Asser International Sports Law Blog

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

The 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...



The Specificity of Sport - Comparing the Case-Law of the European Court of Justice and of the Court of Arbitration for Sport - Part 1 - 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. Introduction.

The so-called specificity of sport represents one of the most debated, if not the most debated, but still undefined issue under European Union (EU) law. A noteworthy peculiarity is that the specificity of sport is frequently mentioned in several legislative and political documents issued by EU institutions, however it is not expressly referred to in any judgment by the European Court of Justice (ECJ).Conversely, the Court of Arbitration for Sport (CAS) case-law on Art. 17 of FIFA Regulations on status and transfer of players (RSTP) has repeatedly and expressly referred to the specificity of sport.[1] Apparently, the concept of specificity of sport has different meanings and purposes in the ECJ and CAS jurisprudence. In this blog (divided in two parts), I will try to analyse those two different meanings and to what extent the CAS case-law is consistent with the concept of specificity of sport as elaborated under EU law. More...

SFT rejects Semenya appeal: nothing changes - By Andy Brown

Editor's note: Andy Brown is a freelance journalist who has been writing about the governance of sport for over 15 years. He is the editor of The Sports Integrity Initiative where this blog appeared first.


For the last three days, I have been struggling with what to write regarding the Swiss Federal Tribunal’s (SFT) Decision to dismiss a challenge from Caster Semenya and Athletics South Africa (ASA) against the Court of Arbitration for Sport’s (CAS) Decision to dismiss a challenge to the Eligibility Regulations for the Female Classification (Athletes with Differences of Sex Development), otherwise known as the DSD Regulations. From reading World Athletics’ statement welcoming the ruling, one could be forgiven for thinking that it had won a major trial. Sports journalists, accustomed to covering events now curtailed by Covid-19, focus on the fact that Semenya has ‘lost’ her case against the DSD Regulations. Neither assertion is strictly accurate.

The SFT’s powers to review the CAS’s ruling are severely limited. It can only consider whether the CAS Decision violates ‘widely recognised principles of public order’ on Swiss public policy grounds. The SFT has only reversed a decision based on a a violation of Swiss public policy once in 30 years.

The SFT didn’t reconsider the evidence put forward to the CAS. ‘For there to be incompatibility with public policy, it is not enough that the evidence has been poorly assessed, that a finding of fact is manifestly false or that a rule of law has been clearly violated’, its Decision reads. ‘The only question to be resolved is in fact whether or not the verdict of the CAS renders the referred award incompatible with substantive public policy’. 

There were questions about whether the appeal from Semenya and ASA qualified to be reviewed by the SFT in the first place. World Athletics is a private organisation headquartered in Monaco, and the SFT was troubled as to whether such a complaint brought by a South African athlete against an overseas private organisation is capable of violating Swiss public policy.

‘It is doubtful whether the prohibition of discriminatory measures falls within the scope of the restrictive concept of public order when the discrimination is committed by a private person and occurs in relations between individuals’, the Decision quotes from its pervious 29 July 2019 Decision, which refused the ASA’s request to provisionally suspend the application of the DSD Regulations. ‘In any event, there is no need to examine this question further here since […] the award under appeal does not in any way establish discrimination which would be contrary to public order’

The SFT ruled that the CAS was correct to uphold conditions of participation for 46 XY DSD athletes in order to guarantee fair competition for certain disciplines in female athletics. In doing so, the SFT was ruling on whether the decision taken by the CAS violates public policy, based only on the complaints brought forward by Semenya and ASA. 

Semenya and the ASA had challenged the CAS Decision based around the idea that the DSD Regulations are discriminatory. The CAS held that they are discriminatory, but agreed with the IAAF (as World Athletics was then named) that such discrimination was necessary to protect its female category. The SFT ruled that even if the discriminatory rules of a private organisation such as the IAAF were considered able to pose a threat to public order, Semenya and the ASA had failed to demonstrate that the CAS Decision was so egregious that it posed such a threat.

‘Caster Semenya essentially alleges a violation of the prohibition of discrimination’, reads the Swiss Federal Supreme Court statement. ‘The CAS has issued a binding decision based on the unanimous opinion of the experts who were consulted that testosterone is the main factor for the different performance levels of the sexes in athletics; according to the CAS, women with the “46 XY DSD” gene variant have a testosterone level comparable to men, which gives them an insurmountable competitive advantage and enables them to beat female athletes without the “46 XY DSD” variant. Based on these findings, the CAS decision cannot be challenged. Fairness in sport is a legitimate concern and forms a central principle of sporting competition. It is one of the pillars on which competition is based. The European Court of Human Rights also attaches particular importance to the aspect of fair competition. In addition to this significant public interest, the CAS rightly considered the other relevant interests, namely the private interests of the female athletes running in the “women” category.’

Such strong support for the principle behind its DSD Regulations was rightly welcomed by World Athletics. Its statement asserted that the SFT ‘acknowledged that innate characteristics can distort the fairness of competitions’. I would argue that the SFT ruling didn’t do this, but rather found that a CAS Decision asserting this didn’t violate Swiss public policy. Semantics, perhaps.

Likewise, when World Athletics quotes the SFT Decision as confirming that ‘It is above all up to the sports federations to determine to what extent a particular physical advantage is likely to distort competition and, if necessary, to introduce legally admissible eligibility rules to remedy this state of affairs’, it is paraphrasing two texts quoted in the SFT Decision. The first is ‘La qualification juridique des rules autonomes des organizations sportive’ by Jérôme Jaquier, 2004. ‘Inborn characteristics specific to athletes in a particular group can also distort the fairness of competition’, the SFT Decision quotes from Jaquier. ‘When they enact regulations, the objective of sports federations is to ensure fair and equitable competition’.

The context of the second quote, from ‘Sportrecht – Berücksichtigung der Interessen des Sports in der Rechtsordnung’ by Martin Kaiser, 2011, is even more interesting. It is preceded with a statement from the Swiss Federal Supreme Court, which reads: ‘It is not for the Federal Court to make, abstractly, comparisons between the disciplines to assess whether a particular athlete has an advantage that makes sporting competition meaningless’

‘It is above all for the sporting federations to determine to what extent a particular physical advantage is liable to distort competition’, the SFT Decision quotes from Kaiser. ‘And, if so, to establish legally admissible eligibility rules to remedy this state of affairs’. 

Again, such details might be considered as semantics. But – I would argue – important semantics. Reading the media maelstrom that has resulted from the SFT Decision, one could be forgiven for assuming that Semenya has lost her case, and has no chance of ever defending her 800m title. However, a statement issued by her lawyers reveals that she intends to challenge the ruling in European and domestic courts.

“I am very disappointed by this ruling, but refuse to let World Athletics drug me or stop me from being who I am”, the statement continues. “Excluding female athletes or endangering our health solely because of our natural abilities puts World Athletics on the wrong side of history. I will continue to fight for the human rights of female athletes, both on the track and off the track, until we can all run free the way we were born. I know what is right and will do all I can to protect basic human rights, for young girls everywhere.” More...



The Semenya Decision of the Swiss Federal Tribunal: Human Rights on the Bench - By Faraz Shahlaei

Editor's note: Faraz Shahlaei is a JSD Candidate at Loyola Law School, Los Angeles. His research and teaching interests are public international law, international sports law, international human rights and dispute resolution.

 

The issue of international human rights was a central contention in Caster Semenya case ever since the start of her legal battle against the regulations of the IAAF. However, the human rights arguments were poorly considered in the two proceedings related to this case. To put it in perspective, it is like having a key player nailed to the bench throughout the whole game; no coach ever tried to give it a chance while it had the potential to be the game changer for all parties.

In 2019, the Human Rights Council, the inter-governmental human rights body of the UN, expressed concern over issues of discrimination in sports in particular regarding IAAF female classification regulations. In June 2020, the United Nations High Commissioner for Human Rights submitted a report to the United Nations Human Rights Council on the “Intersection of Race and Gender Discrimination in Sport”. The report draws a detailed picture of how human rights in the Semenya case have been violated and also elaborates on the inherent problem of addressing human rights issues in alternative dispute resolution mechanisms favored by the sport governing bodies. However, despite an in-depth discussion of Caster Semenya’s case at both the CAS and then the SFT, the question of human rights, a key concern and a fundamental pillar of the case, hasn’t been adequately answered yet! More...


The SFT’s Semenya Decision under European human rights standards: Conflicting considerations and why a recourse could be successful at Strasbourg - By Kevin Gerenni

Editor's note: Kevin Gerenni is Assistant Professor in Public International Law (Facultad de Derecho de la Universidad de Buenos Aires) and LLM Candidate 2021 in Public International Law at the London School of Economics.


Even though the decision rendered by the SFT in the Semenya Case was foreseeable, the Tribunal did put forward some concerning reasoning in terms of public policy (“ordre public”) and human rights. In case Semenya decides to challenge the Swiss state before the ECtHR, one can expect the case to shake some grounds at the ECtHR, which would be faced with the question of the application to sport not of fair trial guarantees (as in Mutu & Pechstein) but of substantial human rights provisions such as the prohibition of discrimination on the basis of sex (Article 14 ECHR) and the right to private life (Article 8 ECHR).

Under Swiss law, the reasons that may lead to the annulment of an arbitral award are enumerated in art. 190 of the Swiss Private International Law Act (PILA). Semenya’s strongest case relied on art. 190(2)(e): the award’s incompatibility with public policy. Naturally, this point concentrated most of the SFT’s attention. In order to analyze the compatibility of the CAS award with Swiss public policy, the SFT focused on three main potential breaches of human rights: prohibition of discrimination, personality rights, and human dignity. In doing so, it put forward certain observations that differ with European human rights standards and the ECtHR’s jurisprudence. The purpose of this short article is to analyze those discrepancies and, consequently, Semenya’s prospects of success before the Strasbourg Tribunal.More...


Selected procedural issues –and questions– arising out the Caster Semenya Judgment of the Swiss Federal Tribunal - By Despina Mavromati

Editor's note: Dr Despina Mavromati is an attorney specializing in international sports law and arbitration (Sportlegis Lausanne) and a UEFA Appeals Body Member. She teaches sports arbitration and sports contracts at the University of Lausanne, Switzerland

 

As the title indicates, this short note only deals with selected procedural issues and questions arising out of the very lengthy Semenya Judgment. In a nutshell, the SFT dismissed Semenya’s appeal to set aside the CAS Award, which had denied the request of Caster Semenya (Semenya, the Athlete) to declare unlawful the Differences of Sex Development (DSD) Regulations of World Athletics (formerly IAAF).[1]

At the outset, it has to be reminded that the CAS Award dealt with the merits of the Semenya case in a final and binding way by rendering an arbitral award according to Article R59 of the CAS Code (and Article 190 of the Swiss Private International Law Act – PILA). Therefore, the SFT did not act as an appellate court but rather as a cassatory court, entitled to review only whether the exhaustively enumerated grounds for annulment set out in Article 190 (2) PILA were met (and provided that they were properly invoked and substantiated in the motion to set aside said award).More...

Caster Semenya Case Exposes Design Flaws in International Sports Governance - By Roger Pielke Jr.

Editor's note: Roger Pielke Jr. is a professor at the University of Colorado Boulder

 

The decision this week by the Swiss Federal Tribunal not to revisit the arbitral decision of the Court of Arbitration for Sport (CAS) in the case of Caster Semenya was not unexpected, but it does help to expose a major design flaw in international sports governance. Specifically, the institutions that collectively comprise, create and enforce “sports law” appear incapable of addressing flawed science and violations of basic principles of medical ethics.

While different people will have different, and legitimate, views on how male-female competition classifications might be regulated, the issues highlighted involving science and ethics are not subjective, and are empirically undeniable. In normal systems of jurisprudence, procedures are in place to right such wrongs, but in sports governance processes in place prevent such course corrections. And that is a problem.

The empirical flaws in the science underpinning the IAAF (now World Athletics) Semenya regulations are by now well understood, and have been accepted by WA in print and before CAS (I was an expert witness for Semenya, and was present when IAAF accepted responsibility for the flawed research). You can read all the details here and in the CAS Semenya decision. I won’t rehash the flawed science here, but the errors are fatal to the research and obvious to see.

One key part of the comprehensive institutional failures here is that the journal which originally published the flawed IAAF research (the British Journal of Sports Medicine, BJSM) has, inexplicably, acted to protect that work from scrutiny, correction and retraction. Normally in the scientific community, when errors of this magnitude are found, the research is retracted. In this case, the BJSM refused to retract the paper, to require its authors to share their data or to publish a critique of the IAAF analysis. Instead, upon learning of the major errors, the BJSM published a rushed, non-peer reviewed letter by IAAF seeking to cover-up the errors. All of this is non-standard, and a scandal in its own right.

The violation of basic principles of medical ethics required by the implementation of the WA Semenya regulations is also not contested. Both WA and the IOC have claimed to uphold the World Medical Association’s Helsinki Declaration on medical and research ethics. Yet, the WMA has openly criticized the WA regulations as unethical and asked doctors not to implement them. In response, WA has stated that it will help athletes who wish to follow the regulations to identify doctors willing to ignore medical ethics guidelines.

Flawed science and ethical violations are obviously issues that go far beyond the case of Caster Semenya, and far beyond sport. In any normal system of jurisprudence such issues would prove readily fatal to regulatory action, either in the first instance of proposed implementation or via review and reconsideration.

Sport governance lacks such processes. At CAS, the panel claimed that matters of scientific integrity and medical ethics were outside their remit. The SFT is allowed to reconsider a CAS decision only on narrow procedural grounds, and thus also cannot consider matters of scientific integrity or medical ethics. So far then, the flaws in the WA regulations – sitting in plain sight and obvious to anyone who looks, have not been correctable.

This leaves the world of sport governance in a compromised position. Some may look past the scientific and ethical issues here, perhaps judging that barring Semenya from sport is far more important that correcting such wrongs. 

Regardless of one’s views on sex and gender classification in sport, the WA regulations and the processes that produced and have challenged them reveal that sports governance has not yet entered the 21st century. Science and ethics matter, and they should matter in sport jurisprudence as well.  It is time to correct this basic design flaw in international sport governance.

Caster Semenya at the SFT – in 10 points - By Jack Anderson

Editor's note: Jack Anderson is Professor and Director of Sports Law Studies at the University of Melbourne

 

1.     Caster Semenya appealed to the Swiss Federal Court (SFT) arguing that World Athletics’ regulations violated human rights principles relating to gender discrimination and human dignity. The Swiss Federal Tribunal (as at CAS) held that World Athletics’ regulations may prima facie breach such human rights principles but were “necessary, reasonable and proportionate” to maintain fairness in women's athletics;


2.     Although in part addressed at the SFT, expect further legal argument on this in the domestic courts of South Africa or at the ECtHR, and in the following ways:

  • Necessity - is the athletic advantage that Caster Semenya has of such a scientifically-measurable extent that it is necessary for World Athletics to intervene in such an invasive manner? In a broader ethical sense, is the incidence of what the World Athletics’ regulations call “difference of sex development” of such prevalence in the general population, and specifically in middle-distance athletics, that, by way of the principle of “sporting beneficence”, intervention is justified. Or, in contrast, is the incidence of DSD not at a level which justifies a departure from the ethical principle of primum non nocere – first, do no harm?
  • Reasonableness - if World Athletics’ regulations are necessary, is the manner of implementation reasonable and in line with the principle of human and bodily integrity? In answering such a question, the focus must be on the fact that in order to continue to compete in her favourite events (such as the 800 metres) Caster Semenya will have to lower her testosterone level through medication;
  • Proportionate - if World Athletics’ regulations are necessary and reasonable is the manner of implementation proportionate? In answering such a question, the focus must be on whether the regulations disproportionately discriminate against a certain, limited group of athletes in a certain, limited number of events and in a certain, limited manner.More...


Chronicle of a Defeat Foretold: Dissecting the Swiss Federal Tribunal’s Semenya Decision - 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.

 

On 25 August 2020, the Swiss Supreme Court (Swiss Federal Tribunal, SFT) rendered one of its most eagerly awaited decisions of 2020, in the matter of Caster Semenya versus World Athletics (formerly and as referenced in the decision: IAAF) following an award of the Court of Arbitration for Sport (CAS). In short, the issue at stake before the CAS was the validity of the World Athletics eligibility rules for Athletes with Differences of Sex Development (DSD Regulation). After the CAS upheld their validity in an award of 30 April 2019, Caster Semenya and the South African Athletics Federation (jointly: the appellants) filed an application to set aside the award before the Swiss Supreme Court.[1] The SFT decision, which rejects the application, was made public along with a press release on 8 September 2020.

There is no doubt that we can expect contrasted reactions to the decision. Whatever one’s opinion, however, the official press release in English does not do justice to the 28-page long decision in French and the judges’ reasoning. The goal of this short article is therefore primarily to highlight some key extracts of the SFT decision and some features of the case that will be relevant in its further assessment by scholars and the media.[2]

It is apparent from the decision that the SFT was very aware that its decision was going to be scrutinised by an international audience, part of whom may not be familiar with the mechanics of the legal regime applicable to setting aside an international arbitration award in Switzerland.

Thus, the decision includes long introductory statements regarding the status of the Court of Arbitration for Sport, and the role of the Swiss Federal Tribunal in reviewing award issued by panels in international arbitration proceedings. The SFT also referred extensively throughout its decision to jurisprudence of the European Court of Human Rights (ECtHR), rendered in cases related to international sport and the CAS. More...

New Transnational Sports Law Articles Released on SSRN - Antoine Duval

I have just released on SSRN four of my most recent articles on Lex Sportiva/Transnational Sports Law. The articles are available open access in their final draft forms, the final published version might differ slightly depending on the feedback of the editors. If you wish to cite those articles I (obviously) recommend using the published version.

I hope they will trigger your attention and I look forward to any feedback you may have!

Antoine


Abstract: This chapter focuses on the emergence of a transnational sports law, also known as lex sportiva, ruling international sports. In the transnational law literature, the lex sportiva is often referred to as a key example or case study, but rarely studied in practice. Yet, it constitutes an important playground for transnational legal research and practice, and this chapter aims to show why. The focus of the chapter will first be on the rules of the lex sportiva. Law, even in its transnational form, is still very much connected to written rules against which a specific behaviour or action is measured as legal or illegal. As will be shown, this is also true of the lex sportiva, which is structured around an ensemble of rules produced through a variety of law-making procedures located within different institutions. The second section of this chapter will aim to look beyond the lex sportiva in books to narrate the lex sportiva in action. It asks, what are the institutional mechanisms used to concretize the lex sportiva in a particular context? The aim will be to go beyond the rules in order to identify the processes and institutions making the lex sportiva in its daily practice. Finally, the enmeshment of the lex sportiva with state-based laws and institutions is highlighted. While the lex sportiva is often presented as an autonomous transnational legal construct detached from territorialized legal and political contexts, it is shown that in practice it operates in intimate connection with them. Hence, its transnational operation is much less characterized by full autonomy than assemblage.


Abstract: This chapter aims to show that the work of the Court of Arbitration for Sport (‘CAS’), which is often identified as the institutional centre of the lex sportiva, can be understood as that of a seamstress weaving a plurality of legal inputs into authoritative awards. In other words, the CAS panels are assembling legal material to produce (almost) final decisions that, alongside the administrative practices of sports governing bodies (‘SGBs’), govern international sports. It is argued that, instead of purity and autonomy, the CAS’ judicial practice is best characterised by assemblage and hybridity. This argument will be supported by an empirical study of the use of different legal materials, in particular pertaining to Swiss law, EU law and the European Convention on Human Rights (‘ECHR’), within the case law of the CAS. The chapter is a first attempt at looking at the hermeneutic practice of the CAS from the perspective of a transnational legal pluralism that goes beyond the identification of a plurality of autonomous orders to turn its sights towards the enmeshment and entanglement characterising contemporary legal practice.


Abstract: Has the time come for the Court of Arbitration for Sport to go public? This article argues that after the Pechstein decision of the European Court of Human Rights, CAS appeal arbitration must be understood as forced arbitration and therefore must fully comply with the due process guarantees enshrined in Article 6(1) ECHR. In particular, this entails a strong duty of transparency with regard to the hearings at the CAS and the publication of its awards. This duty is of particular importance since the rationale for supporting the validity of CAS arbitration, if not grounded in the consent of the parties, must be traced back to the public interest in providing for the equality before the (sports) law of international athletes. Thus, the legitimacy and existence of the CAS is linked to its public function, which ought to be matched with the procedural strings usually attached to judicial institutions. In short, if it is to avoid lengthy and costly challenges to its awards, going public is an urgent necessity for the CAS.


Abstract: In 1998 the FIFA welcomed the Palestinian Football Association as part of its members - allegedly, as an attempt by then FIFA President, the Brazilian João Havelange, to showcase football as an instrument of peace between Israeli and Palestinians. Ironically, almost 20 years after Palestine’s anointment into the FIFA family, instead of peace it is the conflict between Israeli and Palestinians that moved to FIFA. In recent years the Palestinian Football Association (PFA) and the Israeli Football Association (IFA) have been at loggerheads inside FIFA over the fate - I will refer to it as the transnational legality – of five (and then six) football clubs affiliated to the IFA which are physically located in the Israeli settlements in the Occupied Palestinian Territories (OPT). This chapter chronicles the legal intricacies of this conflict, which will serve as a backdrop to discuss arguments raised regarding the legality of business activities of corporations connected to the Israeli settlements. Indeed, as will be shown in the first part of this chapter, the discussion on the legality of economic activities in the OPT has recently taken a business and human rights turn involving systematic targeting of corporations by activists. Interestingly, we will see that this business and human rights turn also played a role in the conflict between the IFA and the PFA. This case study is therefore an opportunity to examine how the strategy of naming and shaming private corporations, and in our case not-for-profit associations, for their direct or indirect business involvement in the settlements has fared. It is also an occasion to critically assess the strength of the human rights ‘punch’ added to the lex sportiva, by the UNGPs.

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

Asser International Sports Law Blog

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

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

Introduction

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

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

The general rule

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

Decision by an association of undertakings

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

Effect on trade between Member States

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

Object or effect the prevention, restriction or distortion of competition

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

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

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

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

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

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

Possible Justification

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

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

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

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

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

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

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

Conclusion

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



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

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

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

[4] Ibid, para 73.

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

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

[7] Ibid, paras 19-24.

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

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

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

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

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

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

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

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

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

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

[18] Ibid, para 19 and 21.

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

[20] Ibid.

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

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

[23] Ibid, para 100.

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

[25] Ibid.

[26] Ibid.

Comments are closed