Editor's note: Ben Van Rompuy, Head of the ASSER International Sports Law Centre, was recently interviewed by LexisNexis UK for their in-house adviser service.
With kind permission from LexisNexis we reproduce the interview on our blog in
How does competition law affect the sports sector?
The application of EU competition law to the sports
sector is a fairly recent and still unfolding development. It was only in the
mid-1990s, due to the growing commercialization of professional sport, that
there emerged a need to address competition issues in relation to, for
instance, ticketing arrangements or the sale of media rights.
Apart from the evident link between competition law
and commercial activities related to sport, competition law also has a vital
role to play in relation to the regulatory aspects of sport. Most markets for
the organization of sports events are a textbook example of monopolistic
markets. As a result, sports associations exercise pure monopsony power:
athletes have no choice but to accept unilaterally imposed restrictions. Albeit
limited to case-by-case inquiry, competition law is thus a meaningful instrument
to curb the otherwise unfettered private regulatory power of sports
associations. Unfortunately, it remains underutilized. Only a handful of
international sports federations have truly experienced the “Bosman effect” and
faced scrutiny of their regulatory activity under the EU antitrust rules.
been any important sports-related antitrust cases in recent years?
Not at the EU level. Regarding commercial activities,
the latest case dates from 2006, namely the Commission’s commitment decision on
the joint selling of the Premier League media rights. And after some
politically difficult uphill battles around the 2000s against FIFA and the
International Automobile Federation the European Commission has been extremely
reluctant to intervene in regulatory matters. Lasts year’s rejection of the
complaint against UEFA’s Financial Fair Play Rules was the latest
“achievement”. In the last few months, however, the Commission has received a
number of new interesting complaints.
Since the decentralization of EU antitrust enforcement
in 2004, National Competition Authorities have addressed more than 40 decisions
concerning the joint selling of sports media rights. For the most part, the
remedy package designed by the Commission has been replicated, but there are some
differences: the more widespread use of a “no single buyer” obligation and the
acceptance of exclusive rights contracts exceeding three years.
Regarding regulatory aspects, a string of recent
national cases have challenged rules that disproportionally restrict athlete
participation in events not organized and promoted by the official federation,
notably in smaller sports such as motor sport, horseracing and bodybuilding (Ireland, Italy, Sweden). What characterizes these
cases is that the remedial action was purely national in scope. In Germany, by
contrast, two exploitative abuse cases are making their way up through the
courts that have the potential of becoming important EU-wide precedents. Both
are concerned with unfair trading conditions – a rarity these days: mandatory
(International Skating Union) and rules concerning the
mandatory release of players to the national team without compensation (International Handball Federation).
aspects of competition law are important in the sporting context?
The State aid rules are the last unexplored frontier. For
decades, national and regional public authorities have directly or indirectly
financed sports organisations, sports infrastructure or individual clubs, but
these measures have blissfully remained under the radar of EU State aid
control. Yet in the last four years, the number of complaints against alleged
unlawful State aid to professional sport, mostly football clubs, has been
rising. Interestingly, citizens filed most of these complaints.
With the enactment of the new Block
Exemption Regulation and
several formal decisions on for instance Belgian, French, German, and Swedish State aid for the construction and renovation of
stadiums, the Commission has developed a coherent set of principles for
infrastructure funding. The most complex cases are still pending. They concern
land swaps/sale of State property (Spain, the Netherlands), tax advantages
(Spain), and bank loans, guarantees or debt waivers (Spain, the Netherlands). The
beneficiaries include top clubs like Real Madrid and Barcelona so the decisions
are bound to attract huge media interest.
likely to be any developments in the future?
Competition problems related to the sale of sports
media rights will continue to arise at the national level. Public authorities
will inevitably face stricter State aid control when supporting professional
sports. State aid control could also be an effective instrument to put an end
to the practice that selective tax exemptions for UEFA, FIFA, the IOC, etc. are
a condition for applications to host international sporting events.
The European Commission is currently examining a new
complaint against FIFA’s
ban on third-party ownership of players’ economic rights (TPO) in football and one
concerning FIFA’s new regulations for player’s agents. These could result in high-profile cases.
I do hope that the Commission will reclaim its
responsibility for ensuring that rules and practices of international sports
associations comply with EU competition law, particularly when athletes lodge
complaints. National competition authorities lack the political power to
confront international federations. And for most athletes, the possibility of
private enforcement is not a real alternative given clauses barring access to
national courts, the costs and the length of proceedings. For example, I am
currently advising two Dutch Olympic speed skaters whose faith lies entirely in
the hands of the Commission. They filed a
complaint against the International
Skating Union, who threatens them with a lifelong ban if they would participate
in lucrative events outside the official calendar. The European Parliament has urged the Commission to open a formal investigation so we
are optimistic that the Commission will take its responsibility and handle this
lawyers in this field advise their clients?
It is all about justifications. What you often see is
that, in an attempt to shield certain practices from competition law scrutiny,
much effort is put into arguments that, for example, sports associations or
clubs are not “undertakings”. And only when these fail, recourse is made to underdeveloped
arguments about the specificity of sport. Yet the true test lies here: are the restrictive
effects reasonably necessary for the organization and proper conduct of sport? This
obviously necessitates a good understanding of the sports sector and its
internal dynamics. Even more so because competition authorities and courts
typically give considerable deference to the legitimate role and expertise of
sports associations in regulating their competitions.
Given that most sports-related antitrust cases are now
being addressed at the national level, there is a strong need to learn and draw
from this decisional practice and case law. I am currently developing a
database that reports and comments on all these cases, which should be a useful
resource for those advising clients in the sports world.