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

The entitlement to Training Compensation of “previous” clubs under EU Competition Law. By Josep F. Vandellos Alamilla

Editor’s note: Josep F. Vandellos is an international sports lawyer associated to RH&C (Spain). He is also a member of the Editorial Board of the publication Football Legal and a guest lecturer in the ISDE-FC Barcelona Masters’ Degree in Sports Management and Legal Skills.


Article 6 of Annexe IV (Training compensation) of the FIFA-RSTP (Ed. 2016) contains the so-called “Special Provisions for the EU/EEA” applicable to players moving from one association to another inside the territory of the European Union (EU) or the European Economic Area (EEA).
The provisions regarding training compensation result from the understanding reached between FIFA and UEFA with the European Union in March 2001[1], and subsequent modifications introduced in the FIFA-RSTP revised version of 2005 to ensure the compatibility of the transfer system with EU law.[2]
This blog will focus on the exception contained in article 6(3) Annexe IV of the FIFA-RSTP. According to this article, when “the former club” fails to offer a contract to the player, it loses its right to claim training compensation from the players’ new club, unless it can justify that it is entitled to such compensation. Instead, the right of “previous clubs” to training compensation is fully preserved irrespective of their behaviour with the player.[3] From a legal standpoint, such discrimination between the “former club” and the “previous clubs” raises some questions that I will try to address in this paper. More...



The EU State aid and sport saga: The Real Madrid Decision (part 2)

This is the second and final part of the ‘Real Madrid Saga’. Where the first part outlined the background of the case and the role played by the Spanish national courts, the second part focuses on the EU Commission’s recovery decision of 4 July 2016 and dissects the arguments advanced by the Commission to reach it. As will be shown, the most important question the Commission had to answer was whether the settlement agreement of 29 July 2011 between the Council of Madrid and Real Madrid constituted a selective economic advantage for Real Madrid in the sense of Article 107(1) TFEU.[1] Before delving into that analysis, the blog will commence with the other pending question, namely whether the Commission also scrutinized the legality of the operation Bernabeú-Opañel under EU State aid law. By way of reminder, this operation consisted of Real Madrid receiving from the municipality the land adjacent to the Bernabéu stadium, while transferring in return €6.6 million, as well as plots of land in other areas of the city. More...

Resolution of Disputes Arising From Football Contracts in Turkey. By N. Emre Bilginoglu

Editor’s note: N. Emre Bilginoglu[1] is a lawyer based in Istanbul. His book entitled “Arbitration on Football Contracts” was published in 2015.


Introduction

With a total market value of approximately 911 million EUR, the Turkish Super League ranks as one of the prominent football leagues in Europe. Five of the eighteen teams that make up half of the total market value are based in Istanbul, a busy megalopolis that hosts a population of fifteen million inhabitants.[2] As might be expected, the elevated market value brings forth a myriad of disputes, mainly between the clubs and the players. However, other crucial actors such as coaches and agents are also involved in some of the disputes. These actors of the football industry are of all countries, coming from various countries with different legal systems.

One corollary of rapid globalisation is the development of transnational law, which is quite visible in the lex sportiva.[3] Like foreign investors, foreign actors of the sports industry look for some legal security before signing a contract. FIFA does protect these foreign actors in some way, providing players and coaches legal remedies for employment-related disputes of an international dimension. But what if the legal system of the FIFA member association does not provide a reasonable legal remedy for its national actors?[4] More...


The World Anti-Doping System at a Crossroads

“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”

Tomorrow the Foundation Board of the World Anti-Doping Agency (WADA) will gather in Glasgow for its most important meeting since the creation of the Agency. Since the broadcasting of a documentary alleging systematic doping in Russian athletics by the German public broadcaster in December 2014, the anti-doping world has been in disarray. The various independent investigations (the Pound Report and the McLaren Report) ordered by WADA into doping allegations against Russian athletes have confirmed the findings of the documentary and the truth of the accusations brought forward by Russian whistle-blowers. Undeniably, there is something very rotten in the world anti-doping system. The current system failed to register a widespread, and apparently relatively open, state-sponsored scheme aimed at manipulating any doping test conducted in Russian territory. Moreover, it was not WADA that uncovered it, but an independent journalist supported by courageous whistle-blowers. More...


The EU State aid and sport saga: The Real Madrid Decision (part 1)

Out of all the State aid investigations of recent years involving professional football clubs, the outcome of the Real Madrid case was probably the most eagerly awaited. Few football clubs have such a global impact as this Spanish giant, and any news item involving the club, whether positive or negative, is bound to make the headlines everywhere around the globe. But for many Spaniards, this case involves more than a simple measure by a public authority scrutinized by the European Commission. For them, it exemplifies the questionable relationship between the private and the public sector in a country sick of never-ending corruption scandals.[1] Moreover, Spain is only starting to recover from its worst financial crisis in decades, a crisis founded on real estate speculation, but whose effects were mostly felt by ordinary citizens.[2] Given that the Real Madrid case involves fluctuating values of land that are transferred from the municipality to the club, and vice versa, it represents a type of operation that used to be very common in the Spanish professional football sector, but has come under critical scrutiny in recent years.[3] More...

International and European Sports Law – Monthly Report – October 2016. By Kester Mekenkamp.

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
We are looking for an International Sports Law Intern (with a particular interest in the CAS)! More information can be found here.


The (terrible) State of the World Anti-Doping System

The fight against doping is still on top of the agenda after the Russian doping scandal. The national anti-doping organizations (NADOs) have reiterated their call for an in depth reform of the World Anti-Doping Agency at a special summit in Bonn, Germany. These reforms are deemed urgent and necessary to “restore confidence of clean athletes and those who value the integrity of sport” and secure “the public’s desire for a fair and level playing field”. The NADOs propose, amongst others things, to separate the investigatory, testing and results management functions from sports organizations, and to remove sports administrators from crucial anti-doping executive functions. More...




Taking the Blue Pill or the Red Pill: Should Athletes Really Check their Medications against the Prohibited List Personally? - A Comment by Marjolaine Viret (University of Neuchâtel )

Editor's Note:  Marjolaine is an attorney admitted to the Geneva bar (Switzerland) who specialises in sports and life sciences.   She currently participates as a scientific collaborator at the University of Neuchâtel on a research project to produce the first article-by-article legal commentary of the 2015 World Anti-Doping Code. Her latest book Evidence in Anti-Doping at the Intersection of Science & Law was published in 2016 in the International Sports Law Book Series of T.M.C. ASSER Press.


INTRODUCTION

On 30 September 2016, a panel of the Court of Arbitration for Sport (“CAS”) rendered its award in the matter opposing high-profile tennis player Maria Sharapova to the International Tennis Federation (“ITF”). Maria Sharapova was appealing the two-year ban imposed on her by the ITF Tribunal in June 2016 for her use of Meldonium, a substance newly added to the WADA Prohibited List 2016[1]. Since neither the ITF nor WADA had chosen to challenge the Tribunal’s decision, the stakes of the case were rather simple: would the player convince the CAS panel that she should benefit from a finding of “No Significant Fault or Negligence”[2], thereby allowing for a reduction of the sanction down to a minimum of one year, or should the decision of the Tribunal be upheld? In its award, the CAS panel decided to grant such finding and reduced the sanction to 15 months.

This blog does not purport to be a ‘comment’ on the CAS award. Rather, it seeks to place the Sharapova matter into a broader context with respect to a specific issue: the expectations on Athletes when it comes to their awareness of the prohibited character of a substance, specifically when taking a medication[3]. In July 2016, I presented at the T.M.C Asser Institute in The Hague various current challenges of anti-doping that the Meldonium cases exposed (see the video here). One of these challenges concerned the modalities for including new substances onto the Prohibited List. This blog represents a follow-up on my presentation, in the light of the findings contained in the CAS award. More...



Case note: State aid Decision on the preferential corporate tax treatment of Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona

On 28 September 2016, the Commission published the non-confidential version of its negative Decision and recovery order regarding the preferential corporate tax treatment of Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona. It is the second-to-last publication of the Commission’s Decisions concerning State aid granted to professional football clubs, all announced on 4 July of this year.[1] Contrary to the other “State aid in football” cases, this Decision concerns State aid and taxation, a very hot topic in today’s State aid landscape. Obviously, this Decision will not have the same impact as other prominent tax decisions, such as the ones concerning Starbucks and Apple

Background

This case dates back to November 2009, when a representative of a number of investors specialised in the purchase of publicly listed shares, and shareholders of a number of European football clubs drew the attention of the Commission to a possible preferential corporate tax treatment of the four mentioned Spanish clubs.[2]More...



International and European Sports Law – Monthly Report – September 2016. By Kester Mekenkamp

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

September hosted the very last bit of the sport summer 2016, most notably in the form of the Rio Paralympic Games. Next to the spectacular achievements displayed during these games, in the realm of sports law similar thrilling developments hit town. The first very much expected #Sportslaw highlight was the decision by the German Bundesgerichtshof in the case concerning SV Wilhelmshaven. The second major (less expected) story was the Statement of Objections issued by the European Commission against the International Skating Union.More...


De- or Re-regulating the middlemen? The DFB’s regulation of intermediaries under EU law scrutiny at the OLG Frankfurt. By Antoine Duval and Kester Mekenkamp.

Football intermediaries, or agents, are again under attack in the news. For some, corrupt behaviour has become endemic in football’s culture. It is always dangerous to scapegoat a whole profession or a group of people. Many intermediaries are trying their best to lawfully defend the interests of their clients, but some are not. The key focus should be on providing an adequate legal and administrative framework to limit the opportunities for corrupt behaviour in the profession. This is easier said than done, however. We are dealing with an intrinsically transnationalized business, often conducted by intermediaries who are not subjected to the disciplinary power of federations. Sports governing bodies are lacking the police power and human resources necessary to force the intermediaries to abide by their private standards. In this context, this blog aims to review a recent case in front of the regional court of Frankfurt in Germany, which highlights the legal challenges facing (and leeway available to) national federations when regulating the profession. More...

Asser International Sports Law Blog | The proportionality test under Art. 101 (1) TFEU and the legitimacy of UEFA Financial fair-play regulations: From the Meca Medina and Majcen ruling of the European Court of Justice to the Galatasaray and AC Milan awards of the Court of Arbitration for Sport – By Stefano Bastianon

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

The proportionality test under Art. 101 (1) TFEU and the legitimacy of UEFA Financial fair-play regulations: From the Meca Medina and Majcen ruling of the European Court of Justice to the Galatasaray and AC Milan awards of the Court of Arbitration for Sport – By Stefano Bastianon

Editor’s note: Stefano Bastianon is Associate Professor in EU Law and EU sports law at the University of Bergamo and lawyer admitted to the Busto Arsizio bar. He is also member of the IVth Division of the High Court of Sport Justice (Collegio di Garanzia dello sport) at the National Olympic Committee.

 

1. On the 20th July 2018, the Court of Arbitration for Sport (hereinafter referred to as “CAS”) issued its decision in the arbitration procedure between AC Milan and UEFA. The subject matter of this arbitration procedure was the appeal filed by AC Milan against the decision of the Adjudicatory Chamber of the UEFA Financial Control Body dated 19th June 2018 (hereinafter referred to as “the contested decision”). As many likely know, the CAS has acknowledged that, although AC Milan was in breach of the break-even requirement, the related exclusion of the club from the UEFA Europe League was not proportionate. To date, it is the first time the CAS clearly ruled that the sanction of exclusion from UEFA club competitions for a breach of the break-even requirement was not proportionate. For this reason the CAS award represents a good opportunity to reflect on the proportionality test under Art. 101 TFEU and the relationship between the landmark ruling of the European Court of Justice (hereinafter referred to as “ECJ”) in the Meca Medina and Majcen affair and the very recent case-law of the CAS.

2. According to the contested decision, AC Milan was guilty for failing to comply with Articles 58 to 63 of the UEFA Financial fair-play regulations on the break-even requirement. As a consequence the Adjudicatory Chamber has excluded AC Milan from participating in the next UEFA Europe League for which AC Milan has already qualified (2018-2019) at the end of the 2017-2018 Italian football championship. The appeal filed at the CAS by AC Milan was mainly aimed at seeking the annulment of the contested decision and ordering UEFA to enter into a settlement agreement.

3. The theory of proportionality test under Art. 101(1) TFEU in sports matters goes back to the ECJ’s ruling in the 2006 Meca Medina and Majcen case, while, in general terms, this theory was enunciated by the ECJ for the first time in the 1994 DLG case and then repeated in the 2002 Wouters and Others case although in a slightly different way.

In the DLG case the ECJ has ruled that:

«in order to escape the prohibition laid down in Article 85(1) of the Treaty, the restrictions imposed on members by the statutes of cooperative purchasing associations must be limited to what is necessary to ensure that the cooperative functions properly and maintains its contractual power in relation to producers (…). In addition, it is necessary to establish whether the penalties for non-compliance with the statutes are disproportionate to the objective they pursue and whether the minimum period of membership is unreasonable». 

Eight years later, in the Wouters and Others case the ECJ established the following principles:

(i) not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Art. 101(1) of the Treaty;

(ii) for the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects; and

(iii) it has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives.

Unlike the DLG case, in the Wouters and Others ruling the ECJ did not expressly refer to the concept of proportionality, but preferred to recall the concept of inherent restrictions. However, from the overall wording of the ECJ, it is clear that in both cases it tried to apply in the antitrust sector the same theory of mandatory requirements developed in relation to the internal market.

4. On the contrary, in the Meca Medina and Majcen case, the ECJ expressly referred to the concept of proportionality. In particular, the ECJ has literally quoted the passage of the Wouters and Others ruling where it is stated that:

«not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC. For the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (Wouters and Others, par. 97)». 

However, unlike the Wouters and Others case, the ECJ has added that the effects restrictive of competition must also be proportionate to the objectives pursued.

More specifically, in anti-doping issues the test of proportionality is a means to avoid the risk that a given rule (and the sanctions imposed in case of a breach of it) may prove excessive by virtue of:

(i) firstly, the conditions laid down for establishing the dividing line between circumstances which amount to doping in respect of which penalties may be imposed and those which do not, and

(ii) secondly, the severity of those penalties (in the case at issue the penalty was a two year suspension).

Regarding the first point, the ECJ has underlined that the dividing line was determined by the threshold of 2 ng/ml of urine above which the presence of Nandrolone in an athlete's body constitutes doping. Based on documents before the Court, the ECJ could conclude that the average endogenous production observed in all studies then published was 20 times lower than 2ng/ml of urine and that the maximum endogenous production value observed was nearly a third lower. As a consequence, the ECJ rejected the argument according to which the threshold was set at such a low level that it should have been regarded as not taking sufficient account of the phenomenon of the endogenous production of Nandrolone.

Regarding the second point, instead, the ECJ simply observed that: 

«since the appellants have, moreover, not pleaded that the penalties which were applicable and were imposed in the present case are excessive, it has not been established that the anti-doping rules at issue are disproportionate».

This is the most critical passage of the ruling as one could wonder what would happen if the plaintiffs had contested the proportionality of the penalties. In such a case the ECJ should have examined the substance of the plea and stated whether the two year suspension was proportionate or not. However, in the event that the ECJ had come to the conclusion that the penalty was not proportionate, the anti-doping rules at issue should have been declared null and void unless it was possible to prove that the conditions of Art. 101 (3) TFEU were fulfilled.

The same reasoning was applied by the EU Commission in the ISU decision concerning the Eligibility rules enacted by the International Skating Union. In its decision, the Commission clearly underlined that:

«even if the Eligibility rules and their consequential effects restrictive of competition were inherent in the pursuit of any legitimate objective, the sanctions imposed on athletes in case of breach of the Eligibility rules are manifestly disproportionate» (par. 260).[1]

Thus, in sports matters there seem to be no doubt that the proportionality test must involve also the sanctions imposed on athletes. As already said, in the ISU decision, the Commission has clearly underlined that the Eligibility rules were not proportionate to achieve legitimate objectives in particular in view of the disproportionate nature of the ISU’s ineligibility sanctions. More specifically the Commission has pointed out that:

«the 2014 Eligibility rules provided for the heaviest sanction of a lifetime ban, even for the first infringement of the Eligibility rules, without taking into consideration the circumstances of the case (…). For the purposes of the assessment of the proportionality of the Eligibility rules it is however not relevant how many times the ISU has actually imposed sanctions. The fact that a lifetime ban was imposed only once on an athlete may even underline the strong deterrent effect of the sanctions. Although the sanctions system has been modified in the General Regulations 2016, the sanctions remain disproportionately punitive, as they provide for periods of ineligibility that go up to five years for negligent participation in unauthorized events, up to 10 years for athletes that knowingly participate in unauthorised events and a lifetime ban for athletes participating in unauthorised events endangering, inter alia, the ‘ISU jurisdiction’. These are disproportionately heavy sanctions in particular in view of the fact that on average a professional athlete's entire career is around eight years long. Also the imposition of a five-year ban is therefore likely to impact very heavily on an athlete's career who, after years of training and sacrifices, loses the possibility to gain income through the participation in the ISU's international events». 

This reasoning clearly shows that the Commission has considered the sanctions imposed to be disproportionate, not simply the rule forbidding participation in unauthorized events.

5. To date, neither the EU Commission nor the ECJ has had the opportunity to comment on the compatibility of the UEFA Financial Fair-play rules with EU Competition law. Indeed, regarding the Striani affair, the Commission has dismissed the complaint on procedural grounds only (the lack of Community interest), while the ECJ has declared a reference for preliminary ruling send by a Belgian court manifestly inadmissible and therefore did not rule on the substance of the case. As a consequence, to date there is no European formal decision that has assessed the compatibility of UEFA Financial Fair-play rules with EU law.

This opportunity, however, was offered to the CAS in the context of the Galatasaray/UEFA award (2016/A/4492). To fully understand the case one must go back to the 2nd March 2016 when the Adjudicatory Chamber of the UEFA Financial Control Body issued a decision in which it decided that Galatasaray has failed to comply with the terms of the Settlement Agreement and imposed on Galatasaray an exclusion from participating in the next UEFA Club competition for which it would otherwise qualify in the next two seasons.

On the 11th March 2016, Galatasaray filed an appeal with the CAS to challenge the decision of the Adjudicatory Chamber of the UEFA Financial Control Body. Basically, the arguments put forward by Galatasaray were based:

(i) on the alleged incompatibility of the break-even rule with EU law (namely, Art. 101 TFEU on cartels, Art. 102 TFEU on abuse of dominant position, Art. 63 TFEU on free movement of capital, Art. 56 TFEU on free movement of services and Art. 45 TFEU on free movement of workers); and, in the event the first argument is rejected,

(ii) on the alleged disproportionate nature of the sanctions imposed by UEFA.

It is very interesting to note that from the point of view of Galatasaray the incompatibility of the break-even rule with EU law is something different and completely divorced from the proportionate character of the sanction. Indeed, the latter argument is invoked only in the event the first argument is rejected. In other words, according to this line of defence, the compatibility of the break-even rule with EU principles must be assessed only on the basis of the alleged restrictive effects on competition and the (alleged legitimate) objectives pursued, without considering the sanctions imposed.

In line with this approach, the CAS examined the two arguments put forward by Galatasaray separately. Regarding the relationship between the break-even rule and EU Competition law, the CAS reasoning can be summarized as follows:

(i) UEFA Financial fair-play regulations have neither the object nor the effect of restricting competition because: (a) UEFA Financial fair-play regulations do not prevent the clubs from competing among themselves on the pitch or in the acquisition of football players; (b) they prevent the distortion of competition by overspending; (c) clubs are free to pay the players as much as the wish provided that salaries are covered by revenues; (d) large dominant clubs have always existed and will always exist and therefore the alleged ossification of the structure market is a nonsense; (d) overspending is not completely prohibited because the break-even rule only applies over rolling periods of three years; and

(ii) in any case, even assuming that the break-even rule has anticompetitive effects, the objectives sought by UEFA Financial fair-play regulations do appear legitimate and their alleged restrictive effects inherent to the achievement of those objective. Put simply: if UEFA intends to control the level of indebtedness of European football clubs, the imposition of limits to spending beyond revenues is a natural element of a financial discipline seeking that objective.

By contrast, regarding the proportionality of the sanction imposed by the UEFA, the reasoning of the CAS is completely based on external factors which allegedly affected the finances of Galatasaray (i.e., the Syrian refugee crisis, the terrorist attacks in Turkey, the Turkish major match-fixing scandal, the exchange rate and rate fluctuations, the national economic downturn in Turkey, the inefficiencies of the market and the management changes). However, according to the CAS, this argument cannot be accepted because the club failed to provide the Panel with the accounting evidence of how and in which proportion each of these factors would have caused the break-even deficit. Moreover, the CAS has underlined that the sanction was not disproportionate because:

(i) it was imposed as a sanction for a second violation (i.e., after the Settlement Agreement which presupposes the previous violation of the rules on financial fair play);

(ii) an exclusion limited in time (one season) from the UEFA competitions is consistent with the principle of equal treatment and fair competition, as it protects the club respecting the UEFA Financial Fair-play regulations and does not prevent future compliance with them.


It follows from the foregoing that, according to the CAS the proportionate character of sanctions listed in the UEFA Financial Fair-play regulations cannot affect the evaluation of the legitimacy of these regulations under Art. 101 TFUE.

6. To some extent the AC Milan/UEFA case is similar to the Galatasaray case. Both clubs have failed to comply with the break-even requirement; both clubs have been sanctioned with the exclusion for one season from the UEFA competitions; both clubs have contested the proportionality of the sanction. Unlike Galatasaray, however, AC Milan was denied the possibility to enter into a Settlement Agreement[2]. On the contrary, it is worthy to note that the CAS has confirmed the decision of the Adjudicatory Chamber of the UEFA CFCB, which was rendered on the 19th June 2018, establishing that AC Milan had failed to fulfil the break-even requirement. However, it has annulled the decision to the extent that it has excluded AC Milan from participating in the next UEFA Club competition for which it would otherwise qualify in the next two seasons (i.e., the 2018-19 and 2019-20 seasons), arguing that the sanction was not proportionate. As a consequence, the CAS has referred back the case to the Adjudicatory Chamber to issue a proportionate disciplinary measure. The press release issued on the 20th July 2018 (the full text of the award is not yet available) indicates that the decision to annul the sanction and refer back the case to the Adjudicatory Chamber is based on the following arguments:

(i) some important elements regarding the financial situation of the Club and the recent change in the Club’s ownership have not been properly assessed by the Adjudicatory Chamber, or could not be properly assessed at the moment when the contested decision was rendered;

(ii) the Adjudicatory Chamber is in a better position than the CAS Panel to issue a new proportionate disciplinary measure on the basis of the current financial situation of the Club.

Despite the differences between the two cases, it is interesting to note that in the Galatasaray case the CAS assessed the sanction imposed by the Adjudicatory Chamber on the merits and found it proportionate. To the contrary, in the AC Milan case the CAS has assessed the sanction on the merits only to state that it was not proportionate, but refrained from saying which other sanction could be considered proportionate, arguing that the Adjudicatory Chamber is in a better position than the CAS to issue a new proportionate disciplinary measure. In other words, the CAS seems to say that it has no problem to assess the proportionality of a given sanction ; however, if it deems that the sanction is not proportionate, it is not for the CAS to replace the penalty imposed with another sanction.

7. Comparing the awards in the Galatasaray and AC Milan cases with the ruling in Meca Medina and Majcen affair some aspects deserve to be underlined. First of all, according to the case-law of the ECJ in sports matters, the evaluation of the restrictive effects of a rule necessarily presupposes the analysis of the proportionate character of the sanction imposed in the event of violation of that rule. On the contrary, according to the case-law of the CAS the analysis of the proportionate character of a sanction necessarily presupposes a positive evaluation of the legitimate character of the objectives pursued by the rule and its inherence to those objectives. In other words, it seems that according to the CAS the disproportionate nature of a sanction is not capable of affecting the legitimacy of the rule whose violation determined that sanction. Although the full text of the award is not yet available from the AC Milan/UEFA case it emerges that the disproportionate nature of the penalty imposed only resulted in the referral of the case to the Adjudicatory Chamber for the imposition of another sanction. Although apparently in line with the Wouters and Others case, this approach is clearly in contrast with the Meca Medina and Majcen case and, more generally, with the whole theory of mandatory requirements in the field of the internal market.

To this regard it is of paramount importance not to underestimate the fundamental difference between rules which are applied a priori and rules that are applied a posteriori. As also recognized by the CAS in the well-known ENIC case:

«rules that are applied a priori tend to prevent undesirable situations which might prove difficult or useless to deal with afterwards, rather than imposing a penalty on someone guilty of something. On the other hand, rules that are applied a posteriori are bound to react to specific behaviours. For example, under EC law and several national laws, rules on mergers are applied a priori, whereas rules on abuses of dominant position are applied a posteriori. Merger operations are checked before they actually take place, and are blocked if the outcome of the merger would be the establishment of a dominant position because of the possible negative consequences on the market and not because the individuals owning or managing the merging undertakings are particularly untrustworthy and the company after the merger is expected to abuse of its dominant position (…). All such a priori rules are applied on a preventive basis, with no appraisal of any specific wrongdoing and no moral judgement on the individuals or companies concerned. On the other hand, rules setting forth obligations and corresponding penalties or sanctions, such as criminal or disciplinary rules, can be applied only after someone has been found guilty of having violated an obligation». 

In this context it is clear that rules applied a posteriori (such as the UEFA Financial Fair-play regulations) consist of both the obligations set forth and the corresponding sanctions. In addition, it is not possible nor correct to arbitrarily separate the obligation from the sanction. Indeed, the fact that in the Meca Medina and Majcen ruling the proportionality test was referred precisely to the restrictive effects and not to the prohibition of doping cannot be ignored. The prohibition of doping as such, without the corresponding sanctions, does not have any restrictive effect on competition.

Secondly, the sanctioning system envisaged by the UEFA does not provide clear and transparent criteria as to how the sanctions are to be applied. There is no scale to measure and define the seriousness of the violation and no provision illustrating the relationship between the violation and the sanction that can be imposed. It is interesting to note that the same reasoning was applied by the EU Commission in the ISU decision. And everyone knows the outcome of this case.

Thirdly, the choice of the CAS to refer back the case to the Adjudicatory Chamber could mean that the AC Milan/UEFA case is not yet closed definitively. According to Art 29 of the Procedural rules governing the UEFA Club Financial Control Body in case of a breach of the UEFA Financial Fair-play regulations the clubs may be sanctioned with the following measures: a) warning, b) reprimand, c) fine, d) deduction of points, e) withholding of revenues from a UEFA competition, f) prohibition on registering new players in UEFA competitions, g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions, h) disqualification from competitions in progress and/or exclusion from future competitions, i) withdrawal of a title or award. If the exclusion from UEFA competitions is certainly one of the most serious sanctions, there are other particularly serious penalties, such as the prohibition on registering new players in UEFA competitions or the restriction on the number of players that a club may register for participation in UEFA competitions. Consequently, since the seriousness of the ascertained infringement seems to exclude that the Adjudicatory Chamber may decide to apply a very minimal sanction (such as a warning or a reprimand), it cannot be excluded that the new sanction will also be perceived as excessive and therefore disproportionate. And in this case, at least in theory, nothing could prevent AC Milan from appealing to the CAS by challenging again the disproportionate character of the (new) sanction.

8. The Meca Medina and Majcen ruling presents many ambiguities and for this reason is rightly criticized. To say nothing else, it cannot be ignored that the extension of the proportionality test also to the sanctioning system provided for by sports regulations raises at least two fundamental problems: (a) firstly, to establish which criteria are to be used to determine the proportionate character of the sanctions; and (b) secondly, the opportunity to invest judges or arbitrators of such a task. However, the recent case-law of the CAS on the proportionality test of UEFA Financial Fair-play regulations seems to reveal no less serious concerns and perplexities.


[1] For more details, see my blog and Ben Van Rompuy’s blog.

 

[2] As a consequence one could argue that the decision of the panel to find that the sanction is disproportionate is probably connected to the fact that Milan was not offered a settlement.

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