05 Jul 2022

Football on Thin Ice – The potential implications of the ISU case judgement on the ESL

Last year, the top 12 European football clubs formally agreed to organize a separate competition.  Gecić Law has already given legal insights on establishing the European Super League (“ESL”) – the football league that may never start.  The ESL aims to compete with – if not completely replace – the current UEFA Champions League, the elite European football championship organized by the UEFA.  The ESL has experienced tremendous pressure from the fans, officials, coaches, players, other stakeholders and especially UEFA, which resulted in (temporary) stopping the initiative.  Much of the opposition to the ESL stemmed from fears of elitism and a lack of competitiveness within the league since it would have only included high-ranking teams from a few European countries.

The whole saga shifted to the court, as the ESL, initiated procedure against UEFA and FIFA for abusing their dominant position on the internal football market by imposing unjustified and disproportionate sanctions and penalties.  A legal battle is now pending before the Madrid Commercial Court (“MCC”).  However, the MCC referred the matter to the European Court of Justice of the European Union (“ECJ”), requesting clarity on how competition law should be applied.  The MCC enquired whether FIFA and UEFA’s actions to hinder the development of ESL is a restriction on competition within the meaning of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”), in the sense that it restricts innovation, limits consumer choice, and eliminates potential competition on the market.

It is noteworthy that the ECJ will hear a closely related case involving the compatibility of skating regulations with EU competition law just before the hearing in the ESL case.  Both cases explore similar matters and may have significant implications on the decision of the other.  As MLex has learned, the ECJ will hear the skating case first, on July 11, 2022, in the morning.  This will be followed in the afternoon by a hearing in the ESL case, which will also continue into the next day.  UEFA pointed out earlier that 16 of the 27 EU countries oppose the project of forming the ESL. These countries have filed written submissions against the establishment of the ESL to the Court. Spain and Italy are among them – the home countries of Real Madrid, Barcelona and Juventus, the clubs that are the leading advocates regarding the establishment of the ESL.  What is even more curious is that the Federal Government of Germany (ger. Bundesregierung) will be present at the hearing, therefore showing an act of support to the German Football Association (ger. Deutschen Fußball-Bund) against the ESL.

Parallels of the skating (ISU) and football (ESL) case

The International Skating Union (“ISU”) ISU is the international sports federation recognized by the International Olympic Committee commercially administering sports in the branches of figure skating and speed skating all around the world.  ISU is composed of a number of national associations – ISU Members, who administer sports at the national level.  ISU had created a pre-authorization system for skating events, including so-called eligibility rules for professional ice skaters, according to which any skater participating in an unauthorized competition would face a long-term suspension (up to a lifetime ban) from subsequent ISU competitions.  The European Commission (“EC”) examined these eligibility rules as an infringement of competition “by object” that limited the ability of professional skaters to participate freely in international events organized by third parties.

ISU case background

In 2014, the South Korean company Icederby International Co. Ltd sought to organize a speed skating competition involving events in a new format in Dubai (UAE).  Since ISU had not authorized that event, the organizer found it difficult to ensure the participation of professional speed skaters, which led it to abandon its plan.  Namely, by virtue of pre-authorization rules, the participation of a skater in an unauthorized competition could expose him/her to a lifetime ban from any competition organized by ISU.

In 2017, having received a complaint from two Dutch professional speed skaters, the EC found that ISU’s eligibility rules were incompatible with EU competition rules.  ISU brought a statement of claim against that decision before the General Court of the European Union (“GC”).  At the end of 2020, the GC confirmed the EC’s findings that ISU rules restricting athletes from taking part in rival events infringed Article 101 TFEU.  Essentially, the GC identified the unique regulatory role of sports organizations in ensuring common standards for sports events by means of a pre-authorization system.  In the context of their commercial activity, they organize the most important competitions in which professional athletes participate to earn a living.  ISU brought an appeal before the ECJ against the GC’s decision.

ECJ in the spo(r)tlight

Cases are now in the hands of the ECJ who will review arguments over sporting rules and likely determine, through its two decisions, how far sports’ governing bodies (UEFA and ISU) can go to control their sport, and if they are allowed, how they can justify authorizing or blocking rival competitions.  The ECJ’s guidance on proportionality will clearly be of important relevance.  Gecić Law will closely follow the outcomes of both cases and as always give its insight from the legal point of view.