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

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

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

1.     FIFA’s training compensation and solidarity mechanism: A very short introduction

Training compensation is the obligation of an acquiring/buying/signing/new club to compensate the training clubs of a player. A training club is considered to be the clubs of the player between the ages of 12 and 21, though the obligation to compensate continues if either of the following two instances take place, up until the season of a player’s 23^rd birthday:  i) “[A] player is registered for the first time as a professional” or,  ii) “a professional is transferred between clubs of two different associations…”. The obligation does not arise if a former club terminates a player’s contract without just cause, when a professional reacquires amateur status in moving clubs, or when a player transfers to a category 4 club. Regarding the categories, this is important because the amounts owed to a training club hinge on where clubs fall within four categories (For more on the four categories see HERE).

There are some regulatory differences between the EU/EEA and the rest of the football world. A significant distinction is that without sufficient justification that it is worthy of compensation, a former club will not be owed by a “new club”[1] if they have not offered a contract of equivalent value to the player in question.[2]

The Solidarity mechanism provisions stipulate that when a player moves to a new club, mid contract, for a fee agreed between the new club and former club, then 5% of that fee is designated as a solidarity contribution, and each of the player’s training clubs will receive a portion. The apportionment varies depending on what age the player was registered with the training club (further information on apportionment can be found HERE). This obligation arises when a player is transferred definitively or on loan, between clubs from different associations, as well as when a transfer takes place within the same association, but a training club of the player is affiliated to another association.

For both training compensation and the solidarity mechanism, the regulations provide that the national association will instead receive the money when the club owed “has in the meantime ceased to participate in organised football and/ or no longer exists”.[3] In cases as such, the compensation is to be used for youth football development.

Disputes can arise when the new club does not pay on time or at all, or if there is a disagreement on the amount owed, as well as when a new club attempts to make the case that a player has already terminated his training period prior to age of 21. Given the above explanation of the systems is brief, further detail may be found within the relevant articles and annexes (see HERE for the full regulations).

2.     A brief history: From the ‘retain and transfer system’ to the FIFA RSTP 2001

Much of the current framework is the product of various events surrounding the birth of the regulations in 2001, though the ideas and concepts it captures go way back beyond this time. The English Football League’s registration system that would go on to be touted as the ‘retain and transfer system’ dates back to at least 1893.[4] Both this system and the American Baseball ‘reserve rule’ system are often mentioned in the same breath. As Sloane pointed out in 1969: “The justification for the reserve rule and the retain and transfer system lies in their alleged function in bringing about a more or less equal distribution of playing talent between clubs, whilst, their advocates argue, free competition would lead to a concentration of 'star' players into a few rich clubs.”[5]  Both systems were the target of an array of challenges over the years, though up until ‘free agency’[6] in the case of American Baseball (much earlier) and Bosman[7] in football, each system remained largely the same in existence and justification.[8] To further emphasise that the issues recognised, and in turn the ideas and justifications pertinent to the current system are hardly new, the Chester Report of 1969 on the situation regarding employment and transfers in football in England had striking similarities to much of what was raised within the European-level negotiations that lead to the changes in 2001.[9]

With the momentous Bosman case in 1995, the previously commonplace practice of an out of contract player being retained and unable to transfer (regardless of that player’s preferences) was found contrary to EU law. Importantly for the subject of this blog, the court also recognised that “encouraging the recruitment and training of young players must be accepted as legitimate”[10] aim, on the basis of which the free movement rights of players could in principle be restricted. Thus, leaving an opening for a regulatory system that would support the “recruitment and training of young players”[11] and restrict free movement in a proportionate way.

In 1998, the European Commission decided to open an investigation against FIFA based on competition law concerns linked to its then applicable RSTP.  This decision brought FIFA, UEFA and FIFPro to the European Commission’s negotiating table to hammer out a compromise that would satisfy their divergent interests and be compatible with the EU’s antitrust rules. The regulations as they now stand, aside from some minor amendments, reflect the outcome of those negotiations. The final press release of the European Commission concluded that FIFA’s new regulations would have to reflect a set of principles in order to be deemed compatible with EU competition law. In particular it accepted that:

• in the case of players aged under 23, a system of training compensation should be in place to encourage and reward the training effort of clubs, in particular small clubs;
• creation of solidarity mechanisms that would redistribute a significant proportion of income to clubs involved in the training and education of a player, including amateur clubs; 

These are in fact quite faithfully transposed in the FIFA RSTP provisions discussed above. Since then, the Bernard[12] ruling of the CJEU further clarified that the societal significance of sport, rendered the incentivisation of training legitimate. In its ruling, the court specified that in order to comply with EU law, a training compensation system ‘must be actually capable of attaining that objective and be proportionate to it, taking due account of the costs borne by the clubs in training both future professional players and those who will never play professionally’.^[13] This remains the main benchmark that any FIFA training compensation system must meet in order to comply with EU law.

As we have shown in this section, the shape of the current FIFA training compensation system and solidarity mechanism are very much a direct result of the EU’s interventionism in the regulation of football in the aftermath of the Bosman case. In doing so, the EU institutions also recognised that the idea of redistributing funds to compensate the costs incurred by the training club in instructing a player is a legitimate one.

3.     Justifying redistribution: Sharing the costs of training

Why do football institutions want this system in place and how was it justified? As was alluded to above, these ideas are not new ideas and are rooted in tradition.[14] Football and its intricacies have been deemed in need of protection for a long time, at least from within. More importantly for this blog, there is a desire for wealth to be redistributed in the form of compensation to the training clubs, to manufacture solidarity between the different levels of football and to incentivise goals such as training, education and development. This justification for FIFA’s redistributive systems is largely connected to the recognition that sport is important for the social fabric, and that incentivising development and training clubs goes beyond football and has societal benefits.

These objectives are reflected in the compromise agreed between FIFA and the EC in 2001. The latter’s press release emphasised that training compensation was “to encourage and reward the training effort of clubs, in particular small clubs“. Similarly, FIFA stated in Circular no. 769; “This system is designed to encourage more and better training of young football players, and to create solidarity among clubs, by awarding financial compensation to clubs which have invested in training young players.” Thus, it is clear that both the football authorities and the EU institutions recognise that the core aim of the FIFA’s training compensation and (though less obviously) its solidarity mechanism are to support the recruitment and training of young professional footballers. In fact, the CJEU’s advocate general in Bernard later recognised that training compensation rules “ensure that clubs are not discouraged from recruitment and training by the prospect of seeing their investment in training applied to the benefit of some other club, with no compensation for themselves”.[15] She went on to emphasise that “there is a broad public consensus that the training and recruitment of young players should be encouraged rather than discouraged”.[16]

At the heart of these rationalisations lies the core belief that failing to compensate the club that has helped a young player grow into a professional player is unfair and would discourage the club’s future effort to train players. Whether a training compensation system is necessary to attain such an objective is, however, far from evident. As was pointed out by advocate general Lenz in the Bosman case, such objectives could as well “be attained by a system of redistribution of a proportion of income, without the players' right to freedom of movement having to be restricted for that purpose“.[17] Nevertheless, the idea of redistribution between clubs remains the fundamental policy objective that underpins both FIFA’s training compensation system and solidarity mechanism.

Concluding remarks and subsequent blogs

This blog has highlighted that FIFA’s training compensation system and solidarity mechanism were introduced, after lengthy discussions with the European Commission and relevant stakeholders, in order to create a solidarity and redistributive relationship between the club where a player was trained and the club were a player pursues his professional career. The core justification behind them is that the training clubs provide an important educational service and that their work would be discouraged if they would not be enjoying some economic returns on their investment (in time and resources) to train players that go on to play professionally for a bigger/richer club.

While this objective is certainly respectable, there are, however, questions that remain regarding the adequacy and necessity of these systems to effectively redistribute funds between clubs. First, one should always keep in mind that training compensations are restricting the players’ freedom to move between clubs. Second, as we will see in the coming blog focusing on African players and clubs, it is questionable whether the current FIFA rules are in practice achieving their main redistributive function. Third, if these mechanisms are necessary to encourage training, it is as well remarkable that they are not also introduced in the context of women professional football, as will be discussed in our third blog. Finally, my last blog will assess how the coming changes to FIFA’s RSTP will affect the structure and operation of both the training compensation system and the solidarity mechanism.

[1] “New club” is the language used in the RSTP.

[2] “[I]n writing via registered post at least 60 days before the expiry of his current contract” per RSTP Annex 4 (6) ‘Special provisions for the EU/EEA’.

[3] RSTP - Annex 4 (3) 3; Annex 5 (2) 3.

[4] Sloane, P. J. (1969), The labour market in professional football, British Journal of Industrial Relations, 7, 181-199.

[5] Ibid.

[6] Established from the decision in Curt Flood v. Bowie Kuhn, et al. 407 U.S. 258.

[7] Case C-415/93 Union Royale Belge des Socie´te´s de Football Association and others v. Bosman and others, ECLI: EU: C:1995:463

[8] Gerrard, B. (2002), The Muscle drain, Coubertobin-Type Taxes and the International Transfer System in Association Football,  European Sport Management Quarterly at 50 – “High Court in England ruled in 1963 that the retain-and transfer system was a restraint of trade. This led to a progressive relaxation of the transfer system with players being given more freedom to move between teams at the end of their contracts while transfer fees remained payable”.

[9] Per Sloane (1969) – “Contracts should have a terminable date and be renewable only on the consent of both parties… The committee did, however, suggest that a special levy should be imposed by the Football League on transfer fees, in addition to the present arrangement and graded according to the size of fee at a progressive rate. This levy could be returned to clubs for the purpose of ground improvements and would thereby tend to offset the tax advantage which clubs derive by signing players, since such payments, unlike the cost of ground improvements, are tax allowable.

[10] Bosman, para 106.

[11] Ibid.

[12] Case C-325/08 Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC, ECLI: EU: C:2010:143

[13] Ibid para 45.

[14] Pearson, G. Sporting Justifications under EU Free Movement and Competition Law: The Case of the Football ‘Transfer System’, European Law Journal, Vol. 21, No. 2, (March 2015) pp. 222.

[15] Opinion of Advocate General Sharpston in CJEU case C-325/08 Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC, para 46.

[16] Ibid para 47.

[17] Opinion of Advocate General Lenz CJEU case C-415/93 Union Royale Belge des Socie´te´s de Football Association and others v. Bosman and others, para 239.

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.