Competition Law in Sports – The European Super League Saga
[Shobhit and Aditya are students at Maharashtra National Law University, Mumbai.]
On 18 April 2021, the world of football was shaken to its roots when a plan to establish a European Super League (ESL) was released, causing widespread outrage among supporters, pundits, and politicians across the world. Liverpool, Manchester United, Manchester City, Tottenham Hotspur, Arsenal, and Chelsea, along with their Spanish counterparts Real Madrid, Barcelona, and Atletico Madrid, and Italian clubs Juventus, Inter Milan, and AC Milan, had become “Founding Clubs” of the league. However, football bodies such as Fédération Internationale de Football Association (FIFA) and Union of European Football Associations (UEFA) had warned that these teams would be barred from participating in all current football competitions and players would not be allowed to play for their respective countries. Both sides have claimed that the other is in breach of competition law; however, if authorities prohibit the rebel clubs from competing in both the ESL and any domestic competitions, the club may argue abuse of the authority's dominant position or anti-competitive behavior. However, not more than 48 hours after the announcement, all of the 6 English Premier League clubs along with Atletico Madrid, Inter Milan, AC Milan, and Juventus dropped out of the project after giving in to fan pressure, thus ending all hopes for an ESL in the near future.
However, this highlights the importance to analyse the aspects of competition that could govern this global dispute for years to come. This post, therefore, highlights the important aspects of the European Union (EU) Competition Law regarding the issue and the probable future for both the parties as a consequence, if the dispute would have taken place.
The article examines the matter through the EU sports legislation, the unique characteristics of the sporting industry, and the challenges and power disputes in competition law in light of the European Super League. To assess the legality of UEFA clauses that exclude the establishment of such breakaway arrangements, the article first offers a progressive interpretation of existing EU sports legislation such as the Treaty on Functioning of the European Union (TFEU). Finally, the article examines the validity of discriminatory UEFA provisions and the case for the establishment of alternate leagues in European football under the EU sports law, using the legal criteria discussed below.
Application of Articles 101 and 102 of the TFEU in the Present Case
A recent case involving EU competition law was heard by the General Court of the European Union. This involved the International Skating Union (ISU) and its decision to not let athletes take part in money-making speed skating events. The ISU is the sole sports federation that is recognized by the International Olympic Committee (IOC) for the purpose of governing and administering skating and speed skating.
The dispute arose in 2014 when a Korean Company, Icederby International Co. Ltd., sought to organize a skating competition based on a new format in the United Arab Emirates, which was not authorized by the ISU. Due to this, the organizer had difficulty in ensuring the participation of the professional athletes. Ultimately, this led to the cancellation of the event. After that, 2 Dutch professionals filed a complaint, and the European Commission in its decision held that the rules of ISU were incompatible with TFEU. They held that their rules were incompatible insofar as they restrict professional players from taking part in international events organized by third-party organizations and therefore deprived those third parties of the services or participation of professionals. ISU then brought the contested decision before the General Court of the European Union. The General Court held that the Commission was right to conclude the eligibility rules, which has their objective as the restriction on competition within the meaning of Article 101 of TFEU.
Article 101(1) of the TFEU not only prohibits anti-competitive agreements and concerted practices but also forbids anti-competitive decisions of associations of undertakings. The 3 concepts of 'agreement', 'concerted practice' and 'decisions by associations of undertakings are intended, from a subjective point of view, to catch forms of collusion having the same nature and which are distinguishable from each other only by their intensity and the forms in which they manifest themselves. The concept of an 'association of undertakings' is not defined in Article 101 of the TFEU. The Icederby case groups associations such as UEFA as deemed to be an association of undertakings. Thus, an association of undertaking such as UEFA would be held accountable for anti-competitive practices if it tries to ban the clubs or the players from existing leagues.
Liability of UEFA in Accordance with the Precedence Set by EU Courts
On the findings of the General Court, it was concluded that ISU is a regulatory body and has the power to make rules and penalties only for the disciplines under its jurisdiction and that third-party competitions are separate from their workings.
The General Court concluded by discussing the obligations which are binding on a sports federation while they are in the exercise of their regulatory function under Article 101 of the TFEU. It said that while they examine applications for its authorization, the third-party organizers should not be deprived of access to the relevant market, up to the extent that competition in the market is distorted.
This, thus, acts as a precedent in European Courts, for those supporting ESL and similar sporting federations. This case was also used as a precedent when a German Court prevented the wrestling federations at national and international levels from blocking new competitions. In another case, the Belgian Competition Authority (BCA) closed the investigation into the international governing body of equestrian sports, Fédération Equestre Internationale (FEI), which protested the establishment of a breakaway equestrian league after the FEI decided to offer commitments to terminate its protest after getting access to the preliminary analysis by the BCA. These precedents significantly strengthen the case of ESL against the footballing regulatory body such as the UEFA and the competition law regulatory body such as the EU.
European Super League Amounting to a Cartel
Given that competition law applies to sports and that restrictive actions must be intrinsic and proportionate to achieving a valid goal, it may be argued that the ESL's central nature pushes it far beyond the boundaries of what is allowed under competition law. The legitimacy of the game, in particular, is dependent on fairness and clubs' desire to scale league tables and achieve excellence at the highest levels.
The concern is whether choosing only 5 of the 20 qualified teams based on previous season successes is sufficient to preserve the game's reputation and whether the resultant limitation of play is proportionate. Whereas in the traditional UEFA Champions League, a team only qualifies on the basis of its position in the domestic top-flight competition (for instance, top 4 teams from Europe’s top 5 domestic leagues), the ESL model could easily be defined as a cartel, given the large anticipated increase in TV rights income for the 15 clubs that will qualify regardless of their results. The clubs are essentially seeking to increase and protect revenues through the exertion of collective market power acquired as a consequence of their success in the very sporting rivalry they are now seeking to deny other clubs. What sets it apart from the natural and proportionate requirement for restrictive policies in sports is the degree to which it ensures economic viability for those teams regardless of their ability to play football.
A competition law lens is used to assess the legitimacy of FIFA and UEFA's decision to disapprove the new league and to place harsh bans on clubs and players. This entails determining if the new league is compatible with Article 101 of the TFEU. Although the Super League is facing a backlash from football supporters, the authors argue that it is in accordance with the values enshrined in the above articles and recent EU Court case decisions.
One important aspect could be the response from the anti-trust legislation against the ESL and its founding clubs against the formation of a cartel. The concept of breakaway leagues also touches upon the fundamentals of competition law - open markets. It thus becomes very essential that monopolies are not established in an attempt to “save” football because such monopolies prohibit the generation of any competition. Thus, even though it took only 48 hours for the league to given in to fan pressure, through a competition law prism, the law is more inclined against UEFA’s claims and it would have been difficult for the authorities to prevent such an interesting league from taking place.