At the end of July 2022, the Luxembourg football club Swift Hesperange – at the time of writing 2nd in the top national league (‘BGL Ligue’) – filed a complaint against the Luxembourg football federation (FLF) and UEFA before the Tribunal d’arrondissement de Luxembourg and asked the Tribunal to refer a set of questions to the EU’s top court, the Court of Justice of the European Union (CJEU). FC Swift Hesperange is challenging rules enacted and implemented by UEFA and FLF, arguing that the sport governing bodies are violating competition laws, as well as rules governing the free movement of workers, services and capital within the EU.
These questions are particularly timely and sensitive, given the partial overlap with the challenge brought last year by the remaining three European football clubs (still) supporting the Super League project. They have, however, not yet been formally referred to the CJEU – and indeed may never reach the EU’s top court, depending on the admissibility of the claims themselves and/or the relevant parties’ ability to persuade the Luxembourg tribunal to refer them.
Both challenges target UEFA’s alleged “conflict of interests” in its remit of both the organisation and regulation of sporting competitions.
The European Model of Sport
It is widely accepted and acknowledged that there is a European Sport Model which benefits from wide political support at national and EU level and has often been presented as a specificity worthy of protection. As previously reported, a European Citizens’ Initiative recently called on the EU to adopt a Recommendation protecting “the model of football in Europe” and “the specific nature of sport in the EU competition rules” (as set out in Article 165 of the Treaty on the Functioning of the European Union (TFEU)).
The European Sport Model has three main characteristics:
- a single governance structure for each sport where the governing body (e.g. UEFA, Ligue de Football Professionnel in France, etc.) has a dual role: it has the sole authority to organise competitions and define the rules of the game, while managing and maximising revenue flowing from any related activity (e.g. TV rights, sponsorships, investments, etc.);
- a pyramid structure with a division of labour, and distinct organisations acting at each level (e.g. regional, national, supranational); and
- an open competition system where participants can progress all the way from the lower ranks to the upper tiers of the pyramid.
Reviewing the alleged conflict of interests of sport governing bodies under competition rules – the ISU case
A theme that regularly emerges in cases involving sports governing bodies is that of conflicts of interest. Where the governing body enjoys a monopolistic position, it is argued that it may have the economic interest to eliminate all competition and to deny rivals the chance to develop alternative competition and/or structures while citing “the rules of the game” and the “interests of the sport”.
This has been scrutinised under EU competition rules in the context of the sports sector, in particular in the ongoing International Skating Union (ISU) case:
- European Commission decision: the Commission considered that eligibility rules imposed by the ISU, the governing body of professional ice skating, which prevented athletes who participate in events not authorised by the ISU from participating in its events, were in breach of EU competition rules. It considered that such rules were restrictive by object insofar as they sought to protect the economic interests of the organisation.
- General Court judgment of 16 December 2020: confirmed the Commission’s finding that the ISU’s penalty system was disproportionate, and that its severity could dissuade athletes from taking part in competitions not authorised by the ISU. However, the General Court found that the Commission had erred when relying on the economic nature of the objectives pursued by the pre-authorisation system put in place by the ISU. The judgment pointed out that “the pursuit of economic objectives is an inherent feature of any undertaking, including a sports federation when it carries out an economic activity”, which “is not in itself anticompetitive”.
As such, claims that the ISU ruling will facilitate the implementation of ‘breakaway’ competitions in the EU are perhaps misconceived. Whilst any criteria limiting market access to sport must be inherent and proportionate to the pursuit of legitimate sporting objectives, the ISU judgement also provides authority for the right of sports governing bodies to regulate events (and potential events) through pre-authorisation systems / eligibility rules.
Opposing the creation of a closed European football tournament – the Super League case
In April 2021, 12 of Europe’s top football clubs announced the creation of the Super League. Following mass protest by virtually all stakeholders (including politicians, national and supranational governing bodies, other clubs, and – perhaps most importantly – sports fans), nine of the 12 football clubs abandoned the project shortly after its announcement.
The three remaining clubs – Real Madrid, Barcelona, and Juventus – have challenged UEFA’s dual role before a Madrid Court. This led to a request for a preliminary ruling being filed by the Madrid court in May 2021 to ask the CJEU if UEFA’s rules and decisions (in particular “Articles 49 and 51 of the UEFA Statutes, and any similar article contained in the statutes of the member associations and national leagues”) are infringing Articles 101 and 102 TFEU (summary available here). The oral pleadings before the CJEU took place in July 2022.
The debate mainly revolved around the notion of “conflict of interests”. According to the request for a preliminary ruling and the transcripts of the oral pleadings, the Super League’s contention is that UEFA and FIFA’s power to authorise the holding of international matches and competitions “is not subject to any type of limit or to an objective and transparent procedure but rather to the discretion of two private bodies which, owing to their monopoly over the organisation of competitions and exclusive management of the economic benefits derived from such sporting competitions, have a clear interest in refusing to grant that permission”. On the other hand, UEFA has argued that the association structure protects the sport and ensures, inter alia, grassroots funding, which is essential to maintain the benefits of sport to society.
Frustrating the emergence of cross-border leagues and the impact on smaller football clubs – the FC Swift Hesperange case
FC Swift Hesperange and its sponsors would like to “dream bigger”. But they contend that their participation in the Luxembourg league offers them little to no prospects of doing so. In particular, the Luxembourg football club considers that it cannot, within the current UEFA framework, take part in a supranational league (under Articles 49 and 51 of UEFA, it is forbidden to create one unless authorised to do so by UEFA), despite the contention that membership of such a league could allow it to experience greater commercial development.
The managers of FC Swift Hesperange (and their partners) are convinced that participation in a Benelux League would open the door of opportunity for the club, but that is made impossible by UEFA and FLF rules which they allege are in direct conflict with EU law. As a result, an action has been brought before the Tribunal d’arrondissement de Luxembourg in which FC Swift Hesperange is seeking to challenge a set of UEFA and FLF rules relating to: the creation of transnational competitions; quotas for “locally trained players”; the imposition of a financial scale for national transfers; transfer rules violating the famous Bosman judgment; and rules prohibiting clubs from incorporating as commercial companies.
Of particular interest is FC Swift Hesperange’s challenge of the scope of Articles 49 and 51 of the UEFA’s Statutes, along with the Authorisation Rules governing International Club competitions (adopted by UEFA Executive Committee on 10 June 2022), which they say may infringe EU competition rules as a result of UEFA’s alleged dual role as “sole organiser of competitions in Europe and the self-appointed regulator of that same market” and related “structural conflict of interest” (i.e., Question 8 referred to the CJEU).
At the end of the day, the club’s challenge boils down to the notion of “conflict of interest”. FC Swift Hesperange has suggested that this can be addressed by either (i) splitting the role of organiser of competitions and that of “gatekeeper”; or (ii) “the establishment by a public authority of a transparent, objective, non-discriminatory procedure subject to the review of the EU state courts”.
Towards a revamp of the European Model of Sport?
These cases are likely to have a strong and lasting impact on the role and powers of sports governing bodies in Europe. They may well lead, as suggested by FC Swift Hesperange, to the imposition of transparent, objective and non-discriminatory obligations as minimum requirements.
In the meantime, the Commission recently reaffirmed its support to UEFA and the European Sports Model, insisting on the importance of the pyramid structure and open competition. It announced on 6 October 2022 that a new cooperation agreement had been signed with UEFA, emphasising UEFA’s “central responsibility as the governing body of European football” and the fact that “UEFA and the European Commission will ensure that UEFA’s competitions remain a success story embedded in our European Sport Model”.
Even if the might of the clubs still championing the Super League project are ultimately unsuccessful with their challenge, it may be that relative “minnows” FC Swift Hesperange can force a change if its challenge is ultimately referred to the CJEU – admittedly, a process which could take some time. The “impossibility” of sporting development for clubs from “small” nations is a stone in UEFA’s shoe that no reference to the specificity of the European Sports Model will remove. In this respect, it is noteworthy that the first revolution in European football was the consequence of the refusal to transfer the modest Belgian footballer Jean-Marc Bosman from FC Liège to USL Dunkerque. “Small” cases brought before the European courts sometimes have major consequences.
For further information, please contact:
Daniel Green, Linklaters
daniel.green@linklaters.com
