Judgment Day: The European Super League ECJ Case [27 May 2021] (Case C-333/21)

Background

In our previous article, we discussed the European Super League (ESL) case before the European Court of Justice (ECJ) on May 27, 2021 (Case C-333/21). The ESL, a proposed breakaway football competition, faced legal challenges and the ECJ was tasked with examining its compliance with European Union law.

A key issue revolved around the potential violation of EU competition law and the principle of sporting integrity. We noted that the case's outcome could have significant implications for the regulation of football competitions and the relationship between sports governance and EU law.

Legal arguments presented in the case involved complex considerations of EU competition law, including the assessment of potential anti-competitive effects and the balance between sporting and economic objectives. These also highlight the broader context of the ESL controversy, which triggered widespread opposition from football fans, governing bodies, and even political figures.

The case emphasised the importance of football governance in shaping the legal landscape for future sports competitions and the delicate balance between economic interests and the fundamental principles of fair competition in the realm of European football.

The ECJ's Judgment

In the recent judgment on the ESL case, FIFA and UEFA have been found to have abused a dominant position. The court concludes that the criteria for competition organisation must be transparent, objective, non-discriminatory, and proportionate, all aspects said to be lacking in the current practices of these organisations. The judgment deems their rules on approval, control, and sanctions as unjustified restrictions on the freedoms of movement.

Moreover, the court asserts that FIFA and UEFA's media rights regulations impede European football clubs, media companies, and consumers, hindering innovation in competitions. Notably, the court defers the assessment of whether these rules could benefit football stakeholders through a solidarity-based redistribution of revenues to Commercial Court No. 17 in Madrid.

It is crucial to highlight that this judgment does not automatically endorse projects like the Super League. Nor does it specifically address or rule on the Super League project, leaving its approval or rejection open to further evaluation and scrutiny.

Nonetheless, the ECJ has ruled that both UEFA and FIFA acted "unlawfully" by blocking the formation of the European Super League in 2021. 

Responses

A22, the company backing the European Super League, celebrated the verdict, declaring that "the UEFA monopoly is over" and asserting that "football is free." However, not everyone shares this enthusiasm, with LaLiga releasing a statement condemning the Super League as “a selfish and elitist model.” 

Likewise, the Premier League has reconfirmed its objection to the ESL, stating that “Supporters are of vital importance to the game and they have time and time again made clear their opposition to a ‘breakaway’ competition that severs the link between domestic and European football”.

As a consequence of the ruling, A22 has today unveiled a new proposal for men's and women's midweek European Competitions. Notably, the revamped plans indicate a departure from the previous Super League format, with participation now based on sporting merit, without permanent members and the inclusion of promotion and relegation.

The original ESL, proposed as a breakaway competition featuring some of Europe's top teams in a "closed shop" format, faced vehement opposition from fans and football governing bodies. Despite its initial collapse, the Grand Chamber of the ECJ has allowed for its swift resurrection.

Legal Considerations

The ECJ's questions and considerations revolved around the interpretation of various articles in the Treaty on the Functioning of the European Union (TFEU) concerning the actions of FIFA and UEFA regarding the establishment of a new pan-European club competition. These questions span issues related to the abuse of dominant positions, prohibitions on certain requirements in the statutes of FIFA and UEFA, the threat of sanctions against clubs participating in the Super League, and the compatibility of specific provisions in the FIFA Statutes with EU competition law. Additionally, the questions explore whether restrictions imposed by FIFA and UEFA on the Super League could qualify for exceptions, considering factors like limited production, impeded market entry, and restricted innovation. The final question pertains to whether the requirement for prior approval from FIFA and UEFA for establishing the Super League constitutes a restriction on fundamental freedoms recognised in the TFEU.

The Court asked and gave effect to six key questions:

1. The interpretation of Article 102 TFEU in the context of interclub football competitions. The main question was whether associations like FIFA and UEFA, holding dominant positions in the market, abused their power by implementing rules requiring prior approval for new competitions and controlling club and player participation without transparent and non-discriminatory criteria. The Court argued that while legitimate rules were essential for the organisation of competitions, arbitrary and discretionary powers might constitute an abuse of dominant position. It emphasised the need for transparent, objective, and non-discriminatory criteria and detailed procedural rules to avoid infringement of Article 102 TFEU. The judgment concludes that the adoption and implementation of such rules without a suitable framework could be considered an abuse of a dominant position.
2. The Court explored the interpretation of Article 101(1) TFEU in the context of interclub football competitions. The second question raised was whether rules requiring prior approval for new competitions, adopted by football associations with economic activities related to organising competitions, constitute a decision aiming to prevent competition. The court clarified that agreements or decisions affecting trade between EU Member States and having the object or effect of restricting competition were incompatible with the internal market. The discussion distinguished between conduct with an 'object' of restricting competition and conduct with an 'effect' on competition. Applying these distinctions to FIFA and UEFA rules, the court found that, in the absence of criteria ensuring transparency, such rules revealed sufficient harm to competition. Consequently, they fell under the prohibition of Article 101(1) TFEU as having the object of preventing competition.
3. The third question revolved around whether a public announcement by entities such as FIFA and UEFA, threatening sanctions on clubs and players participating in unapproved competitions, constitute an anticompetitive decision or an abuse of a dominant position under Article 101(1) and Article 102 TFEU. Given the prior answers, particularly regarding the implementation of rules infringing on both provisions, the court deemed it unnecessary to address this question separately.
4. The Court's fourth question addressed the interpretation of Articles 101 and 102 of the TFEU concerning rules related to sporting competitions. It focused on football associations at global and European levels, questioning whether they could be designated as original owners of competition rights and granted exclusive marketing powers. The court acknowledged the potential application of these rules only to competitions organised by these associations but highlighted the need to address ambiguity. While Articles 101 and 102 TFEU didn't inherently prohibit such rules, the court underscored the importance of proving efficiency gains and tangible profit sharing for solidarity within football. Exclusive marketing powers were deemed potentially anticompetitive, and their justification required satisfying conditions for exemption under Article 101(3) TFEU and Article 102 TFEU, with the burden of proof on the parties involved. In summary, the court distinguished the ownership of rights from their exclusive marketing and emphasised the necessity of evidence in establishing efficiency gains, profit redistribution, and the indispensability of the rules in question. The potential anticompetitive impact of exclusive marketing powers necessitated robust justification based on EU treaty provisions.
5. The fifth question addressed whether rules by FIFA and UEFA, which required their prior approval for third-party undertakings to organise interclub football competitions in the EU and controlled the participation of clubs and players, could be exempted from Article 101(1) TFEU or justified under Article 102 TFEU. The court emphasised that not all agreements or decisions restricting freedom of action necessarily violated Article 101(1) TFEU. It outlined conditions for exemption under Article 101(3) TFEU, including demonstrating efficiency gains, a fair share of profits for users, indispensability of restrictions, and no elimination of effective competition. The court further discussed the requirements for justification under Article 102 TFEU, highlighting the need to show objective necessity and counterbalancing benefits. It concluded that the rules might be exempted or justified only if convincing arguments and evidence demonstrated compliance with all necessary conditions.
6. The sixth and final question addressed whether Articles 45, 49, 56, and 63 TFEU prohibited rules by football associations, responsible for global and European football, requiring prior approval for third-party undertakings to establish interclub football competitions on EU territory. These rules also controlled the participation of professional football clubs and players, with sanctions for non-compliance. The focus was on Article 56 TFEU, the freedom to provide services. The rules, lacking substantive criteria and procedural transparency, predominantly hindered this freedom. Justifying the rules required proving a legitimate non-economic public interest objective, along with proportionality. The absence of clear, objective, and non-discriminatory criteria rendered the rules incompatible with Article 56 TFEU, as they hindered and prevented various economic activities, and their justification was questionable.

Key Takeaways

In summary, the Court has made a number of significant rulings regarding the interpretation of key articles in the TFEU in the context of football associations and their powers:

1. Article 101(1) TFEU: The adoption and implementation of such rules may be interpreted as a decision by an association of undertakings aiming to prevent competition if there is no framework providing for substantive criteria and detailed procedural rules ensuring transparency, objectivity, non-discrimination, and proportionality.
2. Article 102 TFEU: The adoption and implementation of rules by football associations, responsible for football at world and European levels, that control the establishment of a new interclub football competition and the participation of clubs and players may be considered an abuse of a dominant position if there is no transparent, objective, non-discriminatory, and proportionate framework for these powers. 
3. Article 101(3) and Article 102 TFEU: Rules controlling the setting up and participation in interclub football competitions may be exempted or considered justified under these articles only if it is convincingly demonstrated that all required conditions are satisfied.
4. Articles 101 and 102 TFEU: Rules designating associations as original owners of competition rights are not precluded if they apply only to competitions organised by those associations. However, exclusive power over marketing rights is precluded unless all conditions for exemption under Article 101(3) TFEU and justification under Article 102 TFEU are convincingly demonstrated.
5. Article 56 TFEU: Rules requiring prior approval for the establishment of interclub football competitions and controlling participation may be precluded if there is no framework with substantive criteria and detailed procedural rules ensuring transparency, objectivity, non-discrimination, and proportionality.

The ECJ's decision is binding and not subject to appeal, leaving the future of football in a state of considerable uncertainty. While the ruling challenges UEFA and FIFA's authority, it stops short of endorsing the specific Super League project, emphasising the need for transparency, objectivity, non-discrimination, and proportionality in future competitions. 

The football world will be watching very closely as the European Super League prepares to make its return, navigating the evolving landscape and very foundations of the sport, not least the English clubs and critically the supporters, whose protests were central to the collapse of the initial ESL project.