The case at the Court of Justice of the European Union
In April 2021, 12 major European football clubs announced their proposal to create the European Super League (ESL), an alternative to current pan-European competitions such as the Champions League.
In January 2021, well before the announcement of the ESL proposal, both UEFA and FIFA publicly threatened all clubs (and their players) with suspension from all UEFA/FIFA competitions should they participate in any proposed alternative European competition different from the status quo. This was a clear indication that neither body had any intention of objectively reviewing alternative proposals of any kind. FIFA and UEFA reiterated these threats on April 18, 2021. Therefore, on the date of announcement the ESL Company asked the Madrid Commercial Court for legal protection (an injunction) to prevent UEFA/FIFA from using their extensive sanctioning powers to stop the initiative and destroy the Company. In the same proceedings, ESL requested to the Madrid Commercial Court to make a preliminary referral to the European Court of Justice concerning the compatibility of UEFA and FIFA statutes with EU Treaty.
Given the January and April 2021 threats and the monopoly power of the two bodies, the Madrid Court granted the injunction on April 20, 2021. It directed UEFA and FIFA to refrain from taking any action, which would prevent the formation of the ESL. UEFA ignored the order and in direct violation of the injunction, threatened to ban participating clubs from the Champions League and initiated disciplinary proceedings against three of the founding clubs of the ESL. On multiple occasions in the following months, UEFA was explicitly required by the Madrid Court to comply with its order. As a result of pressure from the Court, UEFA finally complied with the main elements of the injunction on September 27, 2021 – 5 months after the Court issued its original instructions.
In addition to requesting the injunction, the ESL Company also filed a lawsuit in the Court of Madrid alleging that the UEFA/FIFA monopoly is against EU Competition and Free Movement Law. This is a critical point: The case is not about the structure of the ESL or the proposed format. It relates solely to the alleged dominant position and monopoly structure of UEFA/FIFA.
Given the significance of the case, the ESL requested that it be referred to the European Court of Justice. The Madrid Court decided to refer the case in May 2021, and it is now making its way through the CJEU, being reviewed by the Grand Chamber of 15 judges given the importance of the case. As part of its referral the Madrid Court asked the CJEU for guidance with respect to a list of six specific questions. While legally technical in nature, the questions are effectively asking whether EU law prohibits UEFA from establishing barriers to protect its monopoly over all pan-European club competitions. Specifically: Is it legal for UEFA to have the right to prevent all new competitors from entering the very market that they control absolutely?
EU competition law forbids any entity that controls a market from using that control to restrain or eliminate competition. Yet, UEFA has been the sole organizer of pan- European club competitions since 1955, nearly 70 years. At the same time, they have given themselves (via their own statutes), the right to approve or deny the organization of any alternative competition. This is an obvious conflict of interest as UEFA has a strong incentive not to authorize any proposals and as a result its statutes infringe EU Competition and Free Movement Law.
By deciding whether to resolve this conflict of interest, the CJEU has the opportunity to create a precedent that will have ramifications that go beyond the realm of football and can enable reform of governance models in other sports. This is illustrated by the parallel procedure in the International Skating Union (ISU) case, which the CJEU is processing at the same time as the ESL case.
What comes next?
On 15 December 2022, Athanasios Rantos, one of the Advocate Generals of the CJEU, will give his opinion on how the Court should answer the questions of the Madrid Court. This opinion is not binding upon the judges of the Grand Chamber. However, it may guide their deliberations and can shed a light on possible outcomes. In spring 2023, the CJEU is likely to adopt its Judgement which is final and not subject to further appeal. It is then the task of the Spanish judge to apply the responses of the CJEU to the specific facts of the case.
What follows is a summary of the six questions referred by the Madrid Commercial Court to the CJEU along with some relevant background for context. In addition, relevant sections from the Treaty on the Functioning of the European Union (TFEU) are included for reference as they are referred to in each of the questions.
Questions by the Madrid commercial court to the CJEU:
Does Article 102 prohibit UEFA and FIFA from abusing their dominant position by conferring upon themselves pre-authorisation rights for European club competitions, in particular when there is no transparent procedure or criteria for approval and when the potential for a conflict of interest is so severe?
Article 102 of the EU Treaty prohibits the abuse of a dominant market position by an operator in any market. Since 1955 UEFA has been the sole, 100% market share, operator of European club competitions and it is therefore a monopoly operator with a dominant position. Additionally, FIFA and UEFA confer upon themselves (via their Statutes) the exclusive right to approve any new European club competition. This allows them to prevent any entry by new operators into this market.
Does Article 101 prohibit the pre-authorisation rights for European club competitions which FIFA and UEFA have conferred upon themselves, in particular when there is no transparent procedure or criteria for approval and when the potential for a conflict of interest is so severe?
Article 101 of the EU Treaty prohibits all agreements which have the object or the effect or preventing, restricting, or distorting competition within a market.
Do Articles 101 and/or 102 of the EU Treaty prohibit FIFA, UEFA, (or their member associations and/or national leagues) from deterring competition by threatening to sanction clubs (and their players) to prevent them from participating in the Super League? Further, if such sanctions include excluding clubs or players from UEFA club competitions or national team matches would such actions be against Articles 101 and 102 in particular when there is no transparent procedure or criteria for approval of a new competitions like the Super League?
Article 101 of the EU Treaty prohibits agreements which have as their object or effect the creation of a dominant position in a market and Article 102 prohibits the abuse of any such dominant market position.
Are Articles 67 and 68 of the FIFA Statutes incompatible with Articles 101/102 of the EU Treaty in so far as FIFA (and UEFA as the European confederation) have (1) assigned all competition rights to themselves therefore depriving participating clubs from the original ownership of such rights and (2) have deprived any potential organiser of an alternative competition from having access to these rights preventing any such competition from being viable?
Article 67 of the FIFA Statutes states that “FIFA, its member associations and the confederations are the original owners of all of the rights emanating from competitions and other events coming under their respective jurisdiction, without any restrictions as to content, time, place and law. These rights include, among others, every kind of financial rights, audiovisual and radio recording, reproduction and broadcasting rights, multimedia rights, marketing and promotional rights and incorporeal rights such as emblems and rights arising under copyright law”. FIFA Statute Article 68 goes on to state that “FIFA, its member associations and the confederations are exclusively responsible for authorising the distribution of image and sound and other data carriers of football matches and events coming under their respective jurisdiction, without any restrictions as to content, time, place and technical and legal aspects”.
In the ESL case, should the EU Treaty be interpreted to mean that the restrictions on competition resulting from FIFA/UEFA statutes qualify for the exception in Article 101, paragraph 3? Furthermore, would there be any objective justification which would permit the view that there is no abuse of a dominant position for the purposes of Article 102 of the EU Treaty?
FIFA and UEFA have conferred upon themselves the exclusive power to organise and approve European club competitions. Additionally, they have the power via sanctions and other measures to prohibit or prevent the development of the Super League or other alternative competitions. By conferring these powers upon themselves, the effect is that the “market” for European club competitions is substantially limited, the appearance of alternatives other than those offered by FIFA/UEFA is impeded, and innovation is restricted thereby eliminating potential competition and limiting consumer choice. Article 101 of the EU Treaty prohibits these types of agreements if indeed, they restrict competition. However, paragraph 3 of Article 101 provides an exception to the normal rule when monopolies or monopoly like entities “contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit”.
Are restrictions on the creation of alternative European club competitions such as those included in the Statutes of FIFA and UEFA contrary to one or more of the fundamental freedoms established under Articles 45, 49, 56 and 63 of the EU Treaty?
Articles 45, 49, 56 and 63 of the European Treaty provide for the free movement of people (labor), goods, services and capital within the European Union. Collectively these Articles are source of the “four fundamental freedoms” of the European common market. In their Statutes, FIFA and UEFA restrict the creation of any new European club competitions by requiring prior approval of alternative competitions such as the Super League (Articles 22 and 71 to 73 of the FIFA Statutes, Articles 49 and 51 of the UEFA Statutes).
Relevant Sections of the TFEU
Article 101 TFEU
The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings 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, and in particular those which:
- directly or indirectly fix purchase or selling prices or any other trading conditions;
- limit or control production, markets, technical development, or investment;
- share markets or sources of supply;
- apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Any agreements or decisions prohibited pursuant to this Article shall be automatically void. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of undertakings,
- any concerted practice or category of concerted practices
which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
- impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
- afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Article 102 TFEU
Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist of:
- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
- limiting production, markets or technical development to the prejudice of consumers;
- applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
- making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.