On December 21, 2023, the European Court of Justice (ECJ) handed down two long-awaited landmark judgments that provide new clarity and guidance on the applicability of competition law to governing bodies in the field of sport. Both cases focus on whether sports governing bodies can make competitions subject to prior approval by the respective body and impose sanctions on athletes and clubs that participate in unauthorized competitions.

1. The Judgments: European Superleague and Ice Skating Union

1.1 Overview

The first case (C-333/21) concerns the project to create a European Superleague (ESL). In 2021, twelve clubs from England, Spain and Italy, which together formed the European Superleague Company (ESLC), announced their plans to create a new football competition at European level: the ESL. Football’s European governing bodies, namely UEFA (the Union of European Football Associations) and FIFA (Fédération Internationale de Football Association), refused to recognize the project and threatened to impose sanctions under their respective statutes on clubs and players who might decide to participate. The ESLC brought an action against FIFA and UEFA before the Commercial Court of Madrid, arguing that FIFA’s and UEFA’s rules on the approval of competitions and the exploitation of media rights infringe EU law. The Spanish court referred questions to the ECJ.

The second case (C-124/21 P) concerned an appeal by the International Skating Union (ISU) against a decision of the General Court (GC). The International Skating Union (ISU) is the only international sports federation recognized by the International Olympic Committee (IOC) in the field of figure skating and speed skating. Confirming an infringement decision of the European Commission, the GC found that ISU’s rules, which require its prior approval for the organization of international competitions and provide for severe penalties on athletes who participate in unauthorized competitions, constituted an infringement of competition law.

As the ISU appealed a decision of the GC, the ECJ’s decision on that case is final, while the ESL case was referred by the ECJ back to the commercial Court in Madrid, where it is expected that the reasoning of the ECJ will be applied and further specified.

The conclusions drawn by the ECJ in both cases apply generally to sports federations beyond these individual cases. The following sections will focus on briefly analyzing the reasoning of the ECJ in the ESL case.

1.2 Applicability of EU Competition Law to Sport

In its deliberations in the ESL case, the ECJ first examined the applicability of EU (competition) law to sport and the activities of sports federations, recalling that the practice of sport, insofar as it constitutes an economic activity, is subject to the provisions of EU law. It expressly stated that UEFA and FIFA are engaged in an economic activity consisting of the organization and marketing of international football competitions and the exploitation of the various rights associated with those competitions, which makes those activities subject to EU competition law. Against this background, the ECJ first clarified that UEFA and FIFA are to be categorized as ‘undertakings’ and ‘associations of undertakings’ within the meaning of EU competition law (Article 102 and 101 TFEU, respectively), to the extent that they engage in economic activities such as the organization of competitions and the exploitation of the rights related thereto. Second, the ECJ examined whether the adoption by UEFA and FIFA of rules on the prior approval of, and participation in, interclub football competitions under penalty of sanctions could be considered to amount to an abuse of a dominant position under Article 102 TFEU and/or to an anti-competitive agreement under Article 101 TFEU.

1.3 Analysis Under Article 102 TFEU

The ECJ examined whether the rules of the sports federations, which make competitions subject to prior approval and impose sanctions on athletes and clubs participating in unauthorized competitions, constitute an abuse of a dominant position under Article 102. In this context, it should be noted, that although the ECJ did not explicitly examine the question of whether UEFA or FIFA hold a dominant position, the ECJ assumed that this is the case, both factually and legally, since the referring commercial court of Madrid appears to have taken this position.

Next, the ECJ recognized that there are specific considerations which allow the conclusion to be drawn that it is legitimate to subject the organization and conduct of international professional football competitions to common rules when they are intended to ensure the homogeneity and coordination of such competitions and to promote the conduct of sporting competitions on the basis of equal opportunities and merit. The ECJ also recognized that it is legitimate to ensure compliance with such common rules by means of sanctions, such as those of the sports federations under scrutiny, which require the prior approval of such competitions and of the participation of clubs and players.

Crucially, the ECJ held that «rules on prior approval and participation are thus legitimate in the specific context of professional football and the economic activities to which the practice of that sport gives rise, neither their adoption nor their implementation may be categorised, in terms of their principle or generally, as an ‘abuse of a dominant position’. The same holds true for sanctions introduced as an adjunct to those rules, since such sanctions are legitimate, in terms of their principle, as a means of guaranteeing the effectiveness of those rules» [N 145-146].

However, on the basis of the assumption of a dominant position, the ECJ essentially held that the relevant rules of sports federations on prior approval of and access to competitions would be abusive if there were no framework providing for substantive criteria and detailed procedural rules capable of ensuring that the rules on prior approval of competitions are transparent, objective, non-discriminatory and proportionate. The ECJ referred the case back to the commercial court in Madrid, holding that it will be for the referring court to categorize the rules at issue in the main proceedings in the light of Article 102 TFEU, after carrying out the additional verifications it may deem necessary.

The ECJ reached this conclusion on the basis that without such a framework, the current rules on prior approval of and access to competitions could create a conflict of interest. According to the ECJ’s analysis, equal opportunities for competitors must be maintained. In the ECJ’s view, the fact that an undertaking engaged in a particular economic activity (sc. Organizing competitions) has the power (de jure or de facto) both to decide which other undertakings may compete in that activity and to determine the conditions under which they may do so creates a conflict of interest which may harm competition. According to the ECJ, it is not per se unlawful to apply rules on access to competition, but it is required that the criteria are transparent, objective and non-discriminatory. The ECJ provides specific guidance on how these criteria should be assessed. First, they must be published in advance in an accessible form. Second, they must be non-discriminatory, and to that end, the rules must set comparable conditions for the sports federations that establish them as well as potential third-party competitors and must not make it impossible or excessively difficult for third-party competitors to comply with them. Finally, the sanctions introduced to enforce these rules must not be discretionary, i.e. they must be based on objective and non-discriminatory criteria and be subject to procedures that ensure that they are proportionate to the infringement in each individual case.

1.4 Analysis Under Article 101 TFEU

Next, the ECJ analyzed rules on prior approval of and access to competitions under article 101 TFEU. The ECJ held that, although the rules on the prior approval of and access to competitions may include the pursuit of legitimate objectives, such as e.g. ensuring compliance with the principles, values and rules of the game which underpin professional sport, these rules confer on the sports federations the power to authorize, control and determine the conditions of access to the relevant market for any potentially competing undertaking. They thus also confer on the sports federations the power to determine both the degree of competition which may exist on that market and the conditions under which that potential competition may be exercised.

According to the ECJ, as regards the adoption or implementation of rules for the prior approval of and access to competitions by associations which are responsible for football at world and European level and which at the same time carry out various economic activities related to the organization of competitions, the key question is whether there is a framework containing substantive criteria and detailed procedural rules capable of ensuring that they are transparent, objective, non-discriminatory and proportionate. In the absence of such a framework, the adoption and implementation of such rules by associations constituted a decision by an association of undertakings which has as its object the prevention of competition. Therefore, in the absence of such a framework, the prior approval rules would be within the scope of Article 101(1) TFEU, without it being necessary to examine the actual or potential effects of the rules.

This conclusion itself is not surprising, as the aim of these rules is obviously to prevent unauthorized competition. The key question, however, is whether the rules can be justified.

1.5 Potential Justification

The ECJ hence examined whether the rules on prior approval, participation and sanctions at issue may either benefit from an exemption or be considered justified.

With regard to Article 101 TFEU, the ECJ first examined whether the rules can be justified. The Court first addressed the scope of the so-called Wouters or Meca-Medina exemption. Certain specific types of conducts, such as ethical rules or principles adopted by an association, may fall outside the scope of the prohibition in Article 101(1) TFEU if they can be justified, even in cases when they have an inherent restrictive effect on competition. However, for this to be the case, they must be justified by the aim of pursuing legitimate objectives in the public interest, which may not per se be anti-competitive in nature, and the specific means used to pursue those objectives must be necessary and proportionate to that aim (cf. the ECJ’s prior case law in this regard, specifically Wouters and Others, C‑309/99 and Meca-Medina and Majcen v Commission, C‑519/04 P).

The ECJ concluded that its previous case-law on justification, and specifically the justifications set forth in the Wouters / Meca-Medina decisions, cannot be applied in situations involving conduct that by its nature infringes Article 102 TFEU, as well as in situations in which such conduct reveals a sufficient degree of harm to justify a finding that has as its ‘object’ the prevention, restriction or distortion of competition within the meaning of Article 101 TFEU.

The ECJ then examined whether an exemption could apply. According to Article 101(3) TFEU, ain a given case is subject to four cumulative conditions: i) it must be demonstrated with a sufficient degree of probability that the agreement allows efficiency gains, ii) it must be demonstrated, with the same degree of probability, that a fair share of the profit resulting from these efficiency gains is reserved for the users; iii) the agreement in question must not impose on the participating undertakings restrictions which are not indispensable to the attainment of such efficiency gains; and iv) the agreement must not give the participating undertakings the opportunity to eliminate effective competition for a substantial part of the products or services concerned.

In the ESL case, the ECJ referred the case back to the commercial court in Madrid to make these determinations on the basis of evidence to be submitted by the parties. However, the ECJ did provide some guidance. According to the ECJ, as regards the fourth condition of an exemption (maintenance of sufficient competition), the commercial court in Madrid must take into account whether the sports federations current rules on prior authorization, participation and sanctions are embedded into a framework of substantive criteria as well as detailed procedural rules capable of ensuring that the rules and sanctions are transparent, objective, precise and non-discriminatory.

With regard to a potential justification under Article 102 TFEU, the ECJ recalled that justification is possible if the undertaking concerned demonstrates either that its conduct was objectively justified by circumstances external to the undertaking and proportionate to that justification, or that its conduct is counterbalanced or outweighed by efficiency gains which must also benefit consumers.

Regarding those rules of UEFA and FIFA which aim to reserve the organization of any competitions to themselves, the ECJ itself found no objective justification and instructed the commercial court in Madrid to examine a possible justification on the grounds of efficiency.

2. Implications

While at first glance it may seem that the ESLC has scored a decisive goal, the ECJ’s judgment may in fact be of limited use to the ESLC. However, both judgements regarding ESCL and ISU may have wide implications for sports and their governing bodies more generally, and not just in the arenas of football and ice skating. It remains to be seen how the ECJ’s decisions will affect the European Super League project, given that most clubs no longer support the project and the fact that the Madrid court will now have to rule on the project itself. The ECJ emphasized that it did not rule on the compatibility of the European Super League project with the TFEU, and referred this question back to the commercial court in Madrid.

Both the ESL and the ISU decisions clarify that sports governing bodies must establish transparent, objective, non-discriminatory rules when they require prior approval of and access to competitions and ensure proportionality in case of sanctions. Moreover, the ECJ provided clarity on the applicability of European competition law to sport: it does apply and must be respected. In this regard, the ECJ sets some guardrails and found that certain current rules of sports governing bodies may potentially fail to comply with EU competition law, although this analysis may change if the Madrid court finds that the disputed rules are justified. The ECJ also provided important guidance that may help sports governing bodies to assess how to adapt their rules to ensure continued compliance with EU competition law in the future.