immediately rings a bell of a potential distortion of competition. The Association of Football Agents (AFA), the representative body of 500 football agents in England, contends in a complaint to the European Commission that Article 7(3) of the Regulations distorts competition under EU law. In this regard, the present blog post will analyse whether Article 7(3) of the Regulations infringes Article 101 of the Treaty on the Functioning of the European Union (TFEU). If so, what would be the possible justifications and which are the requirements that must be fulfilled in the case at hand.

The general rule

To begin with, Article 101(1) of the TFEU stipulates that the following shall be prohibited: “all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of completion within the internal market”.[1] Thus, in order to find an infringement of Article 101(1), it must be established that 1) the FIFA Regulations constitute a decision by an association of undertakings; 2) that Article 7(3) of the Regulations may affect trade between EU Member States; and 3) that Article 7(3) of the Regulations has as its object or effect the prevention, restriction or distortion of competition within the internal market.

Decision by an association of undertakings

Even though, the concept of ‘decision by an association of undertakings’ is not defined in the founding treaties of the European Union, this notion has been interpreted broadly by the Court of Justice of the European Union (CJEU).[2] In order to determine whether the FIFA Regulations are to be regarded as a decision of an association of undertakings within the meaning of Article 101(1) TFEU it has to be established that the members of FIFA are undertakings for the purpose of EU competition law and that FIFA constitutes an association of undertakings. In Piau it was settled that “…it is common ground that FIFA’s members are national associations, which are groupings of football clubs for which the practice of football is an economic activity. These football clubs are therefore undertakings within the meaning of Article 81 EC and the national associations grouping them together are associations of undertakings… ”.[3] Therefore, from the judgement of the Court of First Instance (now the General Court) it is plain that FIFA constitutes an association of undertakings within the meaning of Article 101(1) TFEU. As regards the concept of ‘decision’, the General Court declared that since players’ agents receive a fee on a regular basis for the provision of their service, this constitutes an economic activity which does not fall within the scope of the specific nature of sport as defined by the previous CJEU’s case-law.[4] Moreover, the Regulations adopted by FIFA are binding  on national associations members of FIFA and on clubs, players and their agents and thus those regulations constitute a decision by an association of undertakings within the meaning of Article 101(1) TFEU.[5] In addition, in a recent case, the CJEU adjudged that even a price recommendation, regardless of its exact legal status, may be regarded as constituting such a decision.[6] Therefore, from the abovementioned it follows that based on the proximity of the legal issues discussed in Piau and the main research question at hand, it is likely that the new FIFA Regulations will be deemed a decision by an association of undertakings for the purpose of Article 101(1) TFEU.

Effect on trade between Member States

According to the Commission guidelines on the effect on trade, it is the agreement or decision that must be capable of affecting trade between Member States. It implies that there must be an impact on cross-border economic activity and that it must be possible to foresee with a sufficient degree of probability that the decision may have direct or indirect, actual or potential influence on trade between EU countries.[7] Since the Regulations at hand bind all members of FIFA, including all 28 EU Member States, and concern intermediaries operating in every EU country, there is undoubtedly a potential effect on trade between Member States. As a result of the provisions under Article 7(3) of the Regulations on Working with Intermediaries, every football player or club’s agent in the EU will be potentially restricted to receive a remuneration under the specified recommended price cap. Therefore, the second condition under Article 101(1) TFEU is also fulfilled.

Object or effect the prevention, restriction or distortion of competition

Article 101(1) (a) TFEU lists “…directly or indirectly fix purchase or selling prices…” as an object by an agreement that constitutes a restriction on competition.[8] Further, the Commission has continuously interpreted recommended pricing as falling under the category of price fixing in the sense of Article 101.[9] In this line of reasoning, the CJEU stated that in order to establish that a recommendation constitutes price-fixing, account must be taken of three factors: 1) the common interest between the members of the association, 2) the nature of the recommendation and 3) the statutes of the association.[10] The same test was later applied also by the Commission in its Fenex Decision.[11] Furthermore, in its Guidelines on the applicability of Article 101 to horizontal co-operation agreements, the Commission has acknowledged that any standard terms containing provisions which influence the prices charged to customers, including recommended prices, would constitute a restriction of competition by object. The General Court has also confirmed that recommended rates may constitute indirectly a pricing system binding its members.[12] Therefore, Article 101(1) (a) TFEU has been interpreted by the Commission and the CJEU as capable of encompassing “recommended prices” under the scope of “price-fixing”.

As regards the content of Article 7(3) of the Regulations, it clearly recommends a 3% benchmark cap on the remuneration an intermediary may claim as a result of his/her service. Firstly, even though the provision recommends the percentage cap, the national football associations are bound to implement the Regulations at the national level and the decision of whether to impose the remuneration cap is ultimately determined by the football clubs and the players.[13] By being able to limit the percentage of the commission that an intermediary can receive for a certain transaction, the relevant participating clubs and football players will have the common interest to secure a bigger ‘piece of the pie’ for themselves. Secondly, the nature of the recommended cap, even though non-binding, is detailed, clear and specific. It also appears in a binding legislative document, which national associations are required to fully implement. Nonetheless, even if they decide not to apply the recommended price cap, clubs and players will still be inevitably influenced by such a recommendation in their business activities.[14] Therefore, indirectly the nature of Article 7(3) encourages national associations to follow the recommended limit on agents’ remuneration. Lastly, the statutes of FIFA (Articles 2, 5, 10 and 13), give the Association the competence to draw up regulations and ensure their enforcement, regulate the transfer of players and oblige its members to fully comply with its regulations. As a consequence, even though the remuneration cap is a recommendation by FIFA it is highly likely that de facto this provision will lead to a coordinated behaviour among clubs and players as regards limiting the maximum payment that an intermediary can receive.

Typically, agents receive between 5-10% of their player’s gross income, so the limit of 3%, if enforced, would be a serious damaging shift for agents from a financial perspective as well.[15] Moreover, Article 7(3) of the Regulations constitutes a measure that could also be detrimental to the players and the quality of service that they receive. Due to the price cap, intermediaries will be discouraged to compete and improve. The goal of players’ having experienced and professional agents, who provide a high quality of services, is to assist and guide athletes in achieving the best possible deal in usually considered short careers.[16] As a result, the benchmark cap enshrined in Article 7(3) has the object of distorting competition on the market of football intermediaries’ services by both limiting the amount of remuneration and by indirectly decreasing the quality of the provided services.

At national level, not only the AFA in the UK has contested the Regulations, but also recently, after a complaint lodged by Rogon Sport Management, the German District Court (Landgericht Frankfurt/Main) suspended the implementation of the national regulation adopted by the German Football Association (DFB) transposing the FIFA’s Regulations. The District Court ruled that the limit on agents’ commissions in player transfers constitutes and unlawful restriction on the right to provide services even though DFB was following the recommendations stipulated by FIFA.

In the alternative, even if a restriction by object cannot be established, Article 7(3) still has the effect of distorting competition under Article 101(1). The criteria establishing whether a decision by an association is restrictive by its effect include defining the relevant market and assessing the possibility to access it, while taking into account existing and new competitors.[17] It must also be appraised whether the decision restricts actual or potential competition that would have existed in its absence.[18] Concerning the present discussion, Article 7(3) of the Regulations applies on the market of football intermediaries’ services in the EU. There will be undoubtedly an effect on the behaviour of existing intermediaries since normally their remuneration has been 5-10% and now it will be capped to 3%. This amendment could have the possible effect of lowering the level of competition on the market, decreasing the quality of the provided services and possibly driving some intermediaries out of business. In the absence of the decision at hand, these effect on competition would be significantly less likely to occur. As a consequence, the decision of FIFA to recommend a restriction on the remuneration of football intermediaries will have the effect of distorting competition.

Therefore, from the abovementioned analysis it follows that the recommended remuneration cap of 3% falls under the scope of Article 101(1) TFEU and constitute a decision by an association which has effect on trade between Member States and which restricts competition within the internal market.

Possible Justification

Although, a restriction within the meaning of Article 101 has been established, it remains to be analysed whether such a restriction may be justified. In Wouters, the CJEU held that not every decision of an association of undertakings which restricts the freedom of action of the parties necessarily falls within Article 101(1).[19] In order to apply this provision, account has to be taken of the overall context in which the decision was taken, its objectives. Subsequently, it has to be considered whether the consequential restrictive effects are inherent in the pursuit of those objectives.[20] In that context, it is important to verify whether the restrictions of competition are limited to what is necessary to ensure the implementation of legitimate objectives.[21] In other words, for a restriction to be justified, there must be a legitimate reason and the restrictive measure has to be necessary and proportionate for the achievement of the legitimate aim.

In Piau, the Regulation of Agents was justified as it aimed “to raise the professional and ethical standards for the occupation of players’ agent in order to protect players, who have a short career”.[22] In this case, the General Court ruled that the Commission did not err in its assessment by deciding that the licence system in place, which imposes qualitative rather than quantitative restrictions, seeks to protect players and clubs and takes into consideration the risks incurred by players in the event of poorly negotiated transfers.[23] Moreover, according to FIFA, the European Commission, EPFL and FIFPro, it is indisputable that the aim of the new Regulations is to enhance financial transparency related to players’ transfers and the protection of minor players. In this regard, even though the Commission or the CJEU has not yet decided upon the legitimacy of Article 7(3), it can be fairly assumed that the percentage cap, aiming to protect the exploitation of football players through enhanced financial transparency, can be considered as a legitimate aim.

Nevertheless, contrary to Piau, which concerned the licensing procedure of an agent, the present Article 7 stipulates a qualitative criterion rather a quantitative one. Furthermore, it is dubious whether such a recommended benchmark is suitable for achieving the legitimate aim of protecting football players. According to some commentators, it is foreseeable that the remuneration cap will lead to underhand, illegal payments so that intermediaries can maintain the level of compensation that they receive. As a result, intermediaries will further the very problem that FIFA intends to resolve by behaving in a manner that completely negates the primary purpose of the regulations. It can thus, lead to agents looking for new inventive ways to secure payment, for instance through higher percentage for work carried out in relation to the player’s commercial rights or signing longer representation contracts, which in turn  can also result in exploiting players. Some other negative effects may be the emergence of more persons involved in player transfers (lawyers, accountants or financial advisors), leading to less legal certainty and more disputes over the question who is liable for a certain transaction. Furthermore, a protection of minor players (Article 7) and ensuring financial transparency (Article 6) are already regulated in other provisions of the Regulations and thus a 3% cap seems to be redundant limitation towards the achievement of those goals.

Instead, other less restrictive possibilities for attaining the protection of football players are available. As proposed by AFA, a model of self-regulation and accreditation of intermediaries can be set up in co-operation with the national football associations.[24] By such a system, clubs and players could ensure themselves that an intermediary is of a particular standard, even though they would have the freedom to conclude a contract with those agents who do not fulfil a binding accreditation standard.[25] Such a system will not only be more preferred than the current FIFA’s Regulations but it will also be compatible with EU competition rules.[26] Other commentators consider that a more efficient option would be for FIFA not to cap agent fees but rather to strengthen existing ‘fit and proper’ enforcement measures to ensure global compliance with those standards. In this way, the fear expressed by FIFPro that “unnecessarily large amount of money disappears from professional football through agents” will be countered by stricter enforcement measures without restricting competition on the market. Another option for FIFA to avoid anti-competitive effects is for example, the publication of historical or survey-based price information by independent parties. Such regular publications might provide more trustworthy price guides reflecting the dynamics of the relevant market, enhance price transparency and at the same time avoid distortion of competition.

In any event, the measure in question appears to go beyond what is necessary. Typically agents receive between 5-10% of the player’s gross income and thus, a 3% recommended cap is seriously damaging the financial interests of intermediaries. Here, it ought to be mentioned that during the consultation process at FIFA’s Executive Committee, which led to the approval of the Regulations, all relevant stakeholders were present (member associations, clubs, FIFPro, professional football leagues, etc.) with the exception of any intermediaries’ representatives. Subsequently, the interests of agents were neglected during the discussion and the outcome was a stronger bargaining power granted to clubs and players in relation to transfers’ negotiations. This imbalance might lead to an asymmetry of information between agents and players and thus, to a distortion of the market. Further, not only is the content of Article 7(3) too strict but it is also too general and broad, encompassing all intermediaries and not foreseeing any exceptional circumstances. There is also no procedure in place, which allows agents to prove their qualifications and loyalty. As a result, even though an intermediary must have an impeccable reputation and is not allowed to charge minor football players, he/she is still presumed to be abusing his/hers powers and there is no mechanism allowing an intermediary to rebut this presumption.

Since, Article 7(3) of the Regulations does not satisfy the broad criteria for justification in Wouters and API, it is highly unlikely that it will pass through the narrow efficiencies test laid down in Article 101(3) TFEU. Hence, this assessment will not be analysed in this blog post.

Therefore, regardless of the fact that Article 7(3) of the Regulations serves a legitimate aim, it is dubious whether this particular measure is suitable for the achievement of the said goal and it is apparent that its restrictive effects go beyond what is necessary.

Conclusion

In this post, the potential negative effects of Article 7(3) of the FIFA Regulations on Working with Intermediaries on EU competition law were considered. It was concluded that pursuant to the Piau case and the Commission’s decisional practice, such a recommendation constitutes a decision of an association of undertakings which is capable of distorting competition within the meaning of Article 101(1). Next, it was analysed whether the legitimate reason of preventing the abusive practices of players’ exploitation can justify the restriction on competition. The author’s view is that a 3% cap on the commission granted to agents is not the most appropriate measure to do so and thus it constitutes a disproportionate restriction on EU competition rules.



[1] Consolidated version of the Treaty on the Functioning of the European Union (2012) OJ C326/01 art 101.

[2] Case C-309/99 Wouters and Others [2002] ECR I-1577 para 64; Case C-35/96 Commission v Italy [1998] ECR I-3851 para 60; A recommendation by an Association can also constitute a decision, see Case C 96-82 IAZ v Commission [1983] ECR 3369 paras 20-21.

[3] Case T-193/02 Piau v Commission [2005] ECR II-0209 para 69.

[4] Ibid, para 73.

[5] Case T-193/02 Piau v Commission [2005] ECR II-0209 para 75. See also Case C-45/85 Verband der Sachversicherer v Commission [1987] ECR 405 paras 29-32 and Case C-309/99 Wouters [2002] ECR I-1577 para 71.

[6] Case C-136/12 Consiglio nazionale dei geologi v Autorità garante della concorrenza e del mercato (ECJ 18 July 2013) para 46; See also Case C-45/85 Verband der Sachversicherer v Commission [1987] ECR 405 para 32.

[7] Ibid, paras 19-24.

[8] Consolidated version of the Treaty on the Functioning of the European Union (2012) OJ C326/01 art 101(1) (a).

[9] Belgian Architects’ Association [2005] OJ L4/10 paras 3 and 4; Case COMP/37.975 PO/Yamaha [2003] para 141; See also, a tariff recommendation issued by an Association of undertakings was considered to be anticompetitive in Fenex [1996] OJ L181/28 para 74.

[10] Case C-45/85 Verband der Sachversicherer v Commission [1987] ECR 405 paras 29-31.

[11] Fenex [1996] OJ L181/28 para 47.

[12] Joined Cases T-213/95 & T-18/96 Stichting Certificatie Kraanverhuurbedrijf (SCK) and Federatie van Nederlandse Kraanbedrijven (FNK) v Commission [1997] ECR II-1739 paras 159 and 161-164.

[13] See the text of Article 7 of the Regulations.

[14] See Fenex [1996] OJ L181/28 para 73.

[15] UEFA ‘Club Licensing Benchmarking Report 2012’ < http://www.uefa.org/MultimediaFiles/Download/Tech/uefaorg/General/02/09/18/26/2091826_DOWNLOAD.pdf> page 54.

[16] Case T-193/02 Piau v Commission [2005] ECR II-0209 para 102.

[17] Case C-234/89 Delimitis [1991] ECR I-0935 paras 14, 16 and 18.

[18] Ibid, para 19 and 21.

[19] Case C-309/99 Wouters and Others [2002] ECR I-1577 para 97.

[20] Ibid.

[21] Joined Cases C-184 to 187, 194, 195 & 208/13 API (CJEU 4 September 2014) para 48; Case C-519/04 P Meca-Medina [2006] ECR I-6991 para 47 and Case C-136/12 Consiglio nazionale dei geologi v Autorità garante della concorrenza e del mercato (ECJ 18 July 2013) para 54.

[22] Case T-193/02 Piau v Commission [2005] ECR II-0209 para 102.

[23] Ibid, para 100.

[24] Nick De Marco, ‘The New FA Football Intermediaries Regulations and the Disputes Likely to Arise’ (Blackstone Chambers, 27 April 2015) pages 13-14.

[25] Ibid.

[26] Ibid.

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