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

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...



Will the World Cup 2022 Expansion Mark the Beginning of the End of FIFA’s Human Rights Journey? - By Daniela Heerdt

Editor's note: Daniela Heerdt is a PhD candidate at Tilburg Law School in the Netherlands. Her PhD research deals with the establishment of responsibility and accountability for adverse human rights impacts of mega-sporting events, with a focus on FIFA World Cups and Olympic Games.


About three years ago, the Fédération Internationale de Football Association (FIFA) adopted a new version of its Statutes, including a statutory commitment to respect internationally recognized human rights. Since then, FIFA undertook a human rights journey that has been praised by various stakeholders in the sports and human rights field. In early June, the FIFA Congress is scheduled to take a decision that could potentially undo all positive efforts taken thus far.

FIFA already decided in January 2017 to increase the number of teams participating in the 2026 World Cup from 32 to 48. Shortly after, discussions began on the possibility to also expand the number of teams for the 2022 World Cup hosted in Qatar. Subsequently, FIFA conducted a feasibility study, which revealed that the expansion would be feasible but require a number of matches to be hosted in neighbouring countries, explicitly mentioning Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates (UAE). One does not have to be a human rights expert to be highly alarmed by this list of potential co-hosting countries. Nevertheless, the FIFA Council approved of the possibility to expand in March 2019, paving the way for the FIFA Congress to take a decision on the matter. Obviously, the advancement of the expansion decision raises serious doubts over the sincerity of FIFA’s reforms and human rights commitments. More...



How Data Protection Crystallises Key Legal Challenges in Anti-Doping - By Marjolaine Viret

Editor's Note: Marjolaine is a researcher and attorney admitted to the Geneva bar (Switzerland) who specialises in sports and life sciences. Her interests focus on interdisciplinary approaches as a way of designing effective solutions in the field of anti-doping and other science-based domains. Her book “Evidence in Anti-Doping at the Intersection of Science & Law” was published through T.M.C Asser Press / Springer in late 2015. She participates as a co-author on a project hosted by the University of Neuchâtel to produce the first article-by-article legal commentary of the 2021 World Anti-Doping Code. In her practice, she regularly advises international federations and other sports organisations on doping and other regulatory matters, in particular on aspects of scientific evidence, privacy or research regulation. She also has experience assisting clients in arbitration proceedings before the Court of Arbitration for Sport or other sport tribunals.


Since the spectre of the EU General Data Protection Regulation (‘GDPR’) has loomed over the sports sector,[1] a new wind seems to be blowing on anti-doping, with a palpable growing interest for stakes involved in data processing. Nothing that would quite qualify as a wind of change yet, but a gentle breeze of awareness at the very least.

Though the GDPR does mention the fight against doping in sport as a potential matter of public health in its recitals,[2] EU authorities have not gone so far as to create a standalone ground on which anti-doping organisations could rely to legitimise their data processing. Whether or not anti-doping organisations have a basis to process personal data – and specifically sensitive data – as part of their anti-doping activities, thus remains dependent on the peculiarities of each national law. Even anti-doping organisations that are incorporated outside the EU are affected to the extent they process data about athletes in the EU.[3] This includes international sports federations, many of which are organised as private associations under Swiss law. Moreover, the Swiss Data Protection Act (‘DPA’) is currently under review, and the revised legal framework should largely mirror the GDPR, subject to a few Swiss peculiarities. All anti-doping organisations undertake at a minimum to abide by the WADA International Standard for Privacy and the Protection of Personal Information (‘ISPPPI’), which has been adapted with effect to 1 June 2018 and enshrines requirements similar to those of the GDPR. However, the ISPPPI stops short of actually referring to the GDPR and leaves discretion for anti-doping organisations to adapt to other legislative environments.

The purpose of this blog is not to offer a detailed analysis of the requirements that anti-doping organisations must abide by under data protection laws, but to highlight how issues around data processing have come to crystallise key challenges that anti-doping organisations face globally. Some of these challenges have been on the table since the adoption of the first edition of the World Anti-Doping Code (‘WADC’) but are now exposed in the unforgiving light of data protection requirements. More...



What happens in Switzerland stays in Switzerland: The Striani Judgment of the Brussels Court of Appeals

In the last five years, the Striani case has been the main sword of Damocles hanging over UEFA’s Financial Fair Play Regulations. At the very least, the only real judicial threat they have faced (apart from the relatively harmless challenge mounted in the Galatasaray case at the CAS). Indeed, a Belgian player agent, Daniele Striani, represented by Bosman’s former lawyer Jean-Louis Dupont, attempted, in various fora, to challenge the compatibility of UEFA’s CL&FFP Regulations with EU law. Striani lodged a complaint with the European Commission (which was quickly rejected in October 2014) and initiated a private action for damages before the Brussels Court of First Instance. The latter deemed itself not competent to decide on the matter, but nevertheless accepted to order a provisory stay of the enforcement of the UEFA FFP Regulations pending a preliminary reference to the Court of Justice of the EU (see Ben van Rompuy’s blog on the case here). The CJEU unsurprisingly rejected to enter into the matter, but UEFA and Striani decided to appeal the first instance ruling to the Court of Appeal, which rendered its decision on 11 April. It is unclear at this stage whether Striani will attempt to challenge it at the Belgian Cour de Cassation (Highest Civil Court), however this would entail considerable risks and costs and his lawyers to date have not indicated that they would do so (see here). 

While the ruling of the Court of Appeal does not touch upon the much-discussed question of the compatibility of UEFA’s FFP Regulations with EU law (see our many blogs on the question here, here and here), it remains an interesting decision to discuss broader questions related to the procedural ease in challenging regulatory decisions passed by sports governing bodies (SGBs) based in Switzerland. Competition law constitutes the main legal tool available to sports stakeholders looking to challenge existing regulatory arrangements from the outside (e.g. not going through the internal political systems of the SGBs or the CAS route). Recent cases, such as the ISU decision of the European Commission, the Pechstein case in front of the German courts or the Rule 40 decision of the German competition authority, have demonstrated the potency of competition law to question the legality of the rules and decisions of the SGBs.[1] In this regard, the decision of the Brussels Court of Appeal narrows the range of parties allowed to challenge in European courts the SGBs’ rules and decisions on the basis of competition law. More...

Can European Citizens Participate in National Championships? An Analysis of AG Tanchev’s Opinion in TopFit e.V. Daniele Biffi v Deutscher Leichtathletikverband e.V. - 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

To many it may seem obvious that athletes in a national championship should only be able to participate if they have the nationality of the relevant state. The Dutch Road Cycling National Championships should have Dutch cyclists, and the German Athletics Championships should have German athletes and so forth. However, in reality, foreign competitors are allowed to participate in many national championships in the EU, and there is a wide discrepancy between the rules of national sport governing bodies on this issue. There is no unified practice when investigating this point by country or by sport, and rules on participation range from a complete ban on foreign competitors to absolutely no mention of foreign athletes.[1] Thus, the question arises: should foreign athletes be able to participate in national sport championships?

The Court of Justice of the European Union (CJEU) will soon be required to provide an, at least partial, answer to this dilemma as a result of an application for a preliminary ruling.  A German Court has referred three questions to the CJEU on the case TopFit e.V. Daniele Biffi v Deutscher Leichtathletikverband e.V. (DLV) which in essence ask whether EU citizenship rights and in particular, the requirement of non-discrimination on the basis of nationality, should be applied to non-nationals wishing to participate in an athletics national championship in Germany. In the meantime, the Advocate General (AG), who provides a non-binding opinion to the Court before a decision is delivered, Evgeni Tanchev has delivered an interesting opinion on the case. It addresses the claims from the applicants based on EU citizenship rights and urges the CJEU to instead review the case on the basis of the freedom of establishment.

This blog will dissect the AG’s opinion to assess the main arguments put forward in relation to freedom of establishment and EU citizenship. Furthermore, it will weigh the ramifications this case may have on the boundaries of EU law in relation to sport. To fully appreciate the AG’s opinion, it is necessary to first discuss the intriguing factual and legal background colouring this case. After all, this will not be the first time the CJEU faces thorny issues concerning discrimination on the basis of nationality and sport. More...


Asser International Sports Law Blog | Multi-Club Ownership in European Football – Part I: General Introduction and the ENIC Saga – By Tomáš Grell

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Multi-Club Ownership in European Football – Part I: General Introduction and the ENIC Saga – By Tomáš Grell

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.

 

Introduction

On 13 September 2017, more than 40,000 people witnessed the successful debut of the football club RasenBallsport Leipzig (RB Leipzig) in the UEFA Champions League (UCL) against AS Monaco. In the eyes of many supporters of the German club, the mere fact of being able to participate in the UEFA's flagship club competition was probably more important than the result of the game itself. This is because, on the pitch, RB Leipzig secured their place in the 2017/18 UCL group stage already on 6 May 2017 after an away win against Hertha Berlin. However, it was not until 16 June 2017 that the UEFA Club Financial Control Body (CFCB) officially allowed RB Leipzig to participate in the 2017/18 UCL alongside its sister club, Austrian giants FC Red Bull Salzburg (RB Salzburg).[1] As is well known, both clubs have (had) ownership links to the beverage company Red Bull GmbH (Red Bull), and therefore it came as no surprise that the idea of two commonly owned clubs participating in the same UCL season raised concerns with respect to the competition's integrity.

The phenomenon of multi-club ownership is nothing new in the world of football. As will be seen below, the English company ENIC plc. (ENIC)[2] established itself as a pioneer in this type of business activity, having acquired in the late 1990s, through subsidiaries, controlling interests in several European clubs, including SK Slavia Prague in the Czech Republic (Slavia), AEK Football Club in Greece (AEK) or Vicenza Calcio in Italy (Vicenza). Apart from ENIC and Red Bull, a more recent example of a global corporation investing in multiple football clubs worldwide is the City Football Group owned by Sheikh Mansour bin Zayed Al Nahyan. In August 2017, the City Football Group acquired 44.3% stake in Girona FC, a Spanish club that had just been promoted to La Liga for the first time in their history, thereby adding a sixth club to its portfolio consisting of Manchester City, New York City, Melbourne City, Yokohama Marinos[3] (Japan) and Club Atlético Torque (Uruguay).[4] Private individuals may also become owners of two or more football clubs, the most prominent examples being Giampaolo Pozzo and his son Gino who are in possession of the Italy's second oldest club Udinese Calcio and the English top-flight club Watford FC respectively,[5] or Roland Duchâtelet, a Belgian millionaire whose dubious management of his five clubs, namely Charlton Athletic (England), Carl Zeiss Jena (Germany), AD Alcorcón (Spain), Sint-Truiden (Belgium) and Újpest FC (Hungary), has been met with considerable opposition. Moreover, clubs themselves have acquired stakes in other clubs, including, for instance, Atlético Madrid's investment in RC Lens (France) and Club Atlético de San Luis (Mexico), or AS Monaco's recent takeover of the Belgian second-division club Cercle Brugge.

Leaving commercial and marketing aspects aside, the investment in multiple football clubs is often driven by the vision of recruiting talented players at low cost, preferably in Latin American or African countries, and subsequently facilitating their development in smaller European clubs to prepare them for the level required at the lead club. Hence, should Manchester City discover in Uruguay a 'new Luis Suárez', it will not take much effort (and money) to convince such a player to join the academy of Club Atlético Torque, especially if he is promised further development at language-barrier-free Girona and sees himself wearing the Citizens' sky blue shirt one day. Along these lines, it could well be argued that the phenomenon of multi-club ownership in fact creates a supply chain for talent.

For reasons suggested above, qualification for a UEFA club competition is normally not the primary objective of clubs like Girona, which find themselves somewhere in the middle of this supply chain. This at least partially explains why, to the best of my knowledge, only twice the prospect of two or more commonly owned clubs participating in the same UEFA club competition became so imminent that it required UEFA's direct intervention. The first intervention dates back to May 1998 when the UEFA Executive Committee adopted a landmark rule entitled 'Integrity of the UEFA Club Competitions: Independence of the Clubs' (Original Rule) in response to Slavia and AEK, both under ENIC's control, having qualified for the 1998/99 UEFA Cup. The Red Bull case, for its part, revolved around the interpretation of 'decisive influence in the decision-making of a club', a concept that could not be found in the Original Rule.

Against this background, this two-part blog will focus on the UEFA rule(s) aimed at ensuring the integrity of its club competitions. The first part will take a closer look at how the Court of Arbitration for Sport (CAS) and the European Commission (Commission) dealt with ENIC's complaints alleging that the Original Rule was incompatible, inter alia, with EU competition law. The second part will then examine the relevant rule as it is currently enshrined in Article 5 of the UCL Regulations 2015-18 Cycle, 2017/18 Season (Current Rule) and describe how the CFCB Adjudicatory Chamber interpreted the aforementioned concept of decisive influence[6] in the Red Bull case. Finally, in light of the conclusions reached by the CFCB Adjudicatory Chamber, the second part of this two-part blog will discuss whether any modification of the Current Rule is desirable.

 

The ENIC saga: How the Original Rule survived EU competition law scrutiny

Background

It has already been noted that the adoption of the Original Rule was prompted, first and foremost, by the fact that ENIC-controlled Slavia and AEK qualified on sporting merit for the 1998/99 UEFA Cup. However, what needs to be added is that the initial impulse came a season before, when Slavia, AEK and Vicenza all reached the quarter-final of the UEFA Cup Winners' Cup. Although UEFA was fortunate that time as the clubs were not drawn to play against each other and only Vicenza advanced to the semi-final, it learnt its lesson and as a result of this situation adopted robust rules aimed at ensuring the integrity of its club competitions.

The Original Rule

The Original Rule made admission to the UEFA club competitions conditional upon fulfilment of three specific criteria. First, a club participating in a UEFA club competition must have refrained from (i) holding or dealing in the securities or shares; (ii) being a member; (iii) being involved in any capacity whatsoever in the management, administration, and/or sporting performance; and (iv) having any power whatsoever in the management, administration and/or sporting performance of any other club participating in the same UEFA club competition. Second, the Original Rule stipulated that no person could be simultaneously involved in any capacity whatsoever in the management, administration and/or sporting performance of more than one club participating in the same UEFA club competition. Third, an individual or legal entity was prohibited from exercising control over more than one club participating in the same UEFA club competition. The Original Rule further clarified that an individual or legal entity was deemed to have control over a club, and thus the third criterion was not satisfied, where he/she/it (i) held a majority of the shareholders' voting rights; (ii) was authorized to appoint or remove a majority of the members of the administrative, management or supervisory body; or (iii) was a shareholder and single-handedly controlled a majority of the shareholders' voting rights. In principle, under this third criterion, it was permissible for an individual or legal entity to hold up to 49% of the shareholders' voting rights in multiple clubs participating in the same UEFA club competition.

Proceedings before the CAS

It was the third criterion that was applicable to ENIC, a company listed on the London Stock Exchange. Given that both Slavia and AEK were owned as to more than 50% by ENIC, the respective criterion was not satisfied. Consequently, the Committee for the UEFA Club Competitions, a body responsible for monitoring fulfilment of the aforementioned criteria, ruled that only Slavia was eligible to take part in the 1998/99 UEFA Cup on account of its higher club coefficient. Not content with this decision, Slavia and AEK filed a request for arbitration with the CAS on 15 June 1998, challenging the validity of the Original Rule, inter alia, under Articles 81 and 82 of the Treaty Establishing the European Community (TEC) (now Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)). On the same day, the clubs also lodged a request for interim relief which was eventually granted on 16 July 1998.[7] As a result, UEFA was barred from giving effect to the Original Rule for the duration of the arbitration procedure and both Slavia and AEK were given the green light to participate in the 1998/99 UEFA Cup. On 20 August 1999, the CAS rendered its award in which it upheld the validity of the Original Rule and allowed UEFA to apply the rule in question as of the 2000/01 season.

Before embarking on a comprehensive analysis of the compatibility of the Original Rule with EU competition law, the Panel recognized that participation of two or more commonly owned clubs in the same UEFA club competition creates fertile ground for conflicts of interest, and thus ''represents a justified concern for a sports regulator and organizer''.[8] The Panel then confirmed that EU law was applicable to the case before it as the Original Rule could not benefit from any 'sporting exception'.[9] That being clarified, the Panel moved on to examine the relevant market potentially affected by the Original Rule. It defined the relevant product market as the ''market for ownership interests in football clubs capable of taking part in UEFA competitions'' which would include, on the supply side, ''all the owners of European football clubs which can potentially qualify for a UEFA competition'', and, on the demand side, ''any individual or corporation potentially interested in an investment opportunity in a football club which could qualify for a UEFA competition''.[10] The relevant geographic market, for its part, was confined to the territories of national football federations affiliated to UEFA.[11]

Analysis under Article 81 TEC

Article 81 TEC (now Article 101 TFEU) prohibits ''all agreements between undertakings, decisions by associations of undertakings and concerted practices which […] have as their object or effect the prevention, restriction or distortion of competition within the internal market''. While it is evident that UEFA could be classified as an undertaking[12] or an association of undertakings (representing national football federations) within the meaning of Article 81 TEC, it is less clear whether UEFA could also be regarded, through national football federations representing both professional and amateur clubs, as an association of 'club undertakings'. This question is of crucial importance because if UEFA was not to be regarded as an association of 'club undertakings', the Original Rule would not be considered as the product of a horizontal collusion between clubs and, as a result, would fall outside the scope of Article 81 TEC.[13] The role of UEFA in such a case would not go beyond a mere sports regulator.[14] In this context, Advocate General Lenz insisted in the Bosman case that even though national football federations encompass a sheer number of amateur clubs not engaged in economic activities, this does not alter the conclusion that (i) national football federations are to be regarded as associations of undertakings in accordance with Article 81 TEC; and consequently that (ii) UEFA, through these national football federations, is to be regarded as an association of 'club undertakings'.[15] Although not entirely persuaded by the respective argument, the Panel assumed for the purposes of conducting an analysis under Article 81 TEC that the Original Rule represented a decision by an association of 'club undertakings' and, as such, did not fall outside the scope of Article 81 TEC.[16]

The Panel then turned to the question lying at the heart of the dispute, that is, whether the Original Rule had as its object or effect the prevention, restriction or distortion of competition within the internal market. It found that the Original Rule was only designed to ''prevent the conflict of interest inherent in commonly owned clubs taking part in the same competition and to ensure a genuine athletic event with truly uncertain results'', thereby excluding any anti-competitive object of the Original Rule.[17] With respect to the effect of the Original Rule, the Panel asserted that even though the rule in question may have discouraged an owner who had already been in possession of a high-level European club from acquiring controlling interest in another such club, its overall effect was pro-competitive in that it enabled more undertakings to enter the relevant market, and thus stimulated investment in professional football.[18] Moreover, the Panel was concerned that, in the absence of the Original Rule, high-level European clubs would potentially be concentrated in few hands which would, in turn, lead to an increase in prices for ownership interests in those clubs.[19]

Having found that neither the object nor the effect of the Original Rule was anti-competitive, the Panel was further not required to pronounce itself on whether the Original Rule was necessary and proportionate to the legitimate aim pursued. Yet, it held that the Original Rule was ''an essential feature for the organization of a professional football competition and [was] not more extensive than necessary to serve the fundamental goal of preventing conflicts of interest''.[20] In a similar vein, the Panel could not identify any plausible less restrictive alternative to the Original Rule, and therefore it declared that the Original Rule was proportionate to the stated aim of preventing conflicts of interest.[21]

Based on the above considerations, the Panel ultimately concluded that the Original Rule was compatible with Article 81 TEC.       

Analysis under Article 82 TEC 

Article 82 TEC (now Article 102 TFEU) prohibits abusive conduct by companies that have a dominant position on a relevant market. Since UEFA cannot become an owner of a football club, the Panel maintained that it was not present on the relevant market for 'ownership interests in football clubs capable of taking part in UEFA competitions', and for that reason UEFA could not be held to enjoy a dominant position.[22] Accordingly, the Panel concluded that the Original Rule did not violate Article 82 TEC.  

Proceedings before the Commission

In the wake of the CAS award, ENIC's business strategy suffered a blow. However, the English company was not yet ready to give up and lodged a complaint with the Commission on 18 February 2000, again claiming that the Original Rule infringed Articles 81 and 82 TEC.

In its decision, the Commission relied to some extent on the CAS award, adopting the definition of the relevant market or confirming that the Original Rule could not benefit from any 'sporting exception'. As far as the object of the Original Rule was concerned, the Commission articulated that the rule was not intended to distort competition, but rather to ''avoid conflicts of interest that may arise from the fact that more than one club controlled by the same owner […] play in the same competition''.[23] With respect to the Original Rule's effect, the Commission referred to the Wouters case in which the European Court of Justice held that an agreement between undertakings or a decision of an association of undertakings restricting the freedom to act may nevertheless fall outside the scope of Article 81 TEC, provided that its restrictive effects are inherent in the pursuit of a legitimate objective.[24] Applied to the case before it, the Commission ruled that the restrictive effects of the Original Rule were ''inherent in the pursuit of the very existence of credible pan-European football competitions''.[25] Consequently, the Commission found no violation of Article 81 TEC. Turning to Article 82 TEC, the Commission briefly noted that ''if one were to assume that UEFA enjoys a dominant position in whatever market, the fact that UEFA has adopted such a rule does not appear to constitute in itself an abuse of dominant position''.[26]


Conclusion

It is quite intuitive that the aim of preserving the integrity of the UEFA club competitions should outweigh the restriction introduced by the Original Rule which essentially rendered owners of high-level European clubs unable to acquire controlling interests in similar clubs. However, the fact that the Original Rule appeared bullet-proof under EU competition law does not mean that it was entirely without flaws. As will be seen in the second part of this blog, UEFA later decided to make the Original Rule more stringent since it realized that even if an individual or legal entity does not have de jure control over a club, it may still be able to exercise de facto control over such club.


[1]   RB Salzburg were eliminated by HNK Rijeka in the third qualifying round.

[2]   ENIC is currently a majority shareholder of the English top-flight club Tottenham Hotspur.

[3]   Among the clubs listed, Yokohama Marinos is the only club in which the City Football Group holds a minority stake (20%).

[4]   Furthermore, Manchester City have a formal cooperation agreement with Dutch side NAC Breda.

[5]   The Pozzo family also owned Spanish side Granada FC, before selling the club to a Chinese firm in 2016.

[6]   UCL Regulations 2015-18 Cycle, 2017/18 Season, Article 5.01(c)(iv).

[7]   According to the CAS, the fact that UEFA enacted the Original Rule shortly before the start of the 1998/99 season contravened the principles of good faith, procedural fairness and legitimate expectations. See CAS 98/200 AEK Athens and SK Slavia Prague / UEFA, Award of 20 August 1999, p. 5.

[8]   CAS 98/200 AEK Athens and SK Slavia Prague / UEFA, Award of 20 August 1999, para. 48.

[9]   Ibid. para. 83. According to the well-established jurisprudence of the European Court of Justice, ''the practice of sport is subject to [EU] law only in so far as it constitutes an economic activity''. See Case 36/74 Walrave [1974] ECR 1405, Judgment of 12 December 1974, para. 4. See also Case C-415/93 Bosman [1995] ECR I-4921, Judgment of 15 December 1995, para. 73. On the 'sporting exception', see also Richard Parrish and Samuli Miettinen, The Sporting Exception in European Union Law (T.M.C. Asser Press 2008).

[10] AEK Athens and SK Slavia Prague / UEFA (n 8) paras 101-104.

[11] Ibid. para. 108.

[12] According to the European Court of Justice, ''the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed''. See Case C-41/90 Höfner [1991] ECR I-1979, Judgment of 23 April 1991, para. 21.

[13] AEK Athens and SK Slavia Prague / UEFA (n 8) para. 88.

[14] Ibid.           

[15] Bosman, Opinion of Advocate General Lenz delivered on 20 September 1995, para. 256.

[16] AEK Athens and SK Slavia Prague / UEFA (n 8) para. 94.

[17] Ibid. para. 113.

[18] Ibid. paras 114-119.

[19] Ibid.

[20] Ibid. para. 136.

[21] Ibid.

[22] Ibid. para. 141. It should be noted, however, that this assertion was later challenged, albeit in the context of FIFA, by the Court of First Instance in the Piau case. The Court held in this case that the fact that FIFA is not itself an economic operator on the market for the services provided by players' agents was ''irrelevant as regards the application of Article 82 TEC, since FIFA is the emanation of the national associations and the clubs, the actual buyers of the services of players' agents''. See Case T-193/02 Piau [2005] ECLI:EU:T:2005:22, Judgment of 26 January 2005, para. 116.

[23] Case COMP/37 806: ENIC / UEFA [2002] Commission, para. 28.

[24] Case C-309/99 Wouters [2002] ECR I-1577, Judgment of 19 February 2002, para. 97.

[25] See Commission decision (n 23) para. 32.

[26] Ibid. para. 45.

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