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

International and European Sports Law – Monthly Report – February 2020 - By Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

Manchester City sanctioned by UEFA’s Financial Fair Play

Manchester City has been sanctioned under UEFA’s Financial Fair Play (FFP) regulations for two seasons for ‘overstating its sponsorship revenue in its accounts and in the break-even information’ it had provided UEFA. The February 14 decision of the Adjudicatory Chamber of the Club Financial Control Body (CFCB) likely heralds the start of a long and bitter legal war between Manchester City and UEFA, which may end up settling many of the questions surrounding the legality of FFP rules. Since its introduction in 2010, the compatibility of FFP with EU law, especially in terms of free movement and competition law, has been a continued point of contention amongst the parties concerned and commentators (see discussion here, here and here). It was only a matter of time that a case would arise to test this issue and the present circumstances seem to indicate that this may go all the way.                                 

Regardless, the ban will not be enforced this season and in light of the appeal process, it is hard to predict when the CFCB’s decision will have any effect. Indeed, Manchester City has shown an incredible willingness to fighting this out in the courts and shows no signs of backing down. The next stop will be the CAS and perhaps followed by the Swiss Federal Tribunal. It should also be recalled that the CAS has already examined FFP in its Galatasaray award, where it found FFP compatible with EU law (see commentary here). There is even a decent chance that this emerging saga may end up in front of the European Commission and eventually the Court of Justice of the European Union.

Sun Yang CAS award published

After a much-anticipated public hearing, the Panel’s award in the Sun Yang case has finally been published, sanctioning Sun Yang with an eight-year period of ineligibility (see here for a detailed commentary). The decision does not reveal anything groundbreaking in terms of its legal reasoning and in many ways the case will most likely be remembered for its historical significance: the case that jumpstarted a new era of increased public hearings at the CAS.

Perhaps of some interest is the extent to which the panel took into account Sun Yang’s behavior during the proceedings in order to support its assessment of the case. For example, the panel describes how Sun Yang had ignored the procedural rules of the hearing by inviting ‘an unknown and unannounced person from the public gallery to join him at his table and act as an impromptu interpreter’. The Panel interpreted this as Sun Yang attempting ‘to take matters into his own hands’ which it found resembled the athlete’s behavior in the case (see para 358). The Panel also found it ‘striking’ that Sun Yang did not express any remorse concerning his actions during the proceedings. Since the proceedings were held publicly and have been recorded, it is possible to verify the Panel’s assessment in this regard.

In the end, it is possible that Sun Yang may seek to reduce the period of ineligibility once the 2021 WADA Code comes into force (see para 368). For now, Sung Yang may also try to appeal the award to the Swiss Federal Tribunal on procedural grounds, and has already indicated his wish to do so. More...

Mega-sporting events and human rights: What role can EU sports diplomacy play? - Conference Report – By Thomas Terraz

Editor’s note: Thomas Terraz is a fourth year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

 

1.     Introduction

 On March 05, the T.M.C. Asser Institute hosted ‘Mega-sporting events and human rights: What role can EU sports diplomacy play?’ a Multiplier Sporting Event organized in the framework of a European research project on ‘Promoting a Strategic Approach to EU Sports Diplomacy’. This project funded by the European Commission through its Erasmus+ program aims to help the EU adopt a strategic approach to sports diplomacy and to provide evidence of instances where sport can help amplify EU diplomatic messages and forge better relations with third countries. In particular, Antoine Duval from the Asser Institute is focusing on the role of EU sports diplomacy to strengthen human rights in the context of mega sporting events (MSE) both in Europe and abroad. To this end, he organized the two panels of the day focusing, on the one hand, on the ability of sport governing bodies (SGB) to leverage their diplomatic power to promote human rights, particularly in the context of MSEs and, on the other, on the EU’s role and capacity to strengthened human rights around MSEs. The following report summarizes the main points raised during the discussions. More...

Special Issue Call for Papers: Legal Aspects of Fantasy Sports - International Sports Law Journal

The International Sports Law Journal (ISLJ) invites submissions to a special issue focusing on legal aspects of fantasy sports. For some time, fantasy sports has been a major phenomena in North America and this has been reflected in the sports law literature. Fantasy sports have more recently grown in popularity in the rest of world, raising a number of novel legal questions. The ISLJ wants to support fruitful global discussions about these questions through a special issue. We welcome contributions from different jurisdictions analyzing fantasy sports from the perspective of various areas of law including, but not limited to, intellectual property law, gambling law, and competition law.

Please submit proposed papers through the ISLJ submission system (http://islj.edmgr.com/) no later than November 15, 2020. Submissions should have a reccomended length of 8,000–12,000 words and be prepared in accordance with the ISLJ's house style guidelines (https://www.springer.com/journal/40318/submission-guidelines). All submissions will be subject to double-blind peer review.

Question about the special issue can be directed to the Editor–in-Chief, Johan Lindholm (johan.lindholm@umu.se).

International and European Sports Law – Monthly Report – January 2020 - By Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

IOC Athlete Commission releases its Rule 50 Guidelines for Tokyo 2020

The IOC Athlete Commission presented its Rule 50 Guidelines for Tokyo 2020 at its annual joint meeting with the IOC Executive Board. It comes as Thomas Bach had recently underlined the importance of political neutrality for the IOC and the Olympic Games in his New Year’s message. Generally, rule 50 of the Olympic Charter prohibits any political and religious expression by athletes and their team during the Games, subject to certain exceptions. The Guidelines clarify that this includes the ‘field of play’, anywhere inside the Olympic Village, ‘during Olympic medal ceremonies’ and ‘during the Opening, Closing and other official ceremonies’. On the other hand, athletes may express their views ‘during press conferences and interview’, ‘at team meetings’ and ‘on digital or traditional media, or on other platforms. While rule 50 is nothing new, the Guidelines have reignited a debate on whether it could be considered as a justified restriction on one’s freedom of expression.

 

The IOC has made the case that it is defending the neutrality of sport and that the Olympics is an international forum that should help bring people together instead of focusing on divisions. Specifically, Richard Pound has recently made the argument that the Guidelines have been formulated by the athletes themselves and are a justified restriction on free expression with its basis in ‘mutual respect’. However, many commentators have expressed their skepticism to this view (see here, here and here) citing that politics and the Olympics are inherently mixed, that the IOC is heavily involved in politics, and that the Olympics has often served as the grounds for some of history’s most iconic political protests. All in all, the Guidelines have certainly been a catalyst for a discussion on the extent to which the Olympics can be considered neutral. It also further highlights a divide between athlete committees from within the Olympic Movement structures and other independent athlete representation groups (see Global Athlete and FIFPro’s statements on rule 50).

 

Doping and Corruption Allegations in Weightlifting 

The International Weightlifting Federation (IWF) has found itself embroiled in a doping and corruption scandal after an ARD documentary was aired early in January which raised a wide array of allegations, including against the President of the IWF, Tamás Aján. The documentary also included hidden camera interviews from a Thai Olympic medalist who admits having taken anabolic steroids before having won a bronze medal at the 2012 London Olympic Games and from a team doctor from the Moldovan national team who describes paying for clean doping tests. The IWF’s initial reaction to the documentary was hostile, describing the allegations as ‘insinuations, unfounded accusations and distorted information’ and ‘categorically denies the unsubstantiated’ accusations. It further claims that it has ‘immediately acted’ concerning the situation with the Thai athletes, and WADA has stated that it will follow up with the concerned actors. However, as the matter gained further attention in the main stream media and faced increasing criticism, the IWF moved to try to ‘restore’ its reputation. In practice, this means that Tamás Aján has ‘delegated a range of operation responsibilities’ to Ursual Papandrea, IWF Vice President, while ‘independent experts’ will conduct a review of the allegations made in the ARD documentary. Richard McLaren has been announced to lead the investigation and ‘is empowered to take whatever measures he sees fit to ensure each and every allegation is fully investigated and reported’. The IWF has also stated that it will open a whistleblower line to help aid the investigation.More...


How 2019 Will Shape the International Sports Law of the 2020s - By Thomas Terraz

Editor’s note: Thomas Terraz is a fourth year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

 

1.     Introduction

As we begin plunging into a new decade, it can be helpful to look back and reflect on some of the most influential developments and trends from 2019 that may continue to shape international sports law in 2020 and beyond. Hence, this piece will not attempt to recount every single sports law news item but rather identify a few key sports law stories of 2019 that may have a continued impact in the 2020s. The following sections are not in a particular order.More...

Free Event! Mega-sporting events and human rights: What role can EU sports diplomacy play? - 5 March at the Asser Institute in The Hague

The upcoming 2022 FIFA World Cup in Qatar and its links to human rights violations has been the subject of many debates in the media and beyond. In particular, the respect of migrant workers’ labour rights was at the forefront of much public criticisms directed against FIFA. Similarly, past Olympics in Rio, Sochi or Beijing have also been in the limelight for various human rights issues, such as the lack of freedom of the press, systematic discrimination on the basis of sexual orientation or forced evictions. These controversies have led sports governing bodies (SGBs) to slowly embrace human rights as an integral part of their core values and policies. Leading to an increased expectation for SGBs to put their (private) diplomatic capital at the service of human rights by using their leverage vis-à-vis host countries of their mega-sporting events (MSEs). In turn, this also raises the question of the need for the EU to accompany this change by putting human rights at the heart of its own sports diplomacy.


Research collective 
This Multiplier Sporting Event, organised in the framework of the transnational project on ‘Promoting a Strategic Approach to EU Sports Diplomacy’ funded by the Erasmus + Programme, aims to trigger discussions on the role of an EU sports diplomacy in strengthening respect for human rights in the context of MSEs both at home and abroad. It will feature two roundtables focused on the one hand on the diplomatic power and capacity of SGBs to fend for human rights during MSEs and on the other on the EU’s integration of human rights considerations linked to MSEs in its own sports diplomacy.


Programme

13:20 – 14:00 – Welcome and opening speech –Antoine Duval (Asser Institute)
14:00 - 15:30 - Panel 1: Leveraging the Diplomatic Power of the Sports Governing Bodies for Human Rights

  • Lucy Amis (Unicef UK/Institute for Human Rights and Business)
  • Guido Battaglia (Centre for Sport and Human Rights)
  • Florian Kirschner (World Players Association/UNI Global Union)
  • Claire Jenkin (University of Hertfordshire)

15:30 – 16:00 - Coffee Break

16:00 - 17:30 - Panel 2: A Human Rights Dimension for the EU’s Sports Diplomacy?

  • Arnout Geeraert (Utrecht University)
  • Agata Dziarnowska (European Commission)
  • Alexandre Mestre (Sport and Citizenship)
  • Ministry of Health, Welfare and Sport (TBC)

17:30 - Reception

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

Editor’s note: Thomas Terraz is a fourth year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

 

1        Introduction

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

International and European Sports Law – Monthly Report – November and December 2019- By Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

WADA Conference and the Adoption of 2021 WADA Code Amid Calls for Reform

On November 5-7, WADA held its Fifth World Conference on Doping in Sport where it faced a busy schedule, including the adoption of the revised 2021 World Anti-Doping Code and the election of a new WADA President and Vice-President by the Foundation Board. Concerning the latter, Witold Bańka, Poland’s Minister of Sport and Tourism, was elected as WADA President and Yang Yang, a former Chinese speed skater, elected as Vice-President, replacing Sir Craig Reedie and Linda Helleland respectively.  As Helleland leaves her position, she has expressed some strong views on the state of sport governance, particularly that ‘there is an absence of good governance, openness and independence in the highest levels of international sports’. Helleland was not the only one to recently voice governance concerns, as Rob Koehler, Director General of Global Athlete, also called for a ‘wholesale structural change at WADA’, which includes giving ‘independent’ athletes a vote in WADA’s Foundation Board, ensuring a greater ‘separation of powers’ and ensuring greater protection of athletes’ rights.

In the midst of the calls for reform, the amended 2021 WADA Code and the amended International Standards were also adopted after a two year, three stage code review process. Furthermore, a major milestone in athletes’ rights was achieved with the adoption of the Athletes’ Anti-Doping Rights Acts (separate from the WADA Code), which enumerates certain basic rights to help ‘ensure that Athlete rights within anti-doping are clearly set out, accessible, and universally applicable’. On the other hand, the Act ‘is not a legal document’, which clearly circumscribes some of the potential effects the Act may have. Nonetheless, athlete representative groups have ‘cautiously welcomed’ some of the changes brought by the 2021 WADA Code, such as the ‘modified sanctions for substances of abuse violations’.

Sung Yang’s Historical Public Hearing at the CAS

After much anticipation, the second public hearing in CAS history occurred on November 15 in Montreux, Switzerland in the Sun Yang case (details of this case were discussed in August and September’s monthly report), which was livestreamed and can be seen in its totality in four different parts (Part 1, Part 2, Part 3, Part 4). This was an extremely unique opportunity, which hopefully will become a more common occurrence, to see just how CAS hearings are conducted and perhaps get a taste of some of the logistical issues that can emerge during live oral hearings. One of these problems, accurate translations, rapidly became apparent as soon as Sun Yang sat in the witness chair to give his opening statements. The translators in the box seemed to struggle to provide an intelligible English interpretation of Sun Yang and other witnesses’ statements, while Sun Yang also seemingly had trouble understanding the translated questions being posed to him. The situation degenerated to such an extent that ultimately one of WADA’s officials was called to replace the translators. However, the translation drama did not end there, since during Sun Yang’s closing statements an almost seemingly random person from the public appeared next to Sun Yang who claimed to have been requested from Sun Yang’s team to ‘facilitate’ the translation. Franco Frattini, president of the panel, questioned the identity of the ‘facilitator’ and explained that one could not just simply appear before the court without notice. Interestingly, Sun Yang’s legal team also rapidly intervened claiming that it had not been made of aware of the inclusion of the supporting translator, further complicating the matter. In the end, Sun Yang concluded his statements with the translation from the WADA official.

While it was Sun Yang’s legal team that had provided the original translators in the box, it still raises the question as to how translation at CAS could be improved to ensure a certain standard of translators. After all, quality translation is critical to the parties’ right to be heard under Article 6 (e) ECHR. Regardless, in the end, neither parties made an objection that their right to be heard was violated.

Russian Doping Saga Continues: WADA Compliance Review Committee Recommends Strong Sanctions

As was already discussed in August and September’s monthly report, WADA uncovered numerous inconsistencies concerning data taken from the Moscow Laboratory. After further investigation, WADA’s Compliance Review Committee has recommended that the Russian Anti-Doping Agency (RUSADA) be found non-compliant with the WADA Code. Accompanying the recommendation, the Compliance Review Committee also suggested several sanctions, which include prohibiting Russian athletes from participating in major events like the Olympic Games and ‘any World Championships organized or sanctioned by any Signatory’ for the next four years unless they may ‘dmonstrate that they are not implicated in any way by the non-compliance’. It would also see an embargo on events hosted in Russia during the same period. However, these sanctions did not go far enough for some, like Travis Tygart, chief executive of USADA, who wishes to prevent a repeat of Rio 2016 and PyeongChang 2018 ‘in which a secretly-managed process permitting Russians to compete – did not work’. On the other hand, the IOC has advocated for a softer, individual based approach that pursues ‘the rules of natural justice and respect human rights’. In the midst of these developments, the Athletics Integrity Unit also decided to charge several members of the Russian Athletics Federation (RusAF), including its President Dmitry Shlyakhtin, after a 15 month investigation for ‘tampering and complicity’ concerning a Russian athlete’s whereabouts violations.

Following many calls for strong consequences, the WADA Executive Committee met on December 9th and adopted the recommendations of the Compliance Review Committee. Athlete representatives have expressed their disappointment with the sanctions, calling the decision ‘spineless’ since it did not pursue a complete ban on Russian participation at events such as Euro 2020 and the 2020 Olympics. At this point, RUSADA has sent notice to WADA that it will be disputing the decision of WADA’s Executive Committee’s decision at the CAS.More...


Is UCI the new ISU? Analysing Velon’s Competition Law Complaint to the European Commission - By Thomas Terraz

Editor’s note: Thomas Terraz is a fourth year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

 

1.     Introduction

The UCI may soon have to navigate treacherous legal waters after being the subject of two competition law based complaints (see here and here) to the European Commission in less than a month over rule changes and decisions made over the past year. One of these complaints stems from Velon, a private limited company owned by 11 out of the 18 World Tour Teams,[1] and the other comes from the Lega del Ciclismo Professionistico, an entity based in Italy representing an amalgamation of stakeholders in Italian professional cycling. While each of the complaints differ on the actual substance, the essence is the same: both are challenging the way the UCI exercises its regulatory power over cycling because of a growing sense that the UCI is impeding the development of cycling as a sport. Albeit in different ways: Velon sees the UCI infringing on its ability to introduce new race structures and technologies; the Lega del Ciclismo Professionistico believes the UCI is cutting opportunities for semi-professional cycling teams, the middle ground between the World Tour Teams and the amateur teams.

While some of the details remain vague, this blog will aim to unpack part of the claims made by Velon in light of previous case law from both the European Commission and the Court of Justice of the European Union (CJEU) to give a preliminary overview of the main legal issues at stake and some of the potential outcomes of the complaint. First, it will be crucial to understand just who/what Velon is before analyzing the substance of Velon’s complaint. More...

International and European Sports Law – Monthly Report – October 2019 by Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 


The Headlines

International Sports Law Journal (ISLJ) Conference 2019

The T.M.C. Asser Institute and the Asser International Sports Law Centre held the third International Sports Law Journal (ISLJ) Conference on October 24-25. The Conference created a forum for academics and practitioners to discuss, debate and share knowledge on the latest developments of sports law. It featured six uniquely themed panels, which included topics such as ‘Transfer systems in international sports’ and ‘Revisiting the (in)dependence and transparency of the CAS’ to ‘The future of sports: sports law of the future’. The ISLJ Conference was also honored to have two exceptional keynote speakers: Moya Dodd and Ulrich Haas. To kick off the conference, Moya Dodd shared her experiences from an athlete’s perspective in the various boardrooms of FIFA. The second day was then launched by Ulrich Haas, who gave an incredibly thorough and insightful lecture on the importance, function and legal basis of association tribunals in international sport. For a detailed overview of this year’s ISLJ Conference, click here for the official conference report.

The Asser International Sports Law Centre was delighted to have been able to host another great edition of the ISLJ Conference and is thankful to all the participants and speakers who made this edition such a success.

Moving towards greater transparency: Launch of FIFA’s Legal Portal

On October 31, FIFA announced that it was introducing a new legal portal on its website that will give greater access to numerous documents that previously were kept private. FIFA explains that this is in order to help increase its transparency, which was one of the key ‘Guiding Principles’ highlighted in FIFA 2.0: The Vision for the Future released in 2016. This development comes as many sport governing bodies face increasing criticism for the opacity of its judicial bodies’ decisions, which can have tremendous economic and societal impacts. The newly available documents will include: ‘decisions rendered on the merits by the FIFA Disciplinary Committee and the FIFA Appeal Committee (notified as of 1 January 2019); decisions rendered on the merits by the FIFA Ethics Committee (notified since 1 January 2019); decisions rendered on the merits by the FIFA Players’ Status Committee and the FIFA Dispute Resolution Chamber; non-confidential CAS awards in proceedings to which FIFA is a party (notified since 1 January 2019); list of CAS arbitrators proposed by FIFA for appointment by ICAS, and the number of times they have been nominated in CAS proceedings’. The list of decisions from all the aforementioned bodies are updated every four months, according to their respective webpages. However, time will ultimately tell how consistently decisions are published. Nevertheless, this move is a major milestone in FIFA’s journey towards increasing its transparency.

Hong Kong Protests, Human Rights and (e)Sports Law: The Blizzard and NBA controversies

Both Blizzard, a major video game developer, and the NBA received a flurry of criticism for their responses to persons expressing support for the Hong Kong protests over the past month. On October 8, Blizzard sanctioned Blitzchung, a professional Hearthstone player who expressed support of the Hong Kong protest during a post-match interview, by eliminating the prize money he had won and suspending him for one year from any Hearthstone tournament. Additionally, Blizzard will cease to work with the casters who conducted the interview. With mounting disapproval over the sanctions,  J. Allen Brack, the president of Blizzard, restored the prize money and reduced the period of ineligibility to 6 months.

The NBA controversy started when Daryl Morey, the general manager of the Houston Rockets, tweeted his support for the protests in Hong Kong. The tweet garnered much attention, especially in China where it received a lot of backlash, including an announcement from CCTV, the official state broadcaster in China, that it was suspending all broadcasts of the NBA preseason games. In attempts to appease its Chinese audience, which is a highly profitable market for the NBA, Morey deleted the tweet and posted an apology, and the NBA responded by saying that the initial tweet was ‘regrettable’. Many scolded these actions and accused the NBA of censorship to which the NBA Commissioner, Adam Silver, responded that the NBA remains committed to freedom of expression.

Both cases highlighted how (e)sport organizations may be faced with competing interests to either guarantee greater protection of human rights or to pursue interests that perhaps have certain financial motivations. More...


Asser International Sports Law Blog | The proportionality test under Art. 101 (1) TFEU and the legitimacy of UEFA Financial fair-play regulations: From the Meca Medina and Majcen ruling of the European Court of Justice to the Galatasaray and AC Milan awards of the Court of Arbitration for Sport – By Stefano Bastianon

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 proportionality test under Art. 101 (1) TFEU and the legitimacy of UEFA Financial fair-play regulations: From the Meca Medina and Majcen ruling of the European Court of Justice to the Galatasaray and AC Milan awards of the Court of Arbitration for Sport – 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. He is also member of the IVth Division of the High Court of Sport Justice (Collegio di Garanzia dello sport) at the National Olympic Committee.

 

1. On the 20th July 2018, the Court of Arbitration for Sport (hereinafter referred to as “CAS”) issued its decision in the arbitration procedure between AC Milan and UEFA. The subject matter of this arbitration procedure was the appeal filed by AC Milan against the decision of the Adjudicatory Chamber of the UEFA Financial Control Body dated 19th June 2018 (hereinafter referred to as “the contested decision”). As many likely know, the CAS has acknowledged that, although AC Milan was in breach of the break-even requirement, the related exclusion of the club from the UEFA Europe League was not proportionate. To date, it is the first time the CAS clearly ruled that the sanction of exclusion from UEFA club competitions for a breach of the break-even requirement was not proportionate. For this reason the CAS award represents a good opportunity to reflect on the proportionality test under Art. 101 TFEU and the relationship between the landmark ruling of the European Court of Justice (hereinafter referred to as “ECJ”) in the Meca Medina and Majcen affair and the very recent case-law of the CAS.

2. According to the contested decision, AC Milan was guilty for failing to comply with Articles 58 to 63 of the UEFA Financial fair-play regulations on the break-even requirement. As a consequence the Adjudicatory Chamber has excluded AC Milan from participating in the next UEFA Europe League for which AC Milan has already qualified (2018-2019) at the end of the 2017-2018 Italian football championship. The appeal filed at the CAS by AC Milan was mainly aimed at seeking the annulment of the contested decision and ordering UEFA to enter into a settlement agreement.

3. The theory of proportionality test under Art. 101(1) TFEU in sports matters goes back to the ECJ’s ruling in the 2006 Meca Medina and Majcen case, while, in general terms, this theory was enunciated by the ECJ for the first time in the 1994 DLG case and then repeated in the 2002 Wouters and Others case although in a slightly different way.

In the DLG case the ECJ has ruled that:

«in order to escape the prohibition laid down in Article 85(1) of the Treaty, the restrictions imposed on members by the statutes of cooperative purchasing associations must be limited to what is necessary to ensure that the cooperative functions properly and maintains its contractual power in relation to producers (…). In addition, it is necessary to establish whether the penalties for non-compliance with the statutes are disproportionate to the objective they pursue and whether the minimum period of membership is unreasonable». 

Eight years later, in the Wouters and Others case the ECJ established the following principles:

(i) not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Art. 101(1) of the Treaty;

(ii) for the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects; and

(iii) it has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives.

Unlike the DLG case, in the Wouters and Others ruling the ECJ did not expressly refer to the concept of proportionality, but preferred to recall the concept of inherent restrictions. However, from the overall wording of the ECJ, it is clear that in both cases it tried to apply in the antitrust sector the same theory of mandatory requirements developed in relation to the internal market.

4. On the contrary, in the Meca Medina and Majcen case, the ECJ expressly referred to the concept of proportionality. In particular, the ECJ has literally quoted the passage of the Wouters and Others ruling where it is stated that:

«not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC. For the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (Wouters and Others, par. 97)». 

However, unlike the Wouters and Others case, the ECJ has added that the effects restrictive of competition must also be proportionate to the objectives pursued.

More specifically, in anti-doping issues the test of proportionality is a means to avoid the risk that a given rule (and the sanctions imposed in case of a breach of it) may prove excessive by virtue of:

(i) firstly, the conditions laid down for establishing the dividing line between circumstances which amount to doping in respect of which penalties may be imposed and those which do not, and

(ii) secondly, the severity of those penalties (in the case at issue the penalty was a two year suspension).

Regarding the first point, the ECJ has underlined that the dividing line was determined by the threshold of 2 ng/ml of urine above which the presence of Nandrolone in an athlete's body constitutes doping. Based on documents before the Court, the ECJ could conclude that the average endogenous production observed in all studies then published was 20 times lower than 2ng/ml of urine and that the maximum endogenous production value observed was nearly a third lower. As a consequence, the ECJ rejected the argument according to which the threshold was set at such a low level that it should have been regarded as not taking sufficient account of the phenomenon of the endogenous production of Nandrolone.

Regarding the second point, instead, the ECJ simply observed that: 

«since the appellants have, moreover, not pleaded that the penalties which were applicable and were imposed in the present case are excessive, it has not been established that the anti-doping rules at issue are disproportionate».

This is the most critical passage of the ruling as one could wonder what would happen if the plaintiffs had contested the proportionality of the penalties. In such a case the ECJ should have examined the substance of the plea and stated whether the two year suspension was proportionate or not. However, in the event that the ECJ had come to the conclusion that the penalty was not proportionate, the anti-doping rules at issue should have been declared null and void unless it was possible to prove that the conditions of Art. 101 (3) TFEU were fulfilled.

The same reasoning was applied by the EU Commission in the ISU decision concerning the Eligibility rules enacted by the International Skating Union. In its decision, the Commission clearly underlined that:

«even if the Eligibility rules and their consequential effects restrictive of competition were inherent in the pursuit of any legitimate objective, the sanctions imposed on athletes in case of breach of the Eligibility rules are manifestly disproportionate» (par. 260).[1]

Thus, in sports matters there seem to be no doubt that the proportionality test must involve also the sanctions imposed on athletes. As already said, in the ISU decision, the Commission has clearly underlined that the Eligibility rules were not proportionate to achieve legitimate objectives in particular in view of the disproportionate nature of the ISU’s ineligibility sanctions. More specifically the Commission has pointed out that:

«the 2014 Eligibility rules provided for the heaviest sanction of a lifetime ban, even for the first infringement of the Eligibility rules, without taking into consideration the circumstances of the case (…). For the purposes of the assessment of the proportionality of the Eligibility rules it is however not relevant how many times the ISU has actually imposed sanctions. The fact that a lifetime ban was imposed only once on an athlete may even underline the strong deterrent effect of the sanctions. Although the sanctions system has been modified in the General Regulations 2016, the sanctions remain disproportionately punitive, as they provide for periods of ineligibility that go up to five years for negligent participation in unauthorized events, up to 10 years for athletes that knowingly participate in unauthorised events and a lifetime ban for athletes participating in unauthorised events endangering, inter alia, the ‘ISU jurisdiction’. These are disproportionately heavy sanctions in particular in view of the fact that on average a professional athlete's entire career is around eight years long. Also the imposition of a five-year ban is therefore likely to impact very heavily on an athlete's career who, after years of training and sacrifices, loses the possibility to gain income through the participation in the ISU's international events». 

This reasoning clearly shows that the Commission has considered the sanctions imposed to be disproportionate, not simply the rule forbidding participation in unauthorized events.

5. To date, neither the EU Commission nor the ECJ has had the opportunity to comment on the compatibility of the UEFA Financial Fair-play rules with EU Competition law. Indeed, regarding the Striani affair, the Commission has dismissed the complaint on procedural grounds only (the lack of Community interest), while the ECJ has declared a reference for preliminary ruling send by a Belgian court manifestly inadmissible and therefore did not rule on the substance of the case. As a consequence, to date there is no European formal decision that has assessed the compatibility of UEFA Financial Fair-play rules with EU law.

This opportunity, however, was offered to the CAS in the context of the Galatasaray/UEFA award (2016/A/4492). To fully understand the case one must go back to the 2nd March 2016 when the Adjudicatory Chamber of the UEFA Financial Control Body issued a decision in which it decided that Galatasaray has failed to comply with the terms of the Settlement Agreement and imposed on Galatasaray an exclusion from participating in the next UEFA Club competition for which it would otherwise qualify in the next two seasons.

On the 11th March 2016, Galatasaray filed an appeal with the CAS to challenge the decision of the Adjudicatory Chamber of the UEFA Financial Control Body. Basically, the arguments put forward by Galatasaray were based:

(i) on the alleged incompatibility of the break-even rule with EU law (namely, Art. 101 TFEU on cartels, Art. 102 TFEU on abuse of dominant position, Art. 63 TFEU on free movement of capital, Art. 56 TFEU on free movement of services and Art. 45 TFEU on free movement of workers); and, in the event the first argument is rejected,

(ii) on the alleged disproportionate nature of the sanctions imposed by UEFA.

It is very interesting to note that from the point of view of Galatasaray the incompatibility of the break-even rule with EU law is something different and completely divorced from the proportionate character of the sanction. Indeed, the latter argument is invoked only in the event the first argument is rejected. In other words, according to this line of defence, the compatibility of the break-even rule with EU principles must be assessed only on the basis of the alleged restrictive effects on competition and the (alleged legitimate) objectives pursued, without considering the sanctions imposed.

In line with this approach, the CAS examined the two arguments put forward by Galatasaray separately. Regarding the relationship between the break-even rule and EU Competition law, the CAS reasoning can be summarized as follows:

(i) UEFA Financial fair-play regulations have neither the object nor the effect of restricting competition because: (a) UEFA Financial fair-play regulations do not prevent the clubs from competing among themselves on the pitch or in the acquisition of football players; (b) they prevent the distortion of competition by overspending; (c) clubs are free to pay the players as much as the wish provided that salaries are covered by revenues; (d) large dominant clubs have always existed and will always exist and therefore the alleged ossification of the structure market is a nonsense; (d) overspending is not completely prohibited because the break-even rule only applies over rolling periods of three years; and

(ii) in any case, even assuming that the break-even rule has anticompetitive effects, the objectives sought by UEFA Financial fair-play regulations do appear legitimate and their alleged restrictive effects inherent to the achievement of those objective. Put simply: if UEFA intends to control the level of indebtedness of European football clubs, the imposition of limits to spending beyond revenues is a natural element of a financial discipline seeking that objective.

By contrast, regarding the proportionality of the sanction imposed by the UEFA, the reasoning of the CAS is completely based on external factors which allegedly affected the finances of Galatasaray (i.e., the Syrian refugee crisis, the terrorist attacks in Turkey, the Turkish major match-fixing scandal, the exchange rate and rate fluctuations, the national economic downturn in Turkey, the inefficiencies of the market and the management changes). However, according to the CAS, this argument cannot be accepted because the club failed to provide the Panel with the accounting evidence of how and in which proportion each of these factors would have caused the break-even deficit. Moreover, the CAS has underlined that the sanction was not disproportionate because:

(i) it was imposed as a sanction for a second violation (i.e., after the Settlement Agreement which presupposes the previous violation of the rules on financial fair play);

(ii) an exclusion limited in time (one season) from the UEFA competitions is consistent with the principle of equal treatment and fair competition, as it protects the club respecting the UEFA Financial Fair-play regulations and does not prevent future compliance with them.


It follows from the foregoing that, according to the CAS the proportionate character of sanctions listed in the UEFA Financial Fair-play regulations cannot affect the evaluation of the legitimacy of these regulations under Art. 101 TFUE.

6. To some extent the AC Milan/UEFA case is similar to the Galatasaray case. Both clubs have failed to comply with the break-even requirement; both clubs have been sanctioned with the exclusion for one season from the UEFA competitions; both clubs have contested the proportionality of the sanction. Unlike Galatasaray, however, AC Milan was denied the possibility to enter into a Settlement Agreement[2]. On the contrary, it is worthy to note that the CAS has confirmed the decision of the Adjudicatory Chamber of the UEFA CFCB, which was rendered on the 19th June 2018, establishing that AC Milan had failed to fulfil the break-even requirement. However, it has annulled the decision to the extent that it has excluded AC Milan from participating in the next UEFA Club competition for which it would otherwise qualify in the next two seasons (i.e., the 2018-19 and 2019-20 seasons), arguing that the sanction was not proportionate. As a consequence, the CAS has referred back the case to the Adjudicatory Chamber to issue a proportionate disciplinary measure. The press release issued on the 20th July 2018 (the full text of the award is not yet available) indicates that the decision to annul the sanction and refer back the case to the Adjudicatory Chamber is based on the following arguments:

(i) some important elements regarding the financial situation of the Club and the recent change in the Club’s ownership have not been properly assessed by the Adjudicatory Chamber, or could not be properly assessed at the moment when the contested decision was rendered;

(ii) the Adjudicatory Chamber is in a better position than the CAS Panel to issue a new proportionate disciplinary measure on the basis of the current financial situation of the Club.

Despite the differences between the two cases, it is interesting to note that in the Galatasaray case the CAS assessed the sanction imposed by the Adjudicatory Chamber on the merits and found it proportionate. To the contrary, in the AC Milan case the CAS has assessed the sanction on the merits only to state that it was not proportionate, but refrained from saying which other sanction could be considered proportionate, arguing that the Adjudicatory Chamber is in a better position than the CAS to issue a new proportionate disciplinary measure. In other words, the CAS seems to say that it has no problem to assess the proportionality of a given sanction ; however, if it deems that the sanction is not proportionate, it is not for the CAS to replace the penalty imposed with another sanction.

7. Comparing the awards in the Galatasaray and AC Milan cases with the ruling in Meca Medina and Majcen affair some aspects deserve to be underlined. First of all, according to the case-law of the ECJ in sports matters, 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 violation of that rule. On the contrary, according to the case-law of the CAS the analysis of the proportionate character of a sanction necessarily presupposes a positive evaluation of the legitimate character of the objectives pursued by the rule and its inherence to those objectives. In other words, it seems that according to the CAS the disproportionate nature of a sanction is not capable of affecting the legitimacy of the rule whose violation determined that sanction. Although the full text of the award is not yet available from the AC Milan/UEFA case it emerges that the disproportionate nature of the penalty imposed only resulted in the referral of the case to the Adjudicatory Chamber for the imposition of another sanction. Although apparently in line with the Wouters and Others case, this approach is clearly in contrast with the Meca Medina and Majcen case and, more generally, with the whole theory of mandatory requirements in the field of the internal market.

To this regard it is of paramount importance not to underestimate the fundamental difference between rules which are applied a priori and rules that are applied a posteriori. As also recognized by the CAS in the well-known ENIC case:

«rules that are applied a priori tend to prevent undesirable situations which might prove difficult or useless to deal with afterwards, rather than imposing a penalty on someone guilty of something. On the other hand, rules that are applied a posteriori are bound to react to specific behaviours. For example, under EC law and several national laws, rules on mergers are applied a priori, whereas rules on abuses of dominant position are applied a posteriori. Merger operations are checked before they actually take place, and are blocked if the outcome of the merger would be the establishment of a dominant position because of the possible negative consequences on the market and not because the individuals owning or managing the merging undertakings are particularly untrustworthy and the company after the merger is expected to abuse of its dominant position (…). All such a priori rules are applied on a preventive basis, with no appraisal of any specific wrongdoing and no moral judgement on the individuals or companies concerned. On the other hand, rules setting forth obligations and corresponding penalties or sanctions, such as criminal or disciplinary rules, can be applied only after someone has been found guilty of having violated an obligation». 

In this context it is clear that rules applied a posteriori (such as the UEFA Financial Fair-play regulations) consist of both the obligations set forth and the corresponding sanctions. In addition, it is not possible nor correct to arbitrarily separate the obligation from the sanction. Indeed, the fact that in the Meca Medina and Majcen ruling the proportionality test was referred precisely to the restrictive effects and not to the prohibition of doping cannot be ignored. The prohibition of doping as such, without the corresponding sanctions, does not have any restrictive effect on competition.

Secondly, the sanctioning system envisaged by the UEFA does not provide clear and transparent criteria as to how the sanctions are to be applied. There is no scale to measure and define the seriousness of the violation and no provision illustrating the relationship between the violation and the sanction that can be imposed. It is interesting to note that the same reasoning was applied by the EU Commission in the ISU decision. And everyone knows the outcome of this case.

Thirdly, the choice of the CAS to refer back the case to the Adjudicatory Chamber could mean that the AC Milan/UEFA case is not yet closed definitively. According to Art 29 of the Procedural rules governing the UEFA Club Financial Control Body in case of a breach of the UEFA Financial Fair-play regulations the clubs may be sanctioned with the following measures: a) warning, b) reprimand, c) fine, d) deduction of points, e) withholding of revenues from a UEFA competition, f) prohibition on registering new players in UEFA competitions, g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions, h) disqualification from competitions in progress and/or exclusion from future competitions, i) withdrawal of a title or award. If the exclusion from UEFA competitions is certainly one of the most serious sanctions, there are other particularly serious penalties, such as the prohibition on registering new players in UEFA competitions or the restriction on the number of players that a club may register for participation in UEFA competitions. Consequently, since the seriousness of the ascertained infringement seems to exclude that the Adjudicatory Chamber may decide to apply a very minimal sanction (such as a warning or a reprimand), it cannot be excluded that the new sanction will also be perceived as excessive and therefore disproportionate. And in this case, at least in theory, nothing could prevent AC Milan from appealing to the CAS by challenging again the disproportionate character of the (new) sanction.

8. The Meca Medina and Majcen ruling presents many ambiguities and for this reason is rightly criticized. To say nothing else, it cannot be ignored that the extension of the proportionality test also to the sanctioning system provided for by sports regulations raises at least two fundamental problems: (a) firstly, to establish which criteria are to be used to determine the proportionate character of the sanctions; and (b) secondly, the opportunity to invest judges or arbitrators of such a task. However, the recent case-law of the CAS on the proportionality test of UEFA Financial Fair-play regulations seems to reveal no less serious concerns and perplexities.


[1] For more details, see my blog and Ben Van Rompuy’s blog.

 

[2] As a consequence one could argue that the decision of the panel to find that the sanction is disproportionate is probably connected to the fact that Milan was not offered a settlement.

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