Stephen Weatherill
Jacques Delors Professor of
European Law (Emeritus), Faculty of Law and Somerville College, University of
Oxford
Photo: Lassana Diarra, by Рыбакова Елена, on Wikimedia Commons
In preparing this paper I have
benefited from discussion with and comments by (in alphabetical order)
Jean-Louis Dupont, Peter Heermann, Guillermo Íñiguez, Jacob Kornbeck, Miguel
Maduro, Petros Mavroidis, Giorgio Monti, Damien Neven, Oke Odudu, Nada Ina
Pauer, Michael Primbs, Steve Ross, Stefan Szymanski, Ben Van Rompuy, Jan
Zglinski and Julien Zylberstein. Responsibility for all views expressed in this
paper belongs with me alone. This, however, is not the usual disclaimer: let me
be clear that not only do those named not necessarily agree with my views, but
also some of those named strongly disagree with my views. In particular,
attribute only to me, and to no one else, this paper’s recommendation to treat
most governance practices in sport as a restriction of competition by effect,
not by object.
1 Introduction – what I am
worried about.
I have spent over 30 years
defending the EU, and the Court of Justice in particular, from the allegation
that, in the application of the law of its internal market, it lacks
sensitivity to the special features of sport. Not so! Sporting practices which
fall within the scope of EU law may be applied on condition that it is
shown that they are necessary to achieve legitimate objectives and that they
comply with the demands of the test of proportionality. This leaves room for
governing bodies in sport to explain what they do and why they do it. This
admirable model of ‘conditional autonomy’ is in danger. On 21 December 2023 the
Court changed its approach. It restricted the scope for arguments specific to
sport to be advanced in defence of practices reviewed against the demands of EU
competition law. The risk is that in several pending cases concerning sport – the
transfer system, the regulation of agents and club (re-)location - the Court
will adopt its 21 December approach without sufficient awareness of the harm
that may be done to legitimate patterns of sporting governance. The anxiety is
most of all that the Court will adopt an inappropriately wide interpretation of
the concept of a restriction of competition by object which will prevent governing
bodies in sport from explaining the purpose behind their practices.
The potential harm caused by
interpreting EU law ‘from a competition standpoint’ to prevent sport’s (claimed)
special features even being assessed as part of the legal analysis is already
visible in the Court’s ruling in Royal
Antwerp (C-680/21) and the opinion of AG Szpunar in Case C-650/22 FIFA
v BZ (‘Diarra’). The purpose of this comment is to urge the Court not
to wreck its excellent track record in the development of EU sports law. I
explain how, in its treatment of the sports cases pending before it, it can
sustain its reputation as a Court which is respectful of the legitimate but
conditional scope of sporting autonomy and the proper regulatory role of
governing bodies. My recommended route is to treat most choices about
governance in sport as restrictions of competition by effect, not object. The
intent is not to immunise them from review but rather to ensure that review stretches
beyond Article 101(3) and is fully sensitive to the economic and the sporting
context in which governing bodies operate as regulators.
2 The Court’s case law:
granting ‘conditional autonomy’ to the practices of governing bodies in sport.
From the beginning the Court was
attentive to the need to take the special features of sport seriously in the
application of EU law. In the 1974 ruling in Walrave
and Koch (Case 36/74), the very first time that the Court decided a
case involving sport, it concluded that the prohibition against discrimination
based on nationality contained in the Treaty did not ‘affect the composition of
sport teams, in particular national teams’. This saved football’s World Cup
from being destroyed by EU law. The Court’s explanation why this was so was not
convincing. It asserted that the nationality requirements which underpin
international sport are ‘a question of purely sporting interest’ and have
‘nothing to do with economic activity’, which, given the commercial advantages
associated with playing for a major national team, is simply false. But the key
thematic point was the Court’s readiness to interpret basic principles of EU
law with sensitivity to the unusual features of organised sport – here,
international representative teams which do not exist in typical goods or
services markets.
Two decades later, in Bosman
(Case C-415/93), the Court was asked to consider whether football’s transfer
system contravened the EU’s free movement rules in a case in which a player’s transfer
from a Belgian to a French club had been obstructed. It found that the
particular rules at stake could not be justified as a matter of EU law. This
generated significant change within the game, most of all the elimination of
restrictions on a player’s freedom to change employer once his or her contract
has come to an end. But the transfer system lives on in slimmed down form
because the Court chose in Bosman to accept that ‘the considerable
social importance of sporting activities and in particular football’ dictated
that ‘the aims of maintaining a balance between clubs by preserving a certain
degree of equality and uncertainty as to results and of encouraging the
recruitment and training of young players must be accepted as legitimate’. This
is not found in the Treaties nor in any secondary legislation. It is the
Court’s own view of what interests may count as legitimate justifications for
practices such as the transfer system which obstruct cross-border movement. It
amounts, as in Walrave and Koch, to a recognition that in sport there
may be justifications for practices which seem to offend against core EU values
and which would not be accepted outside sport.
Most of the Court’s more recent
case law has concerned the application of EU competition law to sport. Meca-Medina
and Majcen v Commission (Case C-519/04P) was the landmark case, and it shares
the fundamental thematic concern of the earlier case law to interpret and apply
EU internal market law, in casu competition law, with sensitivity to the
particular features of professional sport. The Court explained that the
compatibility of rules with EU competition law cannot be assessed in the
abstract. In applying Article 101(1) TFEU, ‘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’;
and it ‘has then to be considered whether the consequential effects restrictive
of competition are inherent in the pursuit of those objectives ... and are
proportionate to them’. This was not an innovation, nor was it an approach
specific to sport. The Court borrowed this test from its earlier ruling in Wouters
(Case C-309/99). In that case it had concluded that a rule of the Dutch Bar
which prohibited the creation of multi-disciplinary partnerships involving
barristers and accountants suppressed the emergence of new partnerships and
therefore restricted competition, and yet, given the objective of securing the
independence and loyalty to the client of members of the Bar and, more broadly,
the contribution to the sound administration of justice, the rules were treated
as lawful. The legal assessment of practices that have the effect of
restricting competition also includes examination of their objectives. The
Dutch Bar was a type of private regulator, and that is exactly what a governing
body in sport is. So in Meca-Medina the Court, borrowing
the Wouters formula, decided that anti-doping rules of which
swimmers had fallen foul did not constitute a restriction of competition
forbidden by what is now Article 101 TFEU, since they were justified by
legitimate objectives connected to ensuring the proper conduct of competitive
sport.
The consequence of the Court’s
approach in Meca-Medina is not to grant absolute autonomy to governing
bodies in sport. EU law grants governing bodies a conditional autonomy:
they may apply practices which appear to contravene EU internal market law on
condition they show that they are necessary to protect the integrity of the
sport. In Meca-Medina they succeeded. Soon after in MOTOE
(Case C-49/07) they failed. In MOTOE it was found that ELPA, the governing body
charged with regulating motorcycling in Greece, had refused to grant consent to
MOTOE’s request to stage competitions in circumstances where that choice had
favourable consequences for the competitions which ELPA itself staged. The
Court did not condemn the gatekeeping function performed by many governing
bodies in sport, which one may readily identify as necessary to ensure a viable
calendar and common standards. It did object to the particular way that it
operated. The Court identified an absence of equality of opportunity or,
otherwise put, a conflict of interest. ELPA’s gatekeeping right allowed it to
‘distort competition by favouring events which it organises or those in whose
organisation it participates’ at the expense of a would-be competitor. This was a breach of EU competition law.
3 The Court’s case law
summarised: the need for a case-by-case examination.
The Court’s approach entails a
need for a case-by-case examination of the compatibility of sporting practices
with the Treaty. Rightly so. Sporting practices come in many shapes. They range
from those at which stern scepticism should be directed – especially where, as
in MOTOE, the regulatory powers of a governing body are used to promote
its own commercial interests – to those which are necessary to sustain the uniformity
and integrity of the sport. The transfer system, the defence of international
representative sport and anti-doping are not devoid of economic motivation (a
clean sport is likely to be more attractive to sponsors and broadcasters and
fans than one contaminated by doping) nor of economic effect (the suspended
athletes suffer). But this is private regulation necessary for sport to thrive,
which cannot be delivered by a public authority at national level (because this
would lead to jurisdictional fragmentation to the detriment of a global game)
nor by a public authority at international level (because no such thing
exists). Sport needs rules – sport needs a governing body to provide them. Obviously
one cannot create a bright line rule which distinguishes the pernicious from the
virtuous, but sometimes (though not as often as they claim) governing bodies
pursue choices for sincere reasons associated with the organisation of their
sport. The Court’s model of conditional (not absolute) autonomy accommodates respect
for the legitimate role of governing bodies. It puts sporting practices to the
test mandated by EU internal market law.
4 Changing EU competition law:
the Court’s three rulings of 21 December 2023.
Thomas Bach, President of the
International Olympic Committee, once
said that sport ‘should be governed differently than manufacturers of cars
or a producer of low-fat milk’. He is right. It should. And, under the model of
conditional autonomy, in the EU it is. But this is at risk.
On 21 December 2023 the Court
decided three cases concerning sport. All were decisions of the Grand Chamber.
They were Case C-333/21 European Superleague Company SL v FIFA, UEFA,
Case C-680/21 UL, SA Royal Antwerp Football Club v URBSFA, UEFA, and
Case C-124/21 P International Skating Union v Commission, hereafter ESL,
Royal
Antwerp and ISU.
The Court did not change the core
of EU sports law on 21 December 2023. The question whether a practice which
falls within the scope of EU law, most obviously EU internal market law, should
be treated as necessary to meet the legitimate objectives of a governing body
in sport will and should remain at the heart of the analysis. The model of
conditional sporting autonomy prevails. But the Court has changed the detailed
method of analysis. The change made by the Court concerns the nature and
consequences of the distinction between a restriction of competition by object
and a restriction of competition by effect. Where a restriction of competition
is by object, it is no longer open to a governing body to rely on Wouters/
Meca-Medina to exclude its regulatory practices from the scope of
Article 101(1). Instead it can rely only on Article 101(3). Only where the restriction
of competition is by effect may a governing body rely on the wider legitimate
interests recognised by the Court in Wouters and Meca-Medina. The
risk, explained in what follows, is that the Court has limited the room available
to governing bodies to show what they do and why they do it in order to sustain
the integrity of their sport, and has, contrary to its past case law,
subordinated legitimate interests associated with governance in sport to the
assumptions of competition law.
5. Defining a restriction of
competition by object or by effect.
The distinction between a
restriction of competition by object and a restriction of competition by effect
is made by Article 101 itself, which prohibits agreements and concerted practices
which may affect trade between Member States and which have as their object or
effect the prevention, restriction or distortion of competition within the
internal market. Plainly either an anti-competitive object or an anti-competitive
effect is enough to trigger the application of Article 101, but Article 101
does not provide any further elucidation of what these concepts mean or entail.
That has been the task of the Court. The Court has decided that a restriction
by object refers to practices which reveal a sufficient degree of harm to
competition for the view to be taken that they fall within the scope of Article
101(1) without it being necessary to assess their effects. A restriction by
object is assumed to be more pernicious than a restriction by effect.
Logically, then, one looks first
to whether the practice has an anti-competitive object; only if it does not is
it necessary to proceed to the more thorough examination of its effects. Here
lies the appeal of treating restrictions by object as a distinct category
condemned pursuant to Article 101(1). Scare resources are saved because the
inquiry is abbreviated. In the case of a restriction by object there is no call
for investigation of effects on competition. The risk is that this limited
inquiry may cause practices which are virtuous in their overall effect to be
inappropriately placed within the scope of Article 101(1). The Court has for
many years mediated this tension by insisting that the category of restrictions
by object is exceptional and shall be interpreted strictly. This is faithfully
repeated in the three rulings of 21 December 2023 (ESL para 161, ISU
para 101, Royal Antwerp para 88).
But what are restrictions by
object? On 21 December 2023 the Court repeated the basic explanation familiar
from existing case law that the category of a restriction by
object is based on the notion that certain types of coordination between
undertakings can be regarded by their very nature as being injurious to the
proper functioning of normal competition (ESL para 162, ISU para
102, Royal Antwerp para 89). Then, in terms differing slightly among the
judgments according to context, it referred to certain forms of collusive
conduct which are particularly harmful to competition, such as horizontal
cartels leading to price fixing, limitations on production capacity or
allocation of customers, certain types of horizontal agreements other than
cartels, such as those leading to competing undertakings being excluded from
the market, certain types of decisions by associations of undertakings aimed at
coordinating the conduct of their members, in particular in terms of prices, and
agreements aimed at partitioning markets according to national borders, tending
to restore the partitioning of national markets or making the interpenetration
of national markets more difficult.
But this is not intended as an exhaustive
list. The Court’s point is that it cannot be. It explained, citing its own
previous case law, that in order to determine whether a practice reveals by its
very nature a sufficient degree of harm that it may be treated as a restriction
of competition by object, it is necessary to examine the content of the
practice, the economic and legal context of which it forms a part, and its
objectives (ESL 165, ISU 105, Royal Antwerp 92).
6. The consequence of treating
a restriction of competition as by object or by effect.
In the most strikingly
transformative aspect of the judgments of 21 December 2023 the Court made clear
that only where a practice counts as a restriction of competition by effect may
the Wouters/ MecaMedina line of case law be relied on. If a practice is
a restriction of competition by object those justifications are unavailable,
and only the narrower grounds of exemption contained in Article 101(3) can save
the practice (ESL para 189, Royal Antwerp para 118).
This is new. For the private
regulator such as a governing body in sport it is potentially radical. The
point of Wouters and Meca-Medina was that if a practice, reviewed
in the light of its objectives, escapes the reach of Article 101(1) according
to the Court’s formula, there is no need to assess whether it is a restriction
of competition by object or by effect. It is not a restriction of competition
within the meaning of Article 101(1) at all. This is now changed. 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’ cannot benefit from the Wouters/ Meca-Medina
formula (ESL, para 186, Royal Antwerp, para 115). The same is
true of conduct which ‘by its very nature infringes Article 102 TFEU’.
So,
in reviewing sporting practices, the first stage of the analysis is no longer
whether the Meca Medina test is met, but rather whether conduct has as
its object the restriction of competition or by its very nature infringes
Article 102. Only if it does not does Meca-Medina apply as a
route for a governing body to show its practices to be necessary to achieve
legitimate objectives. If it does, only Article 101(3) may save the practice.
Presumably also, if it does, it can be saved from condemnation under Article
102 only if it meets the test of objective justification, which the Court
treats as resembling Article 101(3) (C-413/14P Intel v Commission).
So, for the private regulator
such as the Dutch Bar in Wouters or governing bodies in sport the
structure of the argument is now clear but changed. Reliance on defence of
legitimate interests which are not capable of being fitted within Article
101(3) is possible only if the practices do not count as restrictions of
competition by object within the meaning ascribed to that concept by the Court.
So defining a restriction of competition by object really matters!
In January 2024 this was
vigorously confirmed by the Court. In two cases involving private regulators it
spelled out the consequences of the change it had made on 21 December 2023.
Lietuvos notarų rūmai and
others (Case
C‑128/21) concerned a private body – of notaries – which had agreed how to
calculate fees (in Lithuania). Although the final determination belonged to the
referring national court, the Court strongly suggests that what was at stake
was the horizontal fixing of the prices of the services concerned, which is so
likely to have adverse effects on the price, quantity or quality of products
and services that it is to be treated as a restriction of competition ‘by
object’ within the meaning of Article 101(1) TFEU. The vocabulary and
analytical structure of 21 December 2023 is openly adopted and confirmed,
although it is only Royal Antwerp which is cited (three times),
but the vital point, made clear by the Court at paras 101 and 102 of Lietuvos
notarų rūmai, and others, is that if the conduct is classified as a
restriction by object, then regulatory objectives such as safeguarding the
principles of equal treatment and proportionality and protecting notaries from
unjustified civil liability by standardising notarial practice and filling a
regulatory vacuum can form no part of the analysis under Article 101(1). A week
later, on 25 January 2024, the ruling in Em akaunt BG ЕООD (Case
C-438/22) took a similar approach to a decision of a professional
association of lawyers fixing the minimum amount of fees (in Bulgaria). Again,
the vocabulary and analytical structure of 21 December 2023 is adopted,
although it is ESL which is cited (three times), and again the
Court condemns the arrangement as horizontal price fixing and therefore a
restriction of competition by object. The point: such restrictions may not in
any event be justified by the pursuit of legitimate regulatory objectives.
Article 101(3) is the only possible route to justify the scheme.
7. The problem with the
Court’s approach: limiting the legitimate role of the private regulator.
Once a practice is regarded as a
restriction of competition by object, the scope to justify it is limited, and
no longer embraces the legitimate objectives recognised by the Wouters
/ Meca-Medina case law. For the private regulator things have
changed. For those anxious to leave room for the conditional autonomy of the
private regulator under EU law, things have changed for the worse.
This is a problem.
EU competition law now applies to
the private regulator quite differently depending on whether the practices it
pursues are treated as restrictions by object or restrictions by effect. But
this structurally important distinction, which determines the scope to justify
regulatory practices, rests on unstable foundations. The notion of a
restriction of competition by object remains ambiguous, despite the attention
paid by the Court to the matter on 21 December. Most of all, the Court has
excluded the possibility of creating an exhaustive list of such practices,
insisting instead that, as explained above, attention must be paid to the
content of the practice, the economic and legal context of which it forms a
part and its objectives (ESL 165, ISU 105, Royal Antwerp
92). Therefore there is an unpredictability at the heart of Article 101’s
application to the private regulator: what really is the restriction of
competition by object which disables reliance on the legitimate interests
recognised in Wouters and Meca-Medina? This would be a manageable
problem if the Court’s declaration that it is exceptional to find a practice to
be an object restriction – which should encourage the private regulator – were
reliable. But there are hints in the 21 December rulings that this may be less
helpful in practice than it appears on paper. It is here that the pending case
law is crucial. The risk is that the Court has adjusted Article 101 in a way
that renders it insensitive to the legitimate role played by private regulators
in circumstances where public regulation of the market is missing.
The issue is not limited to sport.
It covers the type of body referred to at para 183 of ESL – an
association ‘pursuing certain ethical or principled objectives’ and, more
broadly, seeking to regulate ‘the exercise of a professional activity’. But the
pending cases focus on sport, so let that be the focus here in explaining the
risk the Court is running.
Royal Antwerp concerned UEFA’s
home grown rules. These require that club squads contain a minimum number of
home grown players – that is, players trained by their club or another club in
the same association between defined ages at an early state of their
career. The rules are motivated by two distinct but connected concerns. First,
there is a perceived need to establish common rules on the matter across Europe,
so the integrity of the sport and the transnational market for players is not
harmed by divergent approaches in particular jurisdictions. Second, and driven
by the content of the common rules rather than simply by the need for common
rules, they are motivated by the anxiety that clubs are too quick to acquire
players who are already fully trained and too slow to invest in youth training.
The purpose of UEFA’s home grown
rules, then, is to establish uniform conditions within which the training and
recruitment of young players is encouraged. They have an economic motivation – in
short, to make the sport better – but there is no obvious conflict of interest
here. UEFA has no direct economic stake in this market. It is a regulator. The
effect of the rules is no doubt to dampen competition in the market to acquire
players and to cause some degree of disruption to cross-border mobility. They
clearly deserve to be reviewed in the light of EU internal market law, and they
may not be compatible with it: Advocate General Szpunar shrewdly questioned
their coherence as a means to encourage training given that a home grown player
is not only one trained by the club but also one trained by and acquired from
another club in the same association. But the vital question asks on what basis
they shall be reviewed in the light of EU law. As restrictions on competition
by effect there is room to explore the rules’ contribution to the broader
development of the game, embracing its social and educational function. As restrictions
of competition by object, not so, except in so far as Article 101(3) can
capture those motivations.
The Court did not decide the
point on 21 December 2023. It leaves the final conclusion to the national court.
But its preference seems to be to treat the home grown rules as a restriction
by object, not effect.
In Royal Antwerp the Court
instructs the national court to examine the economic and legal context in which
the rules were adopted ‘together with the specific characteristics of football’
(para 110), but it offers no elaboration of what this entails, and emphasises
instead that the rules limit the recruitment of talented players, which has an
impact on the competition in which the clubs may engage, not only in the
‘upstream or supply market’ (the recruitment of players), but also in the
‘downstream market’ (interclub football competitions). It adds that the rules
may partition markets according to national borders or make the
interpenetration of national markets more difficult by establishing a form of
national preference.
The Court does not ignore the sporting
context, but it downplays it. The national court could find the homegrown rules
to be a restriction of competition by effect, and the instruction that the
proportion of players concerned is ‘particularly relevant’ in determining the
prejudicial effect of the rules (para 109) tends in that direction. However, the
bulk of the Court’s ruling emphasises the impact on competition in the EU’s
internal market. It seems written to nudge the national court in the direction
of treating the rules as a restriction by object. The problem is that if one
assesses the object of the system mainly from the perspective of its impact of
competition in the labour market, and therefore as a restriction by object, one
excludes the broader objectives of regulating the sport except in so far as
they can be fitted within Article 101(3). This is inconsistent with the Court’s
track record stretching from Walrave and Koch through Bosman to Meca-Medina.
In those cases governance choices were assessed with full appreciation, if not
unconditional endorsement, of the governing body’s regulatory motivations. This
is now not possible if the system is classified as a restriction by object. The
Court needs to avoid an inflated view of the concept of restriction by object,
and it is explained below that the cases now pending before it allow it that
chance.
One additional – and strong -
reason to insist on a narrow understanding of the concept of a restriction of
competition by object will appeal to those concerned with the coherence of EU
internal market law beyond competition law alone. A restriction by object
cannot be saved by reliance on Wouters/ Meca-Medina when reviewed
under Article 101, but a restriction on inter-State trade in goods, workers or
services can be saved by reliance on the general public interest test shaped by
the Court in Cassis de Dijon and applied in Bosman. This supple
test is the functional equivalent of the legitimate interest test developed in Wouters/
Meca-Medina. Competition law and free movement law have different
jurisdictional triggers and do not run in alignment in all respects, but it
would be highly unsatisfactory if they applied different tests to the basic
question whether a practice which does fall within their scope is lawful or
not. The way to avoid this is to take a narrow approach to the concept of a
restriction of object for the purposes of Article 101, thereby ensuring that
normally sporting governance which falls within the scope of both competition
law and free movement law is assessed according to the same flexible test.
8 How did the Court get into
this mess? The flawed lure of assessment ‘from a competition standpoint’.
How did the Court get into this
mess? The Court got into this mess by following its own case law without adequate
awareness of context.
In all the three judgments of 21
December 2023 the Court, setting out the framework for determining whether a
restriction of competition is by object, observes that ‘a determination must be
made of the objective aims which that conduct seeks to achieve from a
competition standpoint’ (emphasis added); and adds that ‘the fact that the
undertakings involved acted without having a subjective intention to prevent,
restrict or distort competition and the fact that they pursued certain
legitimate objectives are not decisive for the purposes of the application of
Article 101(1) TFEU’, citing its own judgments in General
Motors v Commission (C‑551/03 P) and Beef
Industry Development Society and Barry Brothers (C‑209/07) (para 167 ESL,
para 107 ISU, para 94 Royal Antwerp).
So a restriction of competition by
object may be identified even where there is no subjective intent to restrict
competition.
The problem with this is that it
suppresses the assessment of the legitimate objectives pursued by a sports
governing body in so far as its aims, viewed objectively ‘from a competition
standpoint’, are anti-competitive. Neither General Motors nor Beef
Industry had anything to do with sport, nor with private regulation more
generally. The former concerned export restrictions on motor vehicles, the
latter reduction of capacity in the supply of beef and veal. Both support the
proposition that there is no escape from Article 101 even if it is established
that the parties to an agreement acted without any subjective intention of
restricting competition; and moreover that an agreement may be regarded as
having a restrictive object even if it does not have the restriction of
competition as its sole aim but also pursues other legitimate objectives. The
point is to push assessment of any possible economic virtues to Article 101(3).
That is tolerable for cases involving typical economic activity, but much less
so for private bodies charged with a responsibility to regulate an activity
which engages considerations which are broader than recognised by Article
101(3). Finding the private regulator to have restricted competition by object
because that is how the object would be viewed ‘from a competition standpoint’
is to ignore the object viewed from a sporting standpoint. Moreover, and worse,
it shuts out the object viewed from a sporting standpoint from the stage of
assessing justification, except in so far sporting explanations for regulatory
intervention can be fitted within the narrow exemption criteria foreseen by
Article 101(3).
I do not argue that private
regulators never restrict competition by object. Sometimes the conclusion that
a private regulator is pursuing the object of restricting competition may be
justified. It probably was in ESL and ISU. In both those cases
the Court convincingly pointed to the absence of a framework providing for
substantive criteria and detailed procedural rules suitable for ensuring that
the regulatory decisions taken by the governing body were transparent,
objective, precise, non-discriminatory and proportionate. Their object was the
prevention of competition (by new providers). Similarly the two decisions of
January 2024 are probably persuasively treated as instances of a private
regulator pursuing restrictions of competition by object. Notaries fixing
prices charged by notaries (Case C‑128/21 Lietuvos notarĹł rĹ«mai,
and others) and lawyers fixing prices charged by lawyers (Case C-438/22 Em
akaunt BG ЕООD) fit comfortably within the notion of a restriction of
competition by object. There is no obvious cause for anxiety that the alleged
public interest in such practices is excluded from the analysis: this smells
like a hard-core anti-competitive practice involving economic actors looking after
their own interests.
But the treatment of home grown
rules in Royal Antwerp reveals the dangers of this path. If the home
grown rules are a restriction of competition by object, then feasibly sincere
regulatory motivations are excluded from the legal assessment. This is a
radical break with the Court’s long-standing practice.
In Bosman the Court held
that ‘the considerable social importance of sporting activities and in
particular football’ dictated that the aim ‘of encouraging the recruitment and
training of young players must be accepted as legitimate’. The Grand Chamber
repeated and confirmed this fifteen years later in C-325/08 Olympique
Lyonnais SASP v Olivier Bernard, another case about the free movement
of footballers. This, one would suppose, is directly relevant to the assessment
of the homegrown rules. But this recognition of the worth of youth training is
absent from the ruling in Royal Antwerp. The Court accepts that football
is ‘of considerable social and cultural importance in the European Union’ (para
105, citing Bosman), but it does not elaborate on what this entails, and
makes clear that it is only if the referring court reaches the conclusion that
they do not have as their object the restriction of competition may pursuit of
the uniformity of the conditions in which the teams participating in interclub
football competitions governed by those associations are formed and encouraging
the training of young professional football players form part of the legal
assessment (para 117). Moreover, although the Court accepts that sporting competitions
‘may continue to refer … to a national
requirement or criterion’ (para 106), it does not elaborate on this point.
Instead it prefers to emphasise EU law’s intolerance for agreements aimed at
partitioning markets according to national borders, tending to restore the
partitioning of national markets or making the interpenetration of national
markets more difficult, strongly pushing the view that such are restrictions by
object (paras 95, 96, 110). If this is so, an argument such as that the home
grown rules promote the development of local players who can nourish the vibrancy
of the national league and provide a pool on which the national team may draw can
be advanced only if it fits within Article 101(3), which is possible but a
stretch, whereas broader concerns about social and educational benefits and the
cultural function of the national team in affirming identity reach beyond
Article 101(3) and so are ruled out in principle.
I do not here argue that UEFA’s
home grown rules should inevitably be treated as compatible with EU law.
Perhaps the claimed encouragement to invest in youth training cannot be
demonstrated. Perhaps, even if there is such encouragement, it is imperfect,
and that less restrictive means exist to achieve the same objectives, in which
case the rules will fail the test of proportionality. My point is only that
these type of arguments do not even get the opportunity to be tested if the
rules count as a restriction of competition by object. The Court has invited
the national court to set aside the objects pursued by the governing body and
instead to superimpose what a competition lawyer would regard as the object ‘which
that conduct seeks to achieve from a competition standpoint’ (para 167 ESL,
para 107 ISU, para 94 Royal Antwerp), thereby excluding the
sporting context from review, except only in so far as it can be fitted into Article
101(3). The result will be that a private regulator is denied a proper contextual
assessment of its practices. The result is the subordination of sport to the orthodox
assumptions of EU internal market law – which is exactly what the Court has
spent forty years avoiding.
9 The way out of this mess:
expanding assessment beyond that ‘from a competition standpoint’.
The way out of this mess is to do
what the Court says it wants to do – to interpret the concept of restrictions of
competition by object strictly.
Sometimes a governing body is
‘just’ an undertaking, motivated by commercial gain. But sometimes it acts as
the global regulator of the game, protecting the integrity of the sport and
with no direct economic stake in the practices it pursues. In a case where
there is a sincere regulatory object, where the governing body is not obviously
suffering from a conflict of interest, one should normally treat practices as a
restriction of competition by effect. That then allows their assessment to reach
beyond that ‘from a competition standpoint’ and to recognise the breadth of
objectives at stake, as in Wouters and Meca-Medina, and to test
their aptitude to achieve those objectives.
So restrictions by object will be
rare. That the concept of a restriction by object must be interpreted strictly
is recognised in ESL paras 161-2, Royal Antwerp paras 88-89, ISU
paras 101-2. That should be driven by the need to recognise the special
character of the private regulator. The object of practices is commonly not to restrict
competition but to regulate competition. Treating such practices as
restrictions of competition by effect allows full assessment of regulatory
choices. Royal Antwerp misses this.
I am not banging on a closed
door. In both ESL and ISU the Court objected to the way the prior
approval process was structured, but not to the possibility of maintaining a
prior approval process in the first place. The Court accepted that it is
potentially lawful to act to suppress a competition which is not based on
access via sporting merit (ESL para 143-144, 175-176, 253; ISU para
132). So – provided always that the process meets the requirements of
objectivity, transparency, non-discrimination on which the Court so firmly
insists in its 21 December rulings – the Court appears to accept the
compatibility with EU competition law of a refusal to approve a closed league
(and the imposition of penalties on participants). It is a legitimate exercise
of the gatekeeping function which governing bodies in sport, as private
regulators, perform, which is not characteristic of most economic sectors.
Sport is special!
The Court does not spell this
out, but presumably the point is that such a practice is not conduct which has
as its object the restriction of competition within the meaning of Article 101
TFEU nor conduct which by its very nature infringes Article 102 TFEU. Instead,
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 beyond the reach of Article 101(1) because
the rules had legitimate objectives in upholding ‘the ethical values at the
heart of sport, including merit’ (as explained, citing Meca-Medina and
Majcen v Commission, C‑519/04 P, in ESL para
184, Royal Antwerp para 114, ISU para 112).
Certain types of sporting
competition are, it seems, legitimately suppressed by UEFA. Its object is not
to restrict competition. Its object is to defend a model based on sporting
merit.
So sporting merit is a paradigm
recognised and protected by the Court in the application of internal market
law. In fact the judgments of 21 December 2023 show respect for the considerable
social and educational importance of sporting activity (ESL, para 102, Royal
Antwerp, para 70), for the specific characteristics of sporting activity (ESL
para 103, Royal Antwerp, para 71) and proclaim that the sport of
football is of considerable social and cultural importance in the European
Union’ (ESL para 143, Royal Antwerp para 105). But these values
come into play only provided the practice is treated as a restriction of
competition by effect, not object. A governing body (or a private regulator
more generally) should be allowed to argue that its rules pursue objects which
are necessary to achieve legitimate objectives in the organisation of sport (or
some other activity). That is achieved by normally treating governance
arrangements not as restrictions of competition by object but rather
restrictions of competition by effect.
This does not mean a carte
blanche for sporting autonomy. Pernicious self-interested practices like those
in both ESL and ISL will not survive scrutiny, just as those in MOTOE
were condemned as violations of EU law. Nor will more plausibly legitimate
choices pursued by a governing body, uncontaminated by a conflict of interest,
be automatically approved. Wouters/ Meca-Medina is a grant of
conditional, not absolute, autonomy to regulatory bodies. The purpose of rules
of governance must be explained, their aptitude to achieve their ends
demonstrated. The point is only that treating such practices as restrictions of
competition by effect, not object, leaves room for assessment of their impact
in their full context, both as sporting practices and potentially as
anti-competitive practices. This is fully in line with the Court’s excellent
track record in mediating the competing claims of the internal market and
sporting specificity – the model of conditional autonomy it has so skilfully
developed over time. And it is fully in line with the Court’s long-standing insistence
that the category of restrictions by object shall be interpreted strictly.
10 The pending cases on the
transfer system, the regulation of agents and club (re-)location: a chance to re-set
the Court’s course.
The Court has the chance to step
back from taking an inflated view of sporting practices as restrictions of
competition by object. That will in turn release room for most governance
choices to be assessed in their full context, not merely one informed by the
economic assumptions of competition law. That will ensure consistency with the
Court’s anxiety in its landmark cases – Walrave and Koch, Bosman,
Meca-Medina – to apply EU internal market law with sensitivity to, but
not uncritical endorsement of, the peculiar features of sport.
The transfer system
The transfer system was amended
and curtailed after the Court’s ruling in Bosman. Its compatibility with EU law
was once again brought before the Court in Case C-650/22 FIFA v BZ (‘Diarra’).
We know now, after 21 December 2023, that the first question to ask is whether
it is a restriction of competition by object or by effect. Only if it is the
latter may the types of wide-ranging arguments assessed by the Court in Bosman
form part of the assessment under Article 101; if it is the former, the
assessment belongs exclusively to the narrower parameters set by Article
101(3).
AG Szpunar delivered his Opinion
in Case C-650/22 FIFA v BZ (‘Diarra’) on 30 April 2024. His Opinion is
based on the 21 December rulings which, he notes, reveal ‘a considerable effort
of synthesising and summarising prior case-law’ (para 30). His conclusion is
swift and brutal. The transfer system limits the possibility for players to
switch clubs and, conversely, for (new) clubs to hire players in a situation
where a player has terminated a contract without just cause. He cannot see how
this ‘cannot be equated with a restriction of competition by object’ (para 56).
It is a restriction by object. This means that only Article 101(3) can save the
practice, but its requirements are ‘clearly not met’ and he does not discuss
them (para 58).
As a result of this finding, reliance
on the wider notion of legitimate objectives recognised in Wouters/ Meca-Medina
is ruled out – as the AG makes explicit (para 59). The outcome, then, is that
the claim that the transfer system's object is to protect contractual stability
and team-building in order to maintain the integrity of sporting competition is
excluded from the legal analysis, except in so far as it can be accommodated
within Article 101(3); so too the claim that the system encourages the training
of young players (accepted in Bosman and in Olympique Lyonnais
SASP v Olivier Bernard) is excluded except in so far as it can be
accommodated within Article 101(3); nor is there any room to advance the argument
that global rules are needed in football in order to prevent divergent national
labour laws distorting the (global) market for players except in so far as that
argument can be accommodated within Article 101(3).
Treating the system as a
restriction by object entails that the wider sporting context would be excluded
from examination under both Articles 101(1) and 101(3). It is not that competition
law prevails over arguments about sport’s (claimed) special features – it is
that competition law prevents sport’s (claimed) special features even being
assessed.
The way out of this is to treat
the transfer system as having objects associated with the organisation of the
sport but also anti-competitive effects. It is a restriction by effect. That
then allows a fully contextual assessment in line with Wouters/ Meca-Medina.
The transfer system may fail that test, but it will have had its hearing.
A further reason for preferring a
narrower understanding of the concept of a restriction of competition by object
than is suggested by AG Szpunar concerns the relationship between Article 101
and Article 45. A restriction by object cannot be saved by reliance on Wouters/
Meca-Medina when reviewed under Article 101, but a restriction on
inter-State trade within the meaning of Article 45 can be by reliance on the
general (‘Cassis de Dijon’) public interest test shaped over time by the
Court which is functionally identical to Wouters/ Meca-Medina. It
seems undesirable that arguments excluded from the application of Article 101 form
part of the assessment under Article 45 – especially if those arguments,
irrelevant under Article 101, are persuasive enough to lead to the conclusion
there is no breach of Article 45. Strangely AG Szpunar identifies exactly this
risk that ‘the contested provisions would be incompatible with Article 101
TFEU, but compatible with Article 45 TFEU’ (para 35) but proceeds to
operate on a basis that could lead to this result.
He makes the – correct - assumption
that the Wouters case law which he excludes from Article 101 provides a
test ‘in essence … comparable to the justification test under Article 45
TFEU’.
In his analysis of Article 45 he is
open to accepting that ‘the contested provisions seek to maintain contractual
stability in the professional football sector and, more specifically, to ensure
compliance with the obligations entered into by both players and clubs’ and
citing Bosman he recalls that ‘the Court has expressly recognised the
aim of maintaining a balance between clubs by preserving a certain degree of
equality and uncertainty as to results’ (paras 61-62). Moreover: ‘The contested
provisions generally seem likely to promote contractual stability and thus to
contribute both to the stability of the composition of teams in sporting
competitions and to the objective of a certain balance between clubs in
sporting competitions by preserving a degree of equality of opportunity’ (para
64). Although unpersuaded that the detailed operation of the transfer system
meets the test of necessity (paras 68-69) he recognises in principle the
system’s suitability to achieve such sporting objects.
Something has gone badly wrong
here. The Advocate General does not see how the transfer system’s operation ‘cannot
be equated with a restriction of competition by object’ for the purposes of
Article 101, whereas for the purposes of Article 45 he openly accepts that the
transfer system has sporting objects. The result: justifications for the system
which are excluded from the Article 101 analysis form an integral part of the
Article 45 analysis, and may lead to a different conclusion on the system’s
compatibility with EU law. What has gone badly wrong is the interpretation of
the concept of a restriction of competition by object. It should be interpreted
strictly. Here that means that the transfer system should be understood as
having the object of establishing uniform rules apt to protect contractual
stability and team-building and encouraging youth training, in order to
maintain the integrity of sporting competition. It has potentially
anti-competitive effects on the labour market. As a restriction by effect it
may be assessed in the light of Wouters/ Meca-Medina. That has
two happy outcomes – first, that the transfer system is assessed in its full
context, embracing both the structure of the sport and the effect on the
market, and second that Articles 101 and 45, both pillars of internal market
law, run along the same lines.
I do not argue that the transfer
system should be treated as compatible with EU law. Quite possibly it does not
do what FIFA claims it does, quite possibly it is disproportionate, and quite possibly
it fails the Wouters/ Meca-Medina test. Quite possibly one would
wish to be harsher: the transfer system is not found in most labour markets,
and there is a plausible argument that it is an ugly relic of a bygone age when
footballers were traded as chattels rather than treated as employees. But that
inquiry is not my concern here – my concern is only that EU law should allow
space for that inquiry to be conducted. The transfer system needs to be assessed
in its full context, which cannot be achieved by treating it as a restriction
of competition by object apt to be saved only by conformity with Article
101(3). It is a restriction of competition by effect. Only in this way will
consistency with the Court’s long-standing model of the conditional autonomy of
sport under EU law be sustained.
The regulation of agents
A structurally
similar question is raised by the FIFA Football Agent Regulations (FFAR). These
FIFA rules introduce certain standards of conduct and include regulation of
prices charged by agents. Object? Or effect? In 2023 in PROFAA v FIFA
the CAS used the Meca-Medina analysis, and found the rules compatible
with EU law (CAS/2023/O/9370).
The Court has been asked to consider the matter (C-209/23 RRC
Sports, C-428/23 ROGON).
The analysis will now be differently structured. The CAS was able to apply the Meca-Medina
test without the need to decide whether the restrictions on competition were by
object or by effect. Now we know that Meca-Medina is applicable only
once it is decided that there is no restriction by object. If one understands
the FFAR as a cartel arranged between FIFA, national associations and clubs,
and so as a horizontal restriction of competition, then it is probably a
restriction of competition by object, and can be saved only by reliance on Article
101(3). By contrast FIFA portrays the FFAR as regulations designed to improve
the functioning of the market for supply of agents’ services. They regulate the
terms on which agents’ services are offered in order to address market failures
such as intransparency and asymmetry of economic power; they seek to protect the
integrity of the sport, most of all by attempting to protect contractual
stability and team-building from agents’ aggressive pursuit of transfers. So FIFA
argues that the ‘object’ of the FFAR is the regulation of the sport, not the
restriction of competition in the market for supply of agents’ services. That
then opens the door to Wouters/ Meca-Medina, rather than the
narrower criteria of Article 101(3). FIFA, after all, has no direct economic
stake in this market. It is a regulator. Its object is to address problems in
the market for supply of agents’ services which have a direct and substantial
impact on the integrity of the sport. Moreover, only FIFA can deliver common
solutions – no public authority exists which can set globally applicable rules.
To repeat, treating the FFAR as a
restriction of competition by effect, not by object, does not mean that they
will survive scrutiny. FIFA has to show the FFAR are necessary to
preserve the integrity of the sport, and that they meet the proportionality
test. One would, for example, want to examine whether a price cap is
proportionate; one might also ask whether the cap might have the perverse
result of encouraging, not deterring, speculative but lucrative transfer
activity. The point is that treating such methods of governance as restrictions
of competition by effect, not object, is the only way to keep assessment of their
full range of objectives in play. The point is to retain fidelity with the
Court’s case law on sport from Walrave and Koch, through Bosman
to Meca-Medina by not making a determination ‘of the objective aims
which that conduct seeks to achieve from a competition standpoint’ (para 167 ESL,
para 107 ISU, para 94 Royal Antwerp) but rather ensuring also
assessment from a sporting standpoint.
So the regulation of agents is
best treated as a restriction of competition by effect.
Club (re-)location
Does EU law help a club wanting
to stage matches outside the territory of the national association to which it
belongs? Does EU law help a club that wants to apply to join a league in a
different country? Does EU help clubs wanting to set up a new transnational
league? If UEFA objects, how does EU law mediate the tension between the
assumptions of cross-border trading freedoms which animate EU internal market
law and the territorial limits which characterise the pattern of national
Leagues in Europe?
Swift Hesperange, a Luxembourg
football club, claims (inter alia) that UEFA rules which require it to play in
the Luxembourg league violate EU law. The case is proceeding before the local
courts and a preliminary reference has not been made, although the applicant
club is eager that one should be made. The territorial restriction imposed by
the UEFA rules makes the relevance of EU free movement and competition law
obvious; it is equally obvious that the assumption that leagues shall be
national rather than transnational has deep sporting roots.
Royal Antwerp seems
helpful to the club seeking to break open the existing pattern. The ultimate
decision on the nature of the home grown rules belongs with the referring
national court, but in Royal Antwerp the Court’s strong preference is to
treat market partitioning as a restriction of competition by object. That would
mean UEFA’s preservation of national leagues falls within the scope of Article
101(1) and could be saved only by reference to economic arguments about
consumer preference for such a structure which can fit within Article 101(3).
Wider sporting, social and cultural reasons explaining the existing model would
form no part of the legal assessment under Article 101(1), nor would they seem
to have any place under Article 101(3). Disabling UEFA’s access to Wouters/
Meca-Medina in this way opens many doors to clubs wishing to provoke
change. The problem is that the particular sporting context would be ignored by
EU law except in so far as it can be accommodated within Article 101(3) – in
defiance of the Court’s long standing case law. Yet again, the way through this
muddle is to treat such rules as restrictions of competition by effect, and to
leave room to assess them in line with the Wouters/ Meca-Medina
model. That too ensures consistency in the application of competition law and
free movement law to questions of justification. To emphasise once again: this
is not to grant UEFA autonomy to retain the sporting status quo, it is to grant
it a conditional autonomy. It needs to show just why it is necessary for
football competitions to be limited in this way, to the detriment of ambitious
clubs wanting to play in more lucrative leagues and/ or to create new and more
attractive transnational leagues.
In summary, the way forward
I do not here take a stance on
the compatibility with EU law of the transfer system, the regulation of agents
and rules on club (re-)location. My sense is that the transfer system unjustifiably
deprives players of the right to sell their labour in the way that employees in
almost all other sectors of the economy may do and that it should be abolished,
my sense is that the regulation of agents and the promotion of home grown
players both serve legitimate purposes but that on their current models they
may be the subject of objection at the level of detail. But I want my sense to
be tested rigorously, according to a legal formula which is wider than Article
101(3) and which accommodates assessment of both the sporting objects and the
economic effects of the arrangements pursued by the governing body as a
regulator. Before 21 December 2023 that could be achieved by reviewing such
practices according to the Wouters/ Meca-Medina formula; after 21
December 2023 it can be achieved only by treating such practices as
restrictions of competition by effect, and then deploying the Wouters/
Meca-Medina formula.
11 Conclusion: the Court
should normally treat governance choices made by governing bodies in sport as
restrictions of competition by effect, not object.
Governance in sport is unusual.
The existence of governing bodies reflects the need for common rules which
define how a sport is organised and which apply everywhere it is played, and it
follows that, in order to secure uniformity of application, governing bodies
are normally monopoly regulators. However much one may lament notorious
instances of poor governance, which are frequently the product of a conflict of
interest between regulatory and commercial roles, in principle sport needs
governing bodies. No public body exists which is capable of delivering globally
applicable common standards which determine not only the rules of the game, but
also the environment within which the game is played, which embraces matters as
varied as controls on spending, redistribution and solidarity, youth training
and education, the transfer system, sale of media rights, the regulation of
agents, the promotion of equality, non-discrimination, and human rights, and
attention to the environmental impact of sport. These ‘principles, values and
rules of the game’ (ESL para 176) belong on the mandate of the modern governing
body in sport. This is not a feature of most economic sectors.
In reviewing governance practices
in sport the Court has spent fifty years skilfully navigating a path between
too much and too little respect for sporting autonomy. Too much respect would
release governing bodies from the need to comply with core demands of EU law;
too little respect would subordinate the legitimate and distinctive interests
of governance in sport to EU law applied clumsily as ‘one size fits all’. So,
from Walrave and Koch via Bosman to Meca-Medina, the Court
has developed a test according to which governing bodies are permitted space to
try to persuade the Court how and why their practices should be treated as
necessary to protect the legitimate interests of sport and so remain unaffected
by EU law. Autonomy is granted to sporting governance on condition that it is
demonstrated to be necessary.
This is a model that deserves to
be preserved. But the Court is on the brink of imperilling it. On 21 December
2023 it changed the law to remove the nuanced model of justification developed
in Wouters and Meca-Medina from practices which count as
restrictions of competition by object. I think this was a mistake. The
distinction between restriction by object and restriction by effect is not a
bright line, and so I think the change the Court has made creates an unnecessary
complication at the heart of EU competition law. But the rulings of 21 December
2023 were, as AG Szpunar in Case C-650/22 FIFA v BZ (‘Diarra’) explained,
‘arrĂŞts de principe concerning rules adopted by private entities’, so I
suppose the Court will not change its mind. But look to the danger of
suppressing a claim to sporting specificity beneath the aggressive assumptions
of competition law. Imagine the Court were to treat UEFA rules protecting the
organisation of leagues on a national basis as restrictions of competition by
object and to refuse to consider even in principle the argument that this is a
fundamental definitional building-block in European sport. Such an approach is
not consistent with the Court’s practice, and would harm its legitimacy. So,
looking forward, the best way to address the new law of private regulators in
the EU is to interpret the category of restrictions of competition by object as
confined to egregious instances of self-interest pursued by governing bodies.
It should not be interpreted to catch more orthodox forms of sporting
governance which are motivated by more than profit-making.
Treating governance choices made
by governing bodies in sport as normally constituting restrictions of
competition by effect, not object, is in perfect conformity with the Court’s
insistence that the concept of a restriction of competition by object shall be
interpreted strictly. The shape of this approach can be detected in ESL:
the Court accepted that 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). This model should be applied to the cases pending before the Court. The
transfer system has as its object the preservation of contractual stability and
the encouraging of youth training. The effect – but not the object - is to
restrict competition. The regulation of agents has as its object the preservation
of contractual stability and addressing informational asymmetry and unequal
bargaining power in the market. The effect – but not the object - is to
restrict competition. The organisation of sporting competitions along national
lines has as its object the preservation of one of the existential features of
European sport culture, the identification of the national champion. The effect
– but not the object - is to restrict competition. It is only where a governing
body’s ambition is to restrict competition to further its own interests that a
finding of a restriction by object makes sense – as in MOTOE and as in the
particular circumstances which generated the litigation in ISU and ESL,
where the complete absence of due process in the prior approval schemes generated
a reek of suspicion that practice favoured the governing body’s commercial
interests as event organisers.
I do not want to argue that
governing bodies be granted an absolute autonomy from the application of EU law
when they make their choices about how to organise their sport. I want them to
be granted a conditional autonomy: an autonomy which is conditional on showing
convincing reasons why they have chosen the prevailing model. The model
carefully crafted by the Court in Wouters and Meca-Medina does
not and should not release the private regulator from the obligation to
demonstrate the reasons behind the regulatory practices under challenge, and
moreover they must show they truly achieve what they claim to want to achieve.
The transfer system, the regulation of agents and other practices need to be
justified, not rubber-stamped – and they may prove not to be justified. In MOTOE
and in ISU and ESL the Court has shown itself able to identify
and condemn and – one would hope - improve poor governance. The key point is
that the application of the Wouters/ Meca-Medina test permits all
relevant arguments rooted in the special character of sport to be (critically) examined,
and the legitimately broad regulatory role of the modern governing body to be
recognised. This helps to avoid subordinating sport too much to the economic assumptions
of competition law. It also has the (potentially) positive effect of pushing
UEFA (and other governing bodies) to identify with more care exactly what the
purpose of their sport is, and how it should be organised, how all affected
actors are represented – and also to show they genuinely and sincerely
perform that role.
I believe that sport would be
improved by an EU political initiative aimed at establishing a systematic set
of standards on good governance. EU legislation could require improved patterns
of representation, accountability, transparency, equality and diversity; it
could impose term limits on officers, demand ethical standards under a ‘fit and
proper’ test, and require separation of regulatory and commercial functions.
This would not replace governing bodies in sport. It would improve the
performance of governing bodies in sport, thereby enhancing their legitimacy as
regulators. And in practice its influence would not be limited to the EU (the
‘Brussels effect’). But political momentum is currently missing. Therefore for
the present we must reckon with the Court as the most prominent EU institution
charged with the task of mediating the tension between EU internal market law
and the special features of governance in sport. This is achieved by viewing
such practices both ‘from a competition standpoint’ and from a sporting
standpoint. And so, after 21 December 2023, the way to sustain the Court’s
reputation as an institution sensitive to, but not uncritically supportive of,
the claimed special features of sport, nurtured in Walrave and Koch
through Bosman to Meca-Medina, is to treat most governance
practices in sport as a restriction of competition by effect, not by object.
