Football Revolution: how do the Court’s rulings of 21 December 2023 affect UEFA’s role as a ‘gatekeeper’?

Steve Weatherill, Somerville College and Faculty of Law, University of Oxford

Photo credit: Werner100359, via Wikimedia Commons

 

Summary

The Court of Justice’s rulings of 21 December 2023 found practices associated with prior approval of new sporting competitions organised by third parties to be incompatible with EU law. The most prominent reason for this finding was the absence of transparent, non-discriminatory, clear and precise substantive criteria and procedures. So – of course – governing bodies in sport must amend their practices. But what remains, if anything, of their legitimate role as a ‘gatekeeper’? Assume a prior approval system is based on transparent, non-discriminatory, clear and precise substantive criteria and procedures: when may a governing body – I will focus on football and on UEFA - refuse to authorise a new competition?

I have three questions to address in order to elucidate the legal principles set out by the Court on 21 December. First could UEFA refuse to authorise a closed League (and could it penalise participants)? I think, yes. Second could UEFA refuse to authorise a second Champions League (and penalise participants) – i.e. in a format identical to its own, except owned by third parties? I think, no. Third could UEFA refuse to authorise a new competition (and penalise participants) where the format is not identical to its own, but similar (and not closed), except owned by third parties? I think, no, unless UEFA can demonstrate its own competitions are superior according to the (predominantly economic criteria) recognised by EU law. It seems to me that UEFA is entitled to defend the European Model of Sport, most conspicuously by legitimately using its power to forestall the creation of a ‘closed’ competition, but UEFA is not entitled to protect its monopoly over the supply of competitions which comply with the European Model of Sport. Therefore the Court has opened the door as a matter of law to those who would wish to revolutionise football in Europe.

 

The treatment of governing bodies in sport as ‘gatekeepers’

What is the status of governing bodies in sport – UEFA in particular - as ‘gatekeepers’ in the light of the three momentous and lengthy rulings of 21 December 2023 - Case C-333/21 European Superleague Company SL v FIFA, UEFA; Case C-680/21 UL, SA Royal Antwerp Football Club v URBSFA, UEFA; Case C-124/21 P International Skating Union v Commission. The three rulings, all delivered by the Grand Chamber, will be referred to hereafter as ESL, Royal Antwerp and ISU.

The Court went out of its way in ESL to insist that its ruling mainly addresses the compatibility with EU law of FIFA and UEFA rules governing the prior approval of competitions and participation therein by professional football clubs or players. The Court was not being asked to rule on the compatibility of the Super League project itself with EU law (ESL para 80). The rulings, though important, do not answer every question and in fact they ask several new ones. Sometimes the Court issues rulings which are relatively concrete and have a quasi-legislative feel – not on this occasion.

Plainly, however, the Court on 21 December 2023 has done much to develop our understanding of the legal framework which surrounds UEFA’s power of prior approval. Consequently it has also done much to provide those who would wish to challenge the existence and/ or exercise of that power in order to offer new competitions on the market for football in Europe with fresh ammunition. The original version of the Superleague – a ‘closed’ competition to which in any event only two of the original twelve participating clubs continue to express fidelity – may be dead, but the incentives to challenge UEFA’s monopoly and to introduce new competitions have not vanished. This power struggle has only just begun.

The ‘gatekeeping’ power or the power of prior approval claimed by UEFA is a power to authorise new events (or not). It is, then, the power to determine the conditions under which potentially competing undertakings may enter the market for the supply of football competitions. This is a market which is well known to be immensely lucrative, but it is also, as recent trends in club ownership reveal, of increasing political salience. The world covets European football.

This gatekeeping power is capable of falling within the scope of EU law – of course. The rulings of 21 December 2023 are clear on this, unsurprisingly so. The ‘rules on a sporting association’s exercise of powers governing prior approval for sporting competitions, the organisation and marketing of which constitute an economic activity for the undertakings involved or planning to be involved therein, come, in that capacity, within the scope of the …  Treaty provisions on competition law’ (ESL para 90). In support of this proposition the Court is able to cite its previous ruling of 1 July 2008, MOTOE, C‑49/07, which also found the gatekeeping practices of a governing body in sport (in casu motorcycling) to fall foul of EU competition law. And it added that for the same reason the rules also come within the scope of the Treaty provisions on freedom of movement (ESL para 90).

The Court tells us that EU law is violated where that power of prior approval is not governed by transparent, clear and precise substantive criteria, which make it possible to prevent it from being used arbitrarily. Those criteria must be appropriate to ensure the non-discriminatory exercise of such a power and to enable effective review. Moreover there shall be transparent and non-discriminatory procedural rules. The rulings, most of all ESL, are larded with insistence on these features as a condition of legality (ESL paras 88, 134-136, 147-8, 151-152, 175, 177, 178, 179, 203, 254, 255; Royal Antwerp para 57; ISU paras 127, 133). It applies across the board in internal market law too – the same principles are applicable to review pursuant to Article 102, Article 101 and Article 56 (on abuses of a dominant position, cartels, and free movement of services) too, so competition and free movement law are aligned on this point.

This is general EU internal market law. As the Court takes care to point out, this is consistent with existing internal market case law in a wide range of economic sectors. Case law cited ranges across several areas of activity. ESL para 133, and ISU para 125 cite GB-Inno-BM, C‑18/88, which concerns telecommunications and Raso and Others, C‑163/96, which concerns the management of ports, alongside MOTOE from the world of sport.

We can understand this as EU law requiring good governance standards (transparency, non-discrimination etc) as a pre-condition to finding regulatory practices to be lawful. This is not specific to sport, but rather to any situation in which a body exercises a power of, in short, gatekeeping.

The Court is anxious to protect equality of opportunity as between undertakings, and to entrust an undertaking which exercises a given economic activity the power to determine which other undertakings are also authorised to engage in that activity and to determine the conditions in which that activity may be exercised, gives rise to a conflict of interests and puts that undertaking at an obvious advantage over its competitors, by enabling it to deny them entry to the market concerned or to favour its own activity.

The Court goes out of its way to note that it does not matter how this is created, whether by public law delegation or private market power (ESL paras 133, 137; ISU paras 125, 126). MOTOE, the motorcycling case, arose out of state regulation, but the principle that such a gatekeeper needs to be controlled is – it is now made clear by the Court - not limited to that, it applies to a gatekeeping power however created and in whichever economic sector, and in fact it is particularly important where the power is not derived from a grant made by a public authority (ESL para 137). But, even if the principle is of general application to any kind of ‘gatekeeper’, it might be of particular relevance to sport given the notoriously poor governance standards that plague some parts of it. And it is of particular relevance to the practices under scrutiny in the judgments, because at the time the process followed by UEFA and the ISU as gatekeepers was clearly deficient.

The absence of a framework providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory was fatal to the rules when they were put to the tests demanded by Articles 102, 101 and 56 TFEU. This is why the governing body practices were found to be unlawful on 21 December 2023 – just as fifteen years previously MOTOE had condemned the practices of a governing body in sport as contrary to EU competition law for want of restrictions, obligations and review within the prior approval process.

So governing bodies in sport and UEFA in particular must change. They must improve. Let us assume they do. Let us assume that a governing body has such a ‘gatekeeping’ power governed by transparent, clear and precise substantive criteria, which make it possible to prevent it from being used arbitrarily. They are appropriate to ensure the non-discriminatory exercise of the power and to enable effective review. There are transparent and non-discriminatory procedural rules.

Is that enough? What more does EU law have to say? Most of all, within the framework applicable to authorisation decisions, what criteria are legitimately applied to exclude third party organisers, and which are not? This is vital to understand just how far the Court on 21 December 2023 has shrunk UEFA’s powers as a gatekeeper.

The Court takes us a bit further. But the whole story is yet to be told.

Three questions serve to structure the analysis: First could UEFA refuse to authorise a closed League (and could it penalise participants)? Second could UEFA refuse to authorise a second Champions League (and penalise participants) – i.e. in a format identical to its own, except owned by third parties? Third could UEFA refuse to authorise a new competition (and penalise participants) where the format is not identical to its own, but similar (and not closed), except owned by third parties?

 

(i) First question

Could UEFA refuse to authorise a closed League (and could it penalise participants)? Obviously it could not when it had the inadequate framework which is the background to the rulings of 21 December, but if it has cleaned up its process and now follows a scheme that meets the Court’s requirements of transparency, objectivity etc, could it refuse to authorise a closed League (and could it penalise participants)?

I think, yes, UEFA could refuse to authorise a closed League.

ESL para 143 concerns Article 102. It tells us participation in and conduct of competitions is based on sporting merit, which can only be guaranteed if all the teams involved compete under homogeneous regulatory and technical conditions, ensuring a certain equality of opportunity. Para 144 tells us it is legitimate to make the organisation and conduct of international professional football competitions subject to common rules, and, more broadly, to promote competitions based on equal opportunities and merit. Compliance can legitimately be ensured by a scheme of prior authorisation and by accompanying sanctions in the case of violation of the rules. The same phrase appears at ISU para 132: the holding of sporting competitions based on equality of opportunity and merit.

ESL para 175 addresses Article 101. It begins by stating that ‘it follows from paragraphs 142 to 149’ – i.e. the Court explicitly wants to align Article 101 to Article 102 on this point - that the specific nature of international football competitions and the real conditions of the structure and functioning of the market for the organisation and marketing of those competitions on European Union territory lend credence to the idea that it is legitimate to have rules on prior approval – though they need to be objective, transparent etc. Para 176 states that rules on prior authorisation may be motivated by the pursuit of certain legitimate objectives, such as that of ensuring respect for the principles, values and rules of the game which underpin professional football.

Para 253 contains the same approach to Article 56 TFEU on the free movement of services.

So – provided always that the process meets the requirements of objectivity, transparency etc – the Court appears to accept that a prior authorisation system may be used to refuse a competition which is not based on sporting merit. So, most obviously, a ‘no’ to closed leagues (and penalties on participants) appears to be a legitimate exercise of the gatekeeping function.

The legal basis for this legitimate exclusion of closed Leagues is not made entirely clear by the Court. An important part of the package unwrapped on 21 December is to shrink the role played in the legal analysis by Wouters and Others, C‑309/99 and Meca-Medina and Majcen v Commission, C‑519/04 P. Conduct which ‘by its very nature infringes Article 102 TFEU’ cannot benefit from the Wouters/ Meca formula (ESL, para 185). Nor does it apply in situations involving conduct which, far from merely having the inherent effect of restricting competition, ‘reveals a degree of harm in relation to that competition that justifies a finding that it has as its very “object” the prevention, restriction or distortion of competition’ (ESL, para 186, Royal Antwerp, para 115). So only if conduct does not have as its object the prevention, restriction or distortion of competition and does not by its very nature infringe Article 102 does the Meca-Medina route open up, allowing a governing body in sport to show its practices to be necessary to achieve legitimate objectives and thereby to place its practices beyond the scope of the Treaty rules on competition.

All this comes later in the ruling in ESL than the acceptance that participation in and conduct of competitions shall be based on sporting merit and equal opportunities and merit and that rules on prior authorisation may be motivated by the pursuit of legitimate objectives including respect for the principles, values and rules of the game which underpin professional football - ESL paras 143, 144 re Article 102, para 176 re Article 101 and see also para 132 of ISU. Probably, then, the correct understanding is that action taken to defend sporting merit is not a restriction of competition by object at all within the (new) understanding of the scope of Article 101(1), and so benefits from application of the Meca-Medina formula.

The object of requiring that new competitions be open and based on sporting merit is not to restrict competition but rather ‘the pursuit of legitimate objectives, such as ensuring observance of the principles, values and rules of the game underpinning professional football’ (ESL para 176) - just as in Meca-Medina itself the Court found an inherent effect of restricting potential competition between athletes as a result of anti-doping but placed the matter outwith Article 101(1) because the rules had the objective to ‘to safeguard the fairness, integrity and objectivity of the conduct of competitive sport, ensure equal opportunities for athletes, protect their health and uphold the ethical values at the heart of sport, including merit’ (as explained, citing Meca-Medina and Majcen v Commission, C‑519/04 P, EU:C:2006:492, in ESL para 184, Royal Antwerp para 114, ISU para 112).

So, in sum: it is potentially lawful to act to suppress a competition not based on access via sporting merit, subject to showing transparent, objective, non-discriminatory (etc) criteria. This is clearly important, and it puts a shape on the legitimate objectives which UEFA may pursue in crafting pre-authorisation criteria. The Court in ESL is not opening the door to a free-for-all – certain types of sporting competition are, it seems, legitimately suppressed by UEFA as gatekeeper. In this sense the judgments put a shape on the European Sports Model. It may as a matter of law be defended: UEFA may legitimately act against ‘closed’ competitions and insist instead that only competitions which are merit-based may be approved. In December 2022 Advocate General Rantos wrote a wildly adventurous Opinion in ESL which claimed that Article 165 ‘constitutionalised’ the European Sports Model and that accordingly EU law granted a high level of protection to the sporting status quo. One year later the Court’s rulings of 21 December 2023 ignore Mr Rantos’s Opinion and prefer a much more restrained reading of the extent to which EU law respects the specificity of sport. But on this particular point – the distaste for competitions which are not based on sporting merit – the Court echoes Mr Rantos in its willingness to interpret EU internal market law in a way that gives constitutionalised (i.e. recognised in primary law) protection to open competitions.

This seems very helpful to UEFA. It is entitled to act as a gatekeeper charged with the responsibility to defend a model based on sporting merit. It means too that UEFA’s own competitions need to have access based on sporting merit.

 

(ii) Second question

Could UEFA refuse to authorise a second Champions League (and penalise participants) – i.e. in a format identical to its own, except owned by third parties?

I think, no.

This follows from ESL para 151 (concerning Article 102), on non-discrimination. This notes that UEFA itself is economically active in the market in which it has the power of pre-authorisation. So the criteria applicable must not favour UEFA over third parties. If UEFA is able to stage a competition, then it cannot prevent a third party from staging a similar competition.

It means too that UEFA may not place restrictions on third party organisers which have the effect of favouring its own competitions over others. It could not for example authorise clubs to participate in a new competition while also requiring them to participate in the UEFA Champions League.

UEFA’s rules on prior approval were overhauled after ESL was referred to the Court but before the rulings of 21 December 2023. So the rules and procedures governing prior approval condemned by the Court are not the rules and procedures which UEFA employs today. Its June 2022 renovated Regulations  may be found here: https://documents.uefa.com/v/u/_rmtminDpysQUj1VGB01HA.

However the rules, amended to clarify process and applicable criteria, seem to me to violate the non-discrimination rule on which the Court insists. They provide that third party organisers ‘shall provide confirmation that the clubs concerned can always comply with their obligation to field their strongest team throughout UEFA club competitions and national club competitions and any other International Club Competition authorised by UEFA’; also that ‘in order to protect the sporting merit of UEFA Champion Club Competitions’ and so that it ‘shall not adversely affect the good functioning of UEFA Champion Club Competitions’ particular conditions shall be met.

That seems to me to be unlawful. It seeks to protect the pre-eminence of UEFA’s competitions in the market.

The ruling in ESL seems to open up scope for competing football competitions. I have often wondered if UEFA could claim a need to have one and only one European competition for elite clubs, to produce the true champion – so football isn’t like boxing. There is no hint in the rulings of 21 December that this would be a legitimate exercise of UEFA’s gatekeeping role. Instead the Court seems to open the door to multiple competing versions of the Champions League. Whether that is economically sustainable is far from clear: I do not explore that here, I confine myself to exploring what shape EU law places on available opportunities.

 

(iii) Third question

Could UEFA refuse to authorise a new competition (and penalise participants) where the format is not identical to its own, but similar (and not closed), except owned by third parties?

I think, no, unless UEFA can demonstrate its own competitions are superior according to the (predominantly economic criteria) recognised by EU law.

The question here is whether the ruling in ESL restricts UEFA still further than merely a non-discrimination standard. If it does – it is dynamite!

I think it does, although there is room for argument about precisely what the Court’s rulings entail.

ESL para 176 ESL (addressing Article 101 TFEU) seems stronger still than a non-discrimination standard. It notes that the pre-authorisation rules limit the design and marketing of alternative or new competitions, even though they might offer an innovative format attractive to consumers. They ‘completely deprive spectators and television viewers of the opportunity to attend those competitions or to watch the broadcast thereof’ (see also ISU para 146). That suggests an even tighter control over UEFA than a mere non-discrimination standard. What is needed, it seems, is a calculation of the attractiveness of the competitions on offer (by national courts; maybe also by the Commission enforcing the Treaty competition rules). UEFA cannot simply say: this is our model, and we tolerate no other. This is explosive. It is here that the Court’s ruling could be revolutionary or, at least, that it opens the door as a matter of law to those who would wish to revolutionise football in Europe. The ruling’s treatment of media rights seems the same. UEFA cannot simply say this is the existing design and it cannot be changed. Its quality needs to be assessed (in a serious manner).

This is where/ why we appreciate the significance of the Court’s refusal to allow Meca-Medina to apply to practices which it considers by their very nature to infringe Article 102 TFEU (ESL para 185) or to conduct which does not merely having the inherent ‘effect’ of restricting competition but rather reveals a degree of harm in relation to that competition that justifies a finding that it has as its very ‘object’ the prevention, restriction or distortion of competition (ESL para 186, Royal Antwerp para 115, ISU para 113). The Meca-Medina test, which invites a relatively open-ended assessment of the necessity of practices to meet legitimate objectives in sport, is replaced by a narrower test. The pre-authorisation scheme used by UEFA to deal with new competitions (which are open and based on sporting merit) can survive only if it complies with Article 101(3) and 102.

Exemption pursuant to Article 101(3) is possible, but the Court in ESL chooses to spell out with some detailed care what is at stake under a clear concern to instruct a national court to make a careful assessment of the prevailing circumstances, and not to make easy assumptions about UEFA’s compliance with Article 101(3). (I take this to be part of the motivation for its choice to shrink the scope of the much looser Meca-Medina test). Efficiency gains must correspond not to any advantage enjoyed by UEFA but only to ‘the appreciable objective advantages’ that practice makes it possible to attain in the market(s) concerned (ESL para 152, Royal Antwerp para 121); those efficiency gains must have a positive impact on all users, be they traders, intermediate consumers or end consumers, which in football means inter alia, national football associations, professional or amateur clubs, professional or amateur players, young players and, more broadly, consumers, be they spectators or television viewers; the conduct at issue must be indispensable or necessary; and must not provide the opportunity to eliminate all actual competition for a substantial part of the products or services concerned (the large market share held by UEFA is here clearly relevant and causes the Court particular anxiety, ESL paras 199, 207).

The Court moves to Article 102, and expressly aligns its interpretation with that advanced under Article 101(3) (ESL, paras 201, 205). An undertaking holding a dominant position may escape a condemnation of abuse by showing that its conduct is objectively necessary, or that the exclusionary effect produced may be counterbalanced or even outweighed by advantages in terms of efficiency which also benefit the consumer: this is orthodox in the Court’s case law. In the circumstances under review, were UEFA to amend its rules to comply with the requirements of transparency, precision, non-discrimination proportionality etc, there would be room to show them objectively justified ‘by technical or commercial necessities’ (ESL para 203) or apt to allow efficiency gains which counteract the likely harmful effects on competition and consumer welfare on the market(s) concerned.

The Court’s hard-hitting point is this: for Article 101(3) as for Article 102, justification requires the demonstration of ‘convincing arguments and evidence’ (ESL para 205, Royal Antwerp para 120), involving ‘establishing the actual existence and extent of those [efficiency] gains’ (ESL para 204, Royal Antwerp para 121). That is an inquiry for the national court. It clearly must be a serious inquiry.  

The ruling in Royal Antwerp is similarly motivated by an insistence on the need for ‘specific arguments and evidence’ about the reality and extent of incentives and efficiency gains (para 129), as well as the attitude of spectators and television viewers (para 130), albeit in the different context of the claim that rules on home-grown players encourage training. So too under free movement, the national court must consider the factors ‘thoroughly and comprehensively … taking into consideration the arguments and evidence submitted’ (para 149).

Very similar concerns animate the Court’s treatment of UEFA’s ownership and marketing of media rights (ESL paras 210-241). It does not exclude that practice may be justified despite the apparent anti-competitive effect consequent on the centralised control claimed by UEFA at the expense of clubs acting as sellers of rights unilaterally, bilaterally or multilaterally, but it does insist on a hard evidence-based look at the possibility of exemption under Article 101(3) and at the basis of claimed efficiency gains under Article 102. This is to be done by the national court (maybe also by the Commission enforcing the Treaty competition rules).

Doubtless the Commission’s 2003 decision on joint selling of rights to the Champions League will need close attention (2003/778/EC, AT.37398). That Decision is particularly interesting for not looking at the argument that promoting solidarity in sport through income redistribution might justify the anti-competitive consequences of centralised selling. In 2003 the Commission saw no need to consider solidarity because it concluded that the economic benefits of the joint selling met the criteria stipulated by Article 101(3) and it needed to look no further. ESL finds the Court willing to consider  improvements in production and distribution resulting from the centralised sale and the ‘solidarity redistribution’ of the profit generated as of benefit to supporters, consumers, that is to say, television viewers, and, more broadly, all EU citizens involved in amateur football. It also mentions maintaining a balance and preserving a certain equality of opportunity as between the participating professional football clubs, given the interdependence that binds them together. Moreover it notes (better maybe: it claims) there is a trickle-down effect from those competitions into smaller professional football clubs and amateur football clubs which, whilst not participating therein, invest at local level in the recruitment and training of young, talented players, some of whom will turn professional and aspire to join a participating club. And ‘the solidarity role of football, as long as it is genuine, serves to bolster its educational and social function within the European Union’ (ESL paras 234-235). But the benefit ‘for each category of user – including not only professional and amateur clubs and other stakeholders in football, but also spectators and television viewers – must be proven to be real and concrete’ (ESL para 236).

It seems, then, that UEFA cannot exclude new forms of competition unless it shows that Articles 101(3) and 102 are satisfied. That, I think, requires a much more sophisticated set of criteria than UEFA currently has, even in the newly (2022) renovated form. Most of all, ESL is simply the beginning in trying to understand how far UEFA, as gatekeeper, may go in excluding new competitions which are different from existing forms of competition but which are open and based on sporting merit. There is now – after ESL – in principle more room to compete in the market for football competitions in Europe.

 

Conclusion

The Court has opened the door to those who would wish to revolutionise football in Europe. This does not mean there will be a SuperLeague or anything like it. There is no guarantee who will win the power struggles to come. A lot will depend on the attitudes of the elite clubs and of the fans, on sources of funding (certainly not limited to Europe), as well as on the skill deployed and the strategies pursued by UEFA and by those who would wish to dislodge UEFA from its current position of power. The top-down ‘pyramid’ structure of governance in sport is robust and typically defended with vigour from those near or at its top. Tension between UEFA and the elite clubs is nothing new. Moreover history tells us that competing Leagues in football tend not to survive. This, however, is not true in all sports and perhaps it will not be true in football in future. There is a lot of politics here, a lot of commercial incentives, a lot of cultural and social dimensions. But as of 21 December 2023 as a matter of law UEFA’s power as a ‘gatekeeper’ able to dictate the pattern of football competitions in Europe seems significantly weakened.