The ECJ Roulette

28 years after the Bosman ruling, which reshaped and redefined football norms and regulations, Fédération Internationale de Football Association (“FIFA”) and its stakeholders appear to be at another crossroads. Uncertainty has plagued the future workings of the football industry in recent times largely due to the high-profile cases that have reached the doorstep of the national courts and the Court of Justice of the European Union (“ECJ”). Historically, the ECJ has occasionally been called upon to address significant questions that often lead to substantial changes in the governance of football, as evidenced by past rulings. The Bosman ruling's impact has persisted for nearly three decades, fundamentally shaping the regulations of the football transfer market we see today. This poses a challenge to FIFA’s apparent autonomy and also highlights the responsibility of European courts to examine and challenge the regulations of the federations like FIFA and their influential member associations such as the Union of European Football Associations (“UEFA”) to protect the rights of the stakeholders who are impacted by these regulations.

The European Union stands as the football industry’s most valuable market and holds a crucial role in the sports industry at large. Whether this is beneficial or detrimental is debatable, however, their significance and position are unequivocally a matter of fact. Based on this fact, it is understandable that sports federations such as FIFA draft regulations intertwined with European Treaties and Laws. As the European Union’s primary goal is the formation of an internal market involving the integration of their Member State’s economies to attain balanced economic growth, the main issues that concern bodies like FIFA and their stakeholders concerning the European Commission is that within the internal market, there should be free competition, favouring a productive allocation of resources and labour within Europe. While in the past the sports industry was viewed from the lens of cultural perspective giving it the leeway it required for self-governance, over the years due to a plethora of case laws and the increase in the economic value of entertainment through sports, there has been a consensus by the law-makers to look at the sport sector through a business lens as well. The first glance of the challenge concerning the validity of autonomy in sports came via the Walrave ruling in 1974 wherein the ECJ cautiously added the ‘involvement of economy factor’ aspect while analysing whether regulations of sports come within the purview of European law. This decision indeed had an impact noticeable clearly through the fallout of the Bosman ruling as there was a clear economic impact caused due to the restricted free-movement of players pre-Bosman which led to an increase in player salaries and transfer activity within and outside Europe and a power shift towards the side of the players and their agents post-Bosman. The ECJ further enlarged the scope in 2006 with the infamous Meca-Medina judgement which involved the trending anti-competitive angle enriched in Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”). Whilst analysing the case the ECJ refused to give immunity to a category of “purely sporting” rules and instead allowed sports-specific justifications to counter-balance a?prima facie?case of competitive harm. The verdict by the ECJ while still favouring the federations was perceived as a further attack on the autonomy of sports federations as it enhanced the primacy of European law over sports autonomy by adding the criteria of having governing bodies explain why certain rules and procedures are necessary and proportionate for the proper functioning of their sports while making it necessary to produce specific evidence to back up the claims being made in support of the legality of such rules. ?In today’s world as the role and range of economic activity have increased within the sport the definition of ‘undertaking’ and ‘association of undertaking’ under Article 101 (1) of TFEU becomes more prevalent to sports federations as they fall within the definition on account of their increased economic activity. The key aspect of the Meca-Medina judgment was the first application in the sporting world of the Wouters test and the birth of the Wouter-Meca Medina doctrine which inherently was a proportionality test determining what actions of an association of undertakings?i.e. sports federations can be seen as pursuing a legitimate objective as opposed to having a restrictive effect on competition within the context of the internal market established by the European law. An additional saving grace that sporting federations could also rely on was the exception under Article 101 (3) wherein the beneficial effects of a hypothetical rule imposed by sporting federations would outweigh its restrictive effects, a very tight rope to walk on. Despite the increased vigilance by the ECJ, FIFA and other sporting federations found their balancing act over the years by drafting regulations that are compliant with European laws and fall within the scope of specificity of sport under Article 165 of the TFEU under the exemptions of the aforementioned doctrine or Article 101(3). However, radical changes seem to be knocking at the doorstep again for FIFA originating from the latest case laws where the ECJ further examines such exemptions and targets the validity of the conduct of the established sporting federations based on anti-competitive and free movement principles.

In terms of the football industry, the domino effect seemingly began from the infamous Super League case where the ECJ addressed the scope of application of the Wouter-Meca Medina doctrine concerning Articles 101 and 102 of the TFEU. While the judgement of the ECJ, in this case, was favourable in a sense to UEFA recognising its pursuit of legitimate objectives in professional football on grounds of the social and cultural importance of the European sport model which is based on sporting merit, the panel also noted that rules and sanctions implemented by UEFA would be considered abusive in the absence of transparent, objective, precise, and non-discriminatory criteria and procedures. On the same day, the ECJ also delivered a verdict on the Royal Antwerp case concerning UEFA’s homegrown rule on the grounds of whether the quota system established by UEFA is being discriminatory to non-Belgian players and contravening freedom of movement and competition laws under Articles 45 and 101 of the TFEU. In this case, the ECJ again pointed out the importance of “bearing in mind both the social and educational function of sport” amongst other deliberations during their analysis but ultimately placed the burden of assessing whether the rule has a non-economic purpose or pursuing a legitimate objective on the Belgium court. While the ECJ was sensitive to the predicament of the role of the sporting federation in both cases, the rulings reaffirmed that Article 165 TFEU which deals with the specificity of sport does not exempt sport from internal market and competition law rules. This was certainly not a knockout blow for UEFA that the opposition hoped for but in hindsight certainly a warning shot to both UEFA and FIFA in the bout over the regulatory future of the beautiful game. What soon followed was a melee of attacks from all angles by such stakeholders under the guise of competition law and free movement. The can of worms was opened after three decades. This was the spark that led to a forest fire with the heat fast approaching FIFA’s doorstep. Over the past year, the FIFA Agent Regulations were widely contested by domestic courts internationally on account of provisions such as the fee cap and dual representation amongst others being illegally enforced by FIFA due to their obvious economic impact on the agents. The ECJ has again been called upon to answer whether such provisions have an anti-competitive effect as per Articles 101 and 102 of the TFEU with a ruling expected later this year. Furthermore, most recently, the ongoing Diarra case and the outlandish opinion of Advocate General Maciej Szpunar outlined yet another threat faced by FIFA as he questioned the football transfer market and its functioning as a whole based on European law. The recent events transpiring have caused more chaos than control to the football industry and left the regulatory bodies scratching their head. Conducive to the aforementioned cases reaching the ECJ, the sporting federations must be wary of the classification of their conduct with regards to whether they have as their ‘object’ or ‘effect’ the restriction of competition before using the Wouters-Meca Medina doctrine. The ECJ has dealt with this controversial issue throughout several cases not related to sport over the years and determined that ‘object or effect’ were to be read disjunctively; this means that where an agreement has as its object the restriction of competition it is unnecessary to prove that it will produce anticompetitive effects: only if it is not clear that the object of an agreement is to restrict competition is it necessary to consider whether it might have the effect of doing so. In the case laws mentioned above, the ECJ have essentially restricted the application and scope of the Wouters-Meca Medina doctrine as a defence and put the onus on analysing whether conduct by its very nature infringes Article 102 of the TFEU or has as its object the prevention, restriction or distortion of competition. Only if it does?not?does?the ECJ allow the use of the doctrine. This places a heavier burden of proof on sporting federations under certain circumstances to provide a detailed explanation of their actions suffocating them from using legitimate objectives defence without proper analytical and evidentiary reasoning to justify such objectives. The positive of the use of such criteria is that the federations will be liable to explain their actions to their community through their defence to the ECJ which primarily addresses what the football community is craving as there is an evident lack of dialogue between the two parties causing the storm we see unfolding today. However, one must also consider the negatives involved in this scenario which come in the form of strenuous and lengthy debates by the parties in a future dispute regarding how such parties frame the challenged rule as opposed to focusing on analysis of the challenged rule itself. Further, it is another inadvertent step taken by the ECJ to chip away at Article 165 of the TFEU and undermine the concept of sports autonomy and the concept of Lex-Sportiva as opposed to European law. The use of the word inadvertent in the previous sentence is down to the fact that I do not believe the ECJ voluntarily wants to interfere in such matters, however, they are obligated to do so in carrying on their duty to be compliant with European law and help boost the internal market. The referral to a preliminary ruling to the ECJ is the most effective tool to get satisfaction from an infringement of European law. The ECJ cannot refuse to answer on the grounds that this response would be neither relevant nor timely as regards the original case. It can, however, be refused if the question does not fall within their competence. The ECJ has however rarely refused to give a preliminary ruling. Although national courts in the European Union ultimately have the power to adjudicate over such cases at their discretion, they are heavily reliant on the ECJ’s guidance concerning such matters.

Furthermore, the impact of the judgements of national courts of the European Union and the ECJ have far-reaching implications all over the world with most countries outside Europe following suit due to the trailblazing effect the European market has on most of the world in terms of sport and more specifically football, an illustration of the same would be Brazilian court’s ruling the FIFA Agent Regulations as restrictive as per Brazilian competition law which was in line with verdicts by German and Spanish courts. While such countries and their laws and regulations vary from European law on many fronts there is a consensus to at least take note if not comply with European law in terms of sport regulations due to the development of the game in terms of resources in Europe as well as the importance of grievance mechanisms for sport like Court of Arbitration of Sport being available to aggrieved parties which of course operate under Swiss law which corporates with European law coupled with the inadequacy and exhaustion of the national courts of these countries to deal with matters due to their sheer volume of cases which require more of an expertise from personnel within the sports industry.

In conclusion, the ECJ has ensured that the loose screws have been tightened concerning the specificity of sports to the dismay of the sporting federations aiming to protect their autonomy. This may lead to more disputes brewing over competition law, free movement of workers and even other branches of European law. Case in point, the next stakeholders to make the move seem to be the players and player unions themselves through FIFPro who have launched a legal claim challenging the “legality of FIFA's decisions to unilaterally set the International Match Calendar and, in particular, the decision to create?and schedule the FIFA Club World Cup 2025” on account of fixture congestion which is an issue that players have been more and more vocal about in recent times. FIFPRO Europe’s member unions are requesting the Brussels Court of Commerce to refer this crucial matter to the ECJ for preliminary ruling through questions based on the violations of the Fundamental Rights of the players as labourers under Articles 5, 15, 28 and 31 of the EU Charter of Rights as well as the tried and tested “restrictions of competition according to article 101 TFEU”. As a new entrant to the world of sports law and governance, I find it fascinating to see the scene unfolding over the past year in real time while trying to predict what the future holds for FIFA, their affiliates and the stakeholders as well as understanding the trickle-down effect it has on the football community as a whole. All parties must remember to amplify the voice of the personnel involved on grass-root levels and the opinions of those working with lower-level leagues and teams in this regard as we have seen the problems they face to get in tune with the changes made by FIFA i.e. the onboarding process of the FIFA Clearing House. All factors considered and based on the above, I liken the recent involvement of the ECJ to the croupier in charge of the roulette table. The more they spin the wheel in favour of the stakeholders as opposed to the federation, the more the former feels the need to gamble to keep the hot streak alive. Ultimately wherever the ball lands under these circumstances is anybody's guess from this point onwards.