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

Revisiting FIFA’s Training Compensation and Solidarity Mechanism - Part. 3: The Curious Non-Application of Training Compensation to Women’s Football – By Rhys Lenarduzzi

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

 

As recently as September 2020, questions were raised in the European Parliament on the non-application of training compensation to women’s football. Whilst this blog will predominantly consider potential inconsistencies in reasoning for and against training compensation in men’s and women’s football, the questions before the Commission were largely on the theme of disrespect and discrimination. Somewhat unfortunately, the questions raised were side-stepped, with Ms Gabriel (Commissioner for Innovation, Research, Culture, Education and Youth) simply stating that: “The TFEU does not give the Commission the competence to interfere in the internal organisation of an independent international organisation such as FIFA.” This might be true in theory, though one might feel some degree of uneasiness if privy to the Commission’s role in the 2001 FIFA regulatory overhaul.

It is currently explicit in the regulations and the commentary, that in women’s football, signing clubs are not required to compensate training clubs for developing players, through the training compensation mechanism that exists in men’s football. Though it is a contentious comment and as will be expanded below, this may not have always been the case.

At Article 20 of the FIFA Regulations on the Status and Transfer of Players (RSTP), one will find that the principles of training compensation shall not apply to women’s football. Further, in FIFA’s recently released Women’s Football Administrator Handbook (the handbook), it states that disputes relating to training compensation are limited for the moment to male players only.[1]

Regulations on solidarity contributions on the other hand do apply to women’s football, but given transfer fees are not so common, the use of the mechanism is not either. As an indication of how uncommon the activation of the solidarity contribution mechanism in women’s football might be, FIFA reported in the handbook just four claims with the Players’ Status Department in 2016 (three claims involving the same player), and zero since.[2] That is in comparison to hundreds of claims made per season in men’s football, where signing and owing clubs had not fulfilled their obligation to pay the solidarity contribution.

Given the aforementioned, this blog will largely focus on training compensation and how it came to be the case that this mechanism, often presented as critical in the context of men’s football, does not apply in women’s football. To do so, I will first discuss the reasoning advanced in an unpublished CAS award, which one may reasonably suspect played a fundamental role in shaping the current exemption. I will then turn to FIFA’s timely response to the award and the adoption of its Circular No. 1603. Finally, I will point out the disconnect in FIFA’s decision to adopt two radically different approaches to the issue of training compensation in male and female professional football. More...


New Event! Zoom In on Transnational Sports Law - Blake Leeper v. IAAF - 4 December at 4pm (CET)

The Asser International Sports Law Centre in collaboration with Dr Marjolaine Viret is launching a new series of zoom webinars on transnational sports law: Zoom In. The first discussion (4 December at 16.00) will zoom in on the recent arbitral award delivered by the Court of Arbitration for Sport (CAS) in the Blake Leeper v. International Association of Athletics Federations (IAAF) case.

In this decision, reminiscent of the famous Pistorius award rendered a decade ago, the CAS panel ruled on the validity of an IAAF rule that places the burden on a disabled athlete to prove that a mechanical aid used to compete in IAAF-sanctioned competitions does not give them an overall competitive advantage. While siding with the athlete, Blake Leeper, on the burden of proof, the CAS panel did conclude that Leeper’s prosthesis provided him an undue advantage over other athletes and hence that the IAAF could bar him from competing in its events.

To reflect on the key aspects of the decision and its implications, we have invited scholars with different disciplinary backgrounds to join the zoom discussion. 

Confirmed guests

 Moderators


The webinar is freely available, but registration here is necessary.

Last call to register to the 2021 edition of the Sports Law Arbitration Moot - Deadline 1 December

Dear all,

Our Slovenian friends (and former colleague) Tine Misic and Blaž Bolcar are organising the second edition of the Sports Law Arbitration Moot (SLAM).

The best four teams of the SLAM competition will compete in the finals, which will be held in Ljubljana, Slovenia, on 30th and 31st March, 2021.

This is a great opportunity for students to familiarise themselves with the world of sports arbitration, to meet top lawyers and arbitrators in the field, and to visit beautiful Ljubljana.

Go for it!

You'll find more information and can register at https://sportlex.si/slam/en

Pistorius revisited: A comment on the CAS award in Blake Leeper v. IAAF - By Marjolaine Viret

On 23 October 2020, a panel of the Court of Arbitration for Sport (‘CAS’) rendered an award in the matter opposing Mr Blake Leeper (‘Mr Leeper’ or ‘the Athlete’) to the International Association of Athletics Federation (‘IAAF’).[1] The CAS panel was asked to make a ruling on the validity of the IAAF rule that places on a disabled athlete the burden to prove that a mechanical aid used to compete in IAAF-sanctioned competitions does not give such athlete an overall competitive advantage.

The award is remarkable in that it declared the shift of the burden of proof on the athlete invalid, and reworded the rule so that the burden is shifted back on the IAAF to show the existence of a competitive advantage. Thus, while the IAAF won its case against Blake Leeper as the panel found that the sport governing body had discharged its burden in casu, the outcome can be viewed as a victory for disabled athletes looking to participate in IAAF-sanctioned events. It remains to be seen how this victory will play out in practice. Beyond the immediate issue at stake, the case further presents an illustration of how – all things equal – assigning the burden of proof can be decisive for the real-life impact of a policy involving complex scientific matters, as much as the actual legal prerequisites of the underlying rules.

This article focuses on some key aspects of the award that relate to proof issues in the context of assessing competitive advantage. Specifically, the article seeks to provide some food for thought regarding burden and degree of proof of an overall advantage, the contours of the test of ‘overall advantage’ designed by the CAS panel and its possible bearing in practice, and potential impact of the ruling on other areas of sports regulations such as anti-doping.

The award also analyses broader questions regarding the prohibition of discrimination in the regulation of sports, as well as the interplay with international human rights instruments such as the European Convention on Human Rights (‘ECHR’), which are not explored in depth here. More...

Revisiting FIFA’s Training Compensation and Solidarity Mechanism - Part. 2: The African Reality – By Rhys Lenarduzzi

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


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



International and European Sports Law – Monthly Report – October 2020 - By Rhys Lenarduzzi

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


The Headlines

Aguero and Massey-Ellis incident: An Opportunity for Change and Education?

In mid-October a clip went viral of Argentinian star Sergio Aguero putting his hands on sideline referee, Sian Massey-Ellis. A heated debate ensued in many circles, some claiming that Aguero’s conduct was commonplace, others taking aim at the appropriateness of the action, around players touching official and a male touching a female with an unsolicited arm around the back, the squeeze and pull in. Putting the normative arguments aside for a moment, the irony of the debate was that all sides had a point. Football, almost exclusively, has grown a culture of acceptance for touching officials despite the regulations. Male officials who have let such conduct slide, have arguably let their female colleague down in this instance.

Whilst a partial defence of Aguero might be that this kind of conduct takes place regularly, the incident could serve as a learning experience. If Massey-Ellis’ reaction was not enough, the backlash from some of the public might provide Aguero and other players the lesson, that touching a woman in this way is not acceptable.

Returning to football, the respect and protection of officials in sport, the key here appears to be cracking down on touching officials entirely. This is not a foreign concept and football need only look at the rugby codes. Under no circumstances does the regulations or the culture permit that a player from the rugby codes touch a referee. It is likely the case that the obvious extra level of respect for officials in these sports derives from a firm culture of no touching, no crowding officials, communicating with officials through the team captain only, with harsh sanctions if one does not comply.

The Football Association of England has decided no action was necessary, raising questions of how seriously they take the safety of officials, and gender issues. This is ultimately a global football issue though, so the confederations or international bodies may need step in to ensure the protections that appear at best fragile.  


Rugby Trans issue

The World Rugby Transgender guideline has been released and contains a comprehensive unpacking of the science behind much of the regulatory framework. Despite many experts applauding World Rugby on the guidelines and the extensive project to reach them, the England Rugby Football Union is the first to defy the World Rugby ruling and transgender women will still be allowed to play women’s rugby at all non-international levels of the game in England for the foreseeable future. This clash between national bodies and the international body on an important issue is concerning and will undoubtedly be one to keep an eye on.

 

CAS rejects the appeal of Munir El Haddadi and the Fédération Royale Marocaine de Football (FRMF)

The refusal to authorise a footballer to change national federation is in the headlines with the CAS dismissing the appeal of the player and Moroccan federation, confirming the original determination of the FIFA Players’ Status Committee.

This has been given considerable recent attention and seemingly worth following, perhaps best summed up by FIFA Director of Football Regulatory, James Kitching, where in a tweet he notes: “The new eligibility rules adopted by the FIFA Congress on 18 September 2020 have passed their first test. We will be publishing our commentary on the rules in the next fortnight. Watch this space.” More...



Revisiting FIFA’s Training Compensation and Solidarity Mechanism - Part.1: The historical, legal and political foundations - By Rhys Lenarduzzi

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


In 2019, training compensation and solidarity contributions based on FIFA’s Regulations on the Status and Transfer of Players (RSTP) amounted to US$ 75,5 million. This transfer of wealth from the clubs in the core of the football hierarchy to the clubs where the professional players originated is a peculiar arrangement unknown in other global industries. Beyond briefly pointing out or reminding the reader of how these systems work and the history behind them, this blog series aims to revisit the justifications for FIFA-imposed training compensation and the solidarity mechanism, assess their efficacy and effects through a case study of their operation in the African context, and finally analyse the potential impact of upcoming reforms of the FIFA RSTP in this context.

First, it is important to go back to the roots of this, arguably, strange practice. The current transfer system and the legal mechanisms constituting it were largely the result of a complex negotiation between European football’s main stakeholders and the European Commission dating back to 2001. The conclusion of these negotiations led to a new regulatory system enshrined in Article 20 and Annex 4 of the RSTP in the case of training compensation, and at Article 21 and Annex 5 in the case of the solidarity mechanism. Before paying some attention to the historical influences and how we arrived at these changes, as well as the justifications from the relevant bodies for their existence, let us briefly recall what training compensation and the solidarity mechanisms actually are. More...



Invalidity of forced arbitration clauses in organised sport…Germany strikes back! - By Björn Hessert

Editor's note: Björn Hessert is a research assistant at the University of Zurich and a lawyer admitted to the German bar.

 

The discussion revolving around the invalidity of arbitration clauses in organised sport in favour of national and international sports arbitral tribunals has been at the centre of the discussion in German courtrooms.[1] After the decisions of the German Federal Tribunal[2] (“BGH”) and the European Court of Human Rights[3] (“ECtHR”) in the infamous Pechstein case, this discussion seemed to have finally come to an end. Well…not according to the District Court (LG) of Frankfurt.[4] On 7 October 2020, the District Court rendered a press release in which the court confirmed its jurisdiction due to the invalidity of the arbitration clause contained in the contracts between two beach volleyball players and the German Volleyball Federation[5] (“DVV”) – but one step at a time. More...

International and European Sports Law – Monthly Report – September - October 2020 - By Rhys Lenarduzzi


The Headlines


Human rights and sport  

Caster Semenya

Human rights issues are taking the headlines in the sporting world at present. A short time ago, Caster Semenya’s appeal at the Swiss Federal Tribunal against the CAS decision was dismissed, perhaps raising more questions than answering them. Within the last few days however, the message from the Semenya camp has been that this is not over (see here).  See the contributions from a range of authors at Asser International Sports Law Blog for a comprehensive analysis of the Semenya case(s) to date.

Navid Afkari

As the sporting world heard of the execution of Iranian Wrestler Navid Afkari, a multitude of legal and ethical questions bubbled to the surface. Not least of all and not a new question: what is the responsibility of sport and the governing bodies therein, in the space of human rights?  And, if an athlete is to acquire a high profile through sporting excellence, does that render athletes vulnerable to be made an example of and therefore in need of greater protection than is currently afforded to them? There are differing views on how to proceed. Consider the following from the World Players Association (Navid Afkari: How sport must respond) and that from the IOC (IOC Statement on the execution of wrestler Navid Afkari) which shows no indication through this press releases and other commentary, of undertaking the measures demanded by World Players Association and other socially active organisations. (See also, Benjamin Weinthal - Olympics refuses to discuss Iranian regime’s murder of wrestler).

Yelena Leuchanka

As this is written and relevant to the above, Yelena Leuchanka is behind bars for her participation in protests, resulting in several sporting bodies calling for her immediate release and for reform in the sporting world around how it ought to deal with these issues. As a member of the “Belarus women's national basketball team, a former player at several WNBA clubs in the United States and a two-time Olympian”, Leuchanka has quite the profile and it is alleged that she is being made an example of. (see here)

Uighur Muslims and Beijing Winter Olympics

British Foreign Secretary, Dominic Raab does not rule out Winter Olympics boycott over Uighur Muslims. ‘The foreign secretary said it was his "instinct to separate sport from diplomacy and politics" but that there "comes a point where that might not be possible".’ Though Raab’s comments are fresh, this issue is shaping as a “watch this space” scenario, as other governments might echo a similar sentiment as a result of mounting pressure from human rights activist groups and similar, in lead up to the Winter Games. More...



The Specificity of Sport - Comparing the Case-Law of the European Court of Justice and of the Court of Arbitration for Sport - Part 2 - 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.


1. EU law and the CAS case-law

Bearing in mind these questions, it is possible to affirm that under EU law, the specificity of sport

i) refers to the inherent characteristics of sport that set it apart from other economic and social activities and which have to be taken into account in assessing the compatibility of sporting rules with EU law; and

ii) under EU law these inherent characteristics of sport must be  considered on a case by case  basis, per the Wouters test as developed by the ECJ in the Meca Medina ruling.

Both aspects can be found in the CAS case-law too, although the CAS case-law shows some remarkable differences and peculiarities. From a general point of view, the application of the principle of specificity of sport in the CAS case-law represents an aspect of the more general issue related to the application of EU law by the CAS. However, the purpose of this paper is not to fully examine if and to what extent the CAS arbitrators apply EU law rules on free movement and competition; rather, the aim is to analyse the way the CAS deals with the concept of the specificity of sport, highlighting similarities and differences compared to the ECJ.

Taking for granted that ‘a CAS panel is not only allowed, but also obliged to deal with the issues involving the application of [EU] law’,[1] as far as the compatibility of sporting rules with EU law is concerned the CAS case-law shows different degrees of engagement. For instance, in the ENIC award concerning the so-called UEFA integrity rule, the CAS panel went through a complete competition-law analysis in perfect harmony with the Wouters et al. ruling by the ECJ.[2] On the contrary, in the above-quoted Mutu case, the issue of compatibility of the FIFA’s transfer regulations with EU competition law was analysed in a rather simple way, merely stating that the FIFA rules at stake were not anti-competitive under EU competition law without giving any reason to support this conclusion. More recently, in the Galatasaray and Milan A.C. awards, concerning the UEFA’s financial fair-play regulations, the CAS  applied a detailed analysis of EU competition law. However, in both cases, according to the CAS the proportionate character of sanctions listed in the UEFA’s financial fair-play regulations cannot affect the evaluation of the legitimacy of these regulations under Art. 101 TFEU. This conclusion represents a clear breaking point with respect to the ECJ case-law, according to which 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 a violation of that rule as well.[3]   In regard to EU free movement, the CAS case-law tends to be less analytical in terms of the principle of proportionality. For instance, in the RFC Seraing award  which concerned both EU free movement and competition law, the CAS panel mainly focused on the legitimate objectives of the contested rule (FIFA’s ban on Third-Party Ownership – TPO), merely affirming that the restrictive measures under EU free movement were justified and inherent in the pursuit of those objectives.More...



Asser International Sports Law Blog | Balancing Athletes’ Interests and The Olympic Partner Programme: the Bundeskartellamt’s Rule 40 Decision - By Thomas Terraz

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

Balancing Athletes’ Interests and The Olympic Partner Programme: the Bundeskartellamt’s Rule 40 Decision - By Thomas Terraz

Editor’s note: Thomas Terraz is a fourth 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 International Olympic Committee (IOC), after many years of ineffective pushback (see here, here and here) over bye law 3 of rule 40[1] of the Olympic Charter (OC), which restricts the ability of athletes and their entourage to advertise themselves during the ‘blackout’ period’[2] (also known as the ‘frozen period’) of the Olympic Games, may have been gifted a silver bullet to address a major criticism of its rules. This (potentially) magic formula was handed down in a relatively recent decision of the Bundeskartellamt, the German competition law authority, which elucidated how restrictions to athletes’ advertisements during the frozen period may be scrutinized under EU competition law. The following blog begins by explaining the historical and economic context of rule 40 followed by the facts that led to the decision of the Bundeskartellamt. With this background, the decision of the Bundeskartellamt is analyzed to show to what extent it may serve as a model for EU competition law authorities.

 

2        Rule 40 in Context

Before dissecting the decision, the considerable impact of the IOC’s rule 40 and its implementation by national Olympic committees (NOCs) must be emphasized. Many athletes look to the Olympic Games as a unique opportunity to gain exposure and benefit financially from their accomplishments, especially considering that many athletes who qualify for the Olympic Games struggle to make a living from their sport. Athletes are greatly reliant on external funding, particularly from sponsors, to fund their career.[3] To further complicate matters, many sports only enjoy a meaningful spotlight during the Olympic Games. Hence, athletes in those sports view the Games as an unparalleled occasion to become known to a wider public and gain new sponsors. So, why does the IOC restrict these opportunities?

Rule 40’s existence is principally due to The Olympic Partner Programme (TOP), a closed group of thirteen sponsors, which was created in 1985 with the aim of diversifying and securing greater means of funding for the Olympic Games.  It was the brainchild of Michael Payne who has defended the importance of preserving the ‘value of the Olympic sponsorship program’ to prevent a return to the days where the funding of the Games was highly dependent on ticket sales.[4] For the IOC, preserving the value of TOP has meant taking aggressive actions against ambush marketing, which according to Payne is ‘any communication or activity that implies, or from which one could reasonably infer, that an organisation is associated with an event, when in fact it is not’. Payne describes the ways in which the IOC has attempted to tackle ambush marketing, which includes educating the public about ambush marketing, preventing ambush marketing through prohibiting non-sponsor association and controlling Olympic imagery among other methods, and finally legal action, which according to Payne, ‘the mere threat of this is often enough to bring the offending party into line’. In this view, rule 40 can mainly be categorized as a preventative measure.

Rule 40 has also experienced an evolution ever since it was first introduced in 1991 into the OC, which has also meant that ‘defining the scope of rule 40 and understanding its nuances is a process that evolves with each iteration of the games’.[5] Although rule 40 has recently moved from a general ban on advertising with limited exceptions into allowing it under severe restrictions, it remains to be seen whether the IOC will fundamentally rethink the conditions applied to athlete advertising. Meanwhile, athletes, who were partly the initiators of the complaint to the Bundeskartellamt, have perhaps realized that public awareness campaigns have not brought about the drastic change they had hoped for. In the present case, the Bundeskartellamt’s attention was drawn to rule 40 OC after a complaint from Athleten Deutschland (German Athlete Commission) and Bundesverband der Deutschen Sportartikelindustrie (Federal Association of the German Sports Goods Industry).

 

3        Background to the Decision

Before examining the substance of the Bundeskartellamt’s decision, it is important to understand that rule 40, as it was analyzed in the decision, was the one that was in place in the lead up to the Rio 2016 Games.[6] It states:

 “Except as permitted by the IOC Executive Board, no competitor, team official or other team personnel who participates in the Olympic Games may allow his person, name, picture, or sports performances to be used for advertising purposes during the Olympic Games.”

In other words, a general ban on advertisement with limited exceptions. The applicable conditions meant that only athletes with TOP sponsors could launch an advertising campaign during the Rio 2016 Olympic Games and ongoing campaigns from non-TOP sponsors were subject to authorization. Further complicating the matter, NOCs could introduce additional restrictions or opt-out completely from allowing their athletes to advertise during the frozen period.[7] The German Olympic Sports Federation (DOSB), in its 2016 guidelines[AD1]  (page 78), distinguished between DOSB sponsors, Olympic sponsors and non-Olympic sponsors.[8] In the case of non-Olympic sponsors, ‘only advertising activities which had started at least three months prior to the Olympic Games had a chance of being approved’, which means potential sponsors needed to have early concepts ready before that date (early April). It should also be noted that at that time, the DOSB had not yet nominated any athletes for the Olympic Games. In addition to the deadlines, references to the Olympic Movement were strictly forbidden, which included an incredibly broad list of words and phrases.[9] If they wanted to participate in the Games, athletes were forced to subscribe to these rules via the athlete agreement (page 83) [AD2] and any breach could imply sanctions, which included removal from the Olympic Team.[10]

The conditions that these rules impose is succinctly summarized by Grady who explains that though the IOC claimed it had relaxed its rules, it ‘did not create the kinds of opportunities that the IOC may have envisioned’, which in effect ‘precluded almost all but the most powerful global brands from taking full advantage of the ability to feature Olympic athletes during the Games’, a view that was acknowledged by the Bundeskartellamt.[11]

 

4        The Bundeskartellamt’s Decision

Although the present case was resolved through the commitments made by the IOC, the Bundeskartellamt still provided a preliminary assessment concerning the relevant market, the abuse of a dominant position, possible justifications, and proportionality, which are analyzed below.

4.1       Relevant Market

Having decided to resolve the case on the basis of Article 102 TFEU,[12] the Bundeskartellamt identified the relevant market on the basis of a ‘modified concept of demand-side substitutability’ and defined the market as the ‘market for the organisation and marketing of the Olympic Games’.[13] It considered that the Olympic Games was an event that differed from other major sport events from the consumers’ point of view because of the wide variety of sports that are covered and because certain sports which perhaps are not normally broadcasted in a particular country receive extensive media coverage during the Games.[14] The Bundeskartellamt supported its analysis of the relevant market by referring to MOTOE in which the CJEU also defined the ‘relevant product market for the organisation (and marketing) of sports events according to the type of sport’.[15] Lastly, it found that the athletes participating in the Games to be ‘customers of the organisation and marketing of sport events’.[16] ‘Other well-known competitions’ could be considered as an alternative for certain athletes, however, many athletes practice sports that receive very little media attention outside the Games, meaning that overall the substitutability between the Olympic Games and other major sports events is limited.[17]

4.2       An Abuse of a Dominant Position

Next, the Bundeskartellamt considered the members of the Olympic Movement to be in a collectively dominant position in the aforementioned market and deemed them to be undertakings regardless of the fact that they do not make a profit.[18] It also asserted that the members of the Olympic Movement were abusing their dominant position, hindering effective competition, for several reasons. First, the registration deadlines to request authorization were set too early since athletes did not know whether they were even going to the Olympics in the first place. Moreover, the Bundeskartellamt ruled that the very use of registration and authorization criteria could have a prohibitive effect for certain kinds of advertisements. Even though ‘ongoing’ advertisement could be approved, it was still subject to restrictions since it could not use any ‘designations and symbols as well as images and videos’ connected to the Olympic Games.[19] As stated earlier, these are very extensive and make it ‘difficult to market an athlete’s participation in the Olympic Games’.[20] In the end, the sanctions that athletes could face exacerbated the restriction on competition, especially since the sanctions had no proportionality requirements and an appeal could only be made to the CAS.[21]

4.3       Justifications

At this point the Bundeskartellamt moved to make a preliminary assessment as to whether the abuse of the dominant position inherently pursued legitimate objectives and whether the restriction is proportionate to its claimed objective (the Wouters test[22]).  It is interesting to note that the Bundeskartellamt decided to apply the Wouters test to an Article 102 TFEU case and expressly stated that ‘it is to be assumed that the criteria are also meant to apply with regard to the applicability of Art. 82 EC’ (now Article 102 TFEU) in referring to the CJEU’s Meca-Medina case.[23]  Only one of the pursued objectives of the IOC was considered legitimate, while all the others, including ‘preserving the financial stability and sustainability of the Olympic Movement and the Olympic Games’, ‘preserving the value of the Olympic brand to finance the Olympic solidarity model’, and ‘preventing the excessive commercialisation of the Olympic Games’, were not found to be legitimate.[24] The three rejected objectives reflects the decisional practice of the Commission and the CJEU that ‘economic aims cannot justify restrictions’, which the Bundeskartellamt directly acknowledges.[25] This is why it is interesting that the Bundeskartellamt then found that the ‘prevention of ambush marketing during the frozen period in order to safeguard the funding of the Olympic Games, facilitated in part by Olympic sponsorship programmes, and thus to ensure that the Games can be held on a regular basis’ as the only legitimate objective.[26]

A literal reading of this aim seemingly exposes an economic dimension since the IOC wishes to protect TOP and as a consequence, its own budget. However, the Bundeskartellamt was convinced by the IOC’s contention that this was no economic objective,[27] since the ultimate aim of the objective is to ensure the Olympic Games’ consistent occurrence. It could be argued that there are in fact two objectives mangled into one: (1) the prevention of ambush marketing to protect TOP (an economically motivated objective) and (2) ensuring the regular occurrence of the Games (a non-economically motivated objective). The Bundeskartellamt decided to not disentangle the two and accepted that they were in fact one inseparable objective, whereby the latter sub-objective ultimately sidelines the economic dimension of the first. On the other hand, the CJEU’s case law on economic justifications has not been entirely consistent and there has been occasions where it has accepted economic justifications.[28] Furthermore, an efficiency defense could also allow for economic justifications in which the IOC could argue that preventing ambush marketing in order to protect TOP benefits consumers, outweighing any negative effects to competition.[29] In the end, it might be desirable that any future analysis of this dual objective at least acknowledge that there is an underlying economic interest. [TT3] 

4.4       Proportionality

Before analyzing the proportionality of the measure in terms of the prevention of ambush marketing, the Bundeskartellamt defined ambush marketing as ‘the planned endeavour of a company, which is not an official sponsor of a major (sports) event, to attract public attention to its own business by means of marketing activities related to the event, and thus to profit from the communication performance of the event (e.g. high profile, image) without making a financial contribution’.[30] In the corresponding footnote, the Bundeskartellamt makes reference to the definitions of ambush marketing on Wikipedia, which upon closer inspection is taken from Manuela Sachse’s book Negative Kommunikationseffekte von Sponsoring und Ambush-Marketing bei Sportgroßveranstaltungen. It is rather unfortunate that the Bundeskartellamt did not elaborate on why it chose this particular definition of ambush marketing.

Nonetheless, on the formal aspects, the Bundeskartellamt held that the DOSB’s pre-authorization scheme for individual advertisements was disproportionate, especially due to the deadlines. Moving to substantive aspects, it maintained that individual advertisement could only be prohibited if it violated specific legal provisions such as intellectual property rights or specific contractual obligations.[31] Violations of property rights ‘only exist in cases where the public perception is that there are economic and organisation relations between the owner of the property rights and the company which uses Olympic designations’, referring to the jurisprudence of the German Federal Court of Justice.[32] The Bundeskartellamt makes reference to the reasonably well-informed consumer standard, which is also recognized in EU law,[33] to explain that consumers are able to differentiate between ‘a sponsor’s advertising and a reference to the Olympic Games in a promotional context’ and that simply a positive association or temporal connection with the Olympic Games and Olympic Movement is not a violation of intellectual property rights.[34] In this regard, the Bundeskartellamt only found prohibiting the use of ‘Team Deutschland’ during the Olympic Games and the use of ‘a combination of the respective location and the year’, e.g. Rio 2016, during the frozen period to be proportionate, while finding the other restrictions to be disproportionate.[35] In terms of the restrictions on photos and social media posts, the Bundeskartellamt held that the general prohibition of taking photos at Olympic venues for individual advertising measures and posts on social media accounts that do not have any protected ‘designations or symbols’ to be disproportionate.[36]

Ultimately, the sanctions, in particular sporting sanctions, were judged to be disproportionate because of their potential impact on athletes’ careers, since they could affect the athletes existing and future sponsorship opportunities and a competition ban could also, depending on the athlete’s age and the ban’s length, end an athlete’s career. The very existence of sporting sanctions could have a ‘deterrent effect’.[37] Additionally, the CAS’ exclusive jurisdiction over disputes could jeopardize the effectiveness of competition law since ‘there is no guarantee that the parties’ action against an athlete will also be subject to judicial review under European antitrust law’, especially when considering that neither the Swiss or German courts would conduct such a review in an action against the enforcement of the award.[38]  Sports sanctions are also typically carried out by the sport bodies themselves, without intervention of public bodies. Interestingly, the Bundeskartellamt acknowledged the German athletes’ position that the CAS proceedings were longer and more costly than proceedings in front of German courts, which directly contradicts the IOC’s claimed benefits of sports arbitration.[39]

 

5        The Commitments and Potential for Further Intervention Under EU law

After two rounds of negotiations, the DOSB was able to put an end to its infringements by making several commitments that brought its policy on athlete advertisement into line with the Bundeskartellamt’s findings. The commitments submitted after the first round did not go far enough to quell the competition concerns and most sponsors and athletes found ‘little or no improvement in the modified guidelines’. The original commitments were deemed to be too restrictive on the protected Olympic related terms, not provide sufficient opportunities for advertising on social media, not sufficiently delineate the responsibilities of the different parties, and the exclusive jurisdiction of the CAS coupled with sporting sanctions continued to have ‘a strong deterrent effect’.[40] After the second round of negotiations, the most important  commitments included: (1) no more authorization required for advertisements during the frozen period and instead athletes can request that the DOSB review planned advertisements beforehand to confirm if it meets the admissibility criteria; (2) advertisement campaigns may now be launched during the frozen period; (3) pictures of athletes during Olympic competitions may be used for advertisement so long as it does not include protected Olympic logos, symbols or designations; (4) videos[41] are restricted only to the German House, the Olympic village or the back of house areas and (5) sports related sanctions are no longer available (only economic sanctions are possible) and athletes may have recourse to German courts. All in all, the new Guidelines will allow athletes to advertise during the Games provided that they observe certain restrictions that mainly relate to intellectual property rights.[42] This compromise fosters a far better balance between the IOC’s interests to protect the value of the Games and TOP and the athletes’ wish to expand their financial opportunities during perhaps the most important time of their careers.

The analysis undertaken by the Bundeskartelamt is likely to influence any future intervention of the European Commission on this issue. After all, it is quite possible that the Commission may have to take action since the Bundeskartellamt’s decision ‘is enforceable only as regards individual advertising and marketing activities of German Olympic athletes on the German market’. In doing so, the Commission may have to elaborate whether a pre-authorization scheme for advertisements with reasonable deadlines could be compatible with EU law and perhaps further scrutinize the definition of ambush marketing and potential objective justifications that are completely void of an economic motive. The Commission would likely evaluate any advertisement pre-authorization regime in light of the ISU criteria.[43] From a pure competition law perspective, it could also be an opportunity for the Commission and ultimately the CJEU to expressly confirm whether the Wouters test extends to Article 102 TFEU.

Regardless, Commissioner Verstager explained that this is ‘an example of the way the network operates, with the Commission and the German competition authority working closely together’. She also underlined that the Bundeskartellamt’s decision could ‘create incentives for a change of the relevant rules at national and international level, with the Commission following closely any developments in this direction’. Thus, the possibility that the Commission will at some point intervene seems dependent on how seriously the IOC takes this decision. In the meantime, British athletes have also threatened legal action on the basis of EU competition law against the British Olympic Association over its implementation of rule 40, which demonstrates the ongoing nature of this saga.

 

6        Conclusion

The Bundeskartellamt’s narrow interpretation of ambush marketing and emphasis on the protection of intellectual property rights will most likely influence the IOC’s strategy to protect the value of TOP. For example, it could prompt the IOC to place greater efforts into expanding its protected properties. Nevertheless, the IOC’s war against ambush marketing has widened from its original concept and even Michael Payne has been one to express his concern about the extent to which the IOC has gone in order to protect TOP and has expressed the need to apply the rules with ‘balance and common sense’. Albeit these comments were made concerning the rules for ‘clean’ venues at the London 2012 Summer Olympics, there is a certain resonance to the present situation and begs the question whether drastically restricting athletes in their often one-time chance to earn decent money through sponsoring is absolutely necessary to protect the economic viability of the Olympics as a whole.


[1] When the blog refers to rule 40, it refers specifically to bye law 3 of rule 40 OC.

[2] The ‘blackout’ period starts 9 days before the Olympic Game’s opening ceremony to 3 days after the closing ceremony.

[3] Nicholas Gary Schlereth and Evan Frederick, ‘Going for Gold: Social Media and the USOC’ [2017] 27 Journal of Legal Aspects of Sport 19.

[4] Michael Payne, ‘Ambush Marketing: The Undeserved Advantage’ [1998] 15 Psychology and Marketing 323.

[5] John Grady, ‘Analyzing Rule 40’s Restrictions on Using Atheletes in Olympic Sponsorship at Rio 2016’ [2017] 15 Entertainment and Sports Law Journal 1.

[6] Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17 (February 25, 2019) para 3.

[7] ibid para 5.

[8] ibid para 7.

[9] See ibid para 8 for examples.

[10] ibid para 11 and 65.

[11] Grady (n 7) and ibid para 69.

[12] Decision pursuant to Section 32b GWB Public version, B-226/17 (n 3) para 41.

[13] ibid para 44 and 56.

[14] ibid para 46-47.

[15] ibid para 46.

[16] ibid para 53.

[17] ibid para 54.

[18] ibid para 58-63.

[19] ibid para 71.

[20] ibid.

[21] ibid para 75-76.

[22] Case C-309/99 Wouters and Others [2002] ECLI:EU:C:2002:98, para 97.

[23] See Decision pursuant to Section 32b GWB Public version, B-226/17 (n 3) footnote 52.

[24] ibid para 102-105.

[25] See International Skating Union’s Eligibility rules (CASE AT. 40208) [2017] C(2017) 8240, footnote 350 and ibid para 95.

[26] Decision pursuant to Section 32b GWB Public version, B-226/17 (n 3) para 96.

[27] ibid para 27.

[28] For an exploration of accepted economic objectives see Sue Arrowsmith, ‘Rethinking the Approach to Economic Justifications under the EU's Free Movement Rules’ [2015] 69 Current Legal Problems 307.

[29] See for example, Case C-209/10 Post Danmark A/S v Konkurrencerådet [2012] ECLI:EU:C:2012:172, para 41-42.

[30] ibid para 97.

[31] ibid para 108-109.

[32] ibid para 110, referring to Federal Court of Justice, judgment of 15 May 2014 – I ZR 131/13, Olympia-Rabatt.

[33] Case C-210/96 Gut Springenheide and Tusky v Oberkreisdirektor des Kreises Steinfurt [1998] ECLI:EU:C:1998:369, para 31.

[34] Decision pursuant to Section 32b GWB Public version, B-226/17 (n 3) para 110-111.

[35] ibid para 115-118.

[36] ibid 119-120.

[37] ibid para 122.

[38] ibid para 124.

[39] ibid para 124.

[40] ibid para 128.

[41] Protected Olympic logos, symbols or designations are also not allowed in videos.

[42] Decision pursuant to Section 32b GWB Public version, B-226/17 (n 3) para 136-148.

[43] A pre-authorization scheme must (a) ‘provide for sanctions and authorization criteria that are inherent in the pursuit of legitimate objectives’, (b) ‘provide for objective, transparent and non-discriminatory sanctions and authorization criteria’ that are proportionate to its objectives, and (c) ‘provide for an objective, transparent and non-discriminatory procedure for the adoption and effective review of decisions’.


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