Steve Weatherill, Somerville College and Faculty of Law, University of Oxford

Photo credit: Werner100359, via Wikimedia Commons

Summary

Recent Court of Justice rulings on December 21, 2023, determined that practices requiring prior approval for new sporting competitions created by external entities clash with EU law. This decision primarily stemmed from the lack of clear, unbiased, and transparent criteria and procedures. While governing bodies, particularly in football, are obligated to adjust their practices, the extent of their authority as gatekeepers remains unclear. If a prior approval system adheres to transparent, non-discriminatory, and well-defined criteria, can a governing body like UEFA still decline authorization for a new competition?

This article dissects the legal principles outlined by the Court on December 21st through three key inquiries. Firstly, can UEFA reject a closed league and penalize participants? The author believes so. Secondly, can UEFA reject a second Champions League, identical in format to its own but managed by external entities, and penalize participants? The author thinks not. Thirdly, can UEFA decline a new, open competition with a comparable format to its own but operated by external entities, and penalize participants? The author argues against it unless UEFA can prove its competitions are demonstrably superior based on EU law’s primarily economic criteria. While UEFA retains the right to uphold the European Model of Sport, particularly by preventing closed competitions, it cannot monopolize competitions aligned with this model. Consequently, the Court has paved the way for potential transformations in European football.

Governing Bodies in Sport: Redefining the ‘Gatekeeper’ Role

In light of the significant rulings on December 21, 2023—specifically, European Superleague Company SL v FIFA, UEFA (Case C-333/21), UL, SA Royal Antwerp Football Club v URBSFA, UEFA (Case C-680/21), and International Skating Union v Commission (Case C-124/21 P)—the role of governing bodies, especially UEFA, as gatekeepers requires reassessment.

The Court in ESL emphasized that its judgment primarily addressed the compatibility of FIFA and UEFA rules regarding prior approval for competitions and participation with EU law. It refrained from ruling on the Super League’s inherent compatibility with EU law. These rulings, though impactful, leave some questions unanswered and even raise new ones.

Undoubtedly, the Court’s decisions significantly clarify the legal framework surrounding UEFA’s power of prior approval. This provides those challenging this power to introduce new football competitions in Europe with additional leverage. While the initial “closed” Superleague concept may be gone, the drive to challenge UEFA’s monopoly and introduce new competitions persists. This power struggle is far from over.

UEFA’s ‘gatekeeping’ power, or power of prior approval, dictates the terms for new entrants into the lucrative and increasingly political market for football competitions. This power falls under EU law, as confirmed by the December 21, 2023 rulings. The Court stated, “rules on a sporting association’s exercise of powers governing prior approval for sporting competitions…come, in that capacity, within the scope of the…Treaty provisions on competition law” (ESL para 90), echoing its 2008 ruling in MOTOE (C‑49/07). This also subjects the rules to Treaty provisions on freedom of movement (ESL para 90).

The Court dictates that EU law is breached when this prior approval power lacks transparent, clear, and precise criteria that prevent arbitrary use. These criteria should ensure non-discriminatory power exercise and enable effective review, coupled with transparent and non-discriminatory procedural rules. This emphasis on transparency and non-discrimination aligns with general EU internal market law, evident in cases spanning diverse sectors like telecommunications (GB-Inno-BM, C‑18/88) and port management (Raso and Others, C‑163/96).

Essentially, EU law mandates good governance (transparency, non-discrimination, etc.) as a prerequisite for lawful regulatory practices, regardless of the sector. Empowering an entity to control market entry for the same economic activity creates a conflict of interest, disadvantaging competitors. The Court emphasizes that the source of this power—whether public delegation or private market power—is irrelevant (ESL paras 133, 137; ISU paras 125, 126). While applicable to all gatekeepers, this is particularly relevant in sport, notorious for governance issues.

The absence of a framework ensuring transparent, objective, and non-discriminatory criteria doomed the rules under Articles 102, 101, and 56 TFEU. This led to the December 21, 2023 rulings against governing body practices, mirroring the condemnation of similar practices fifteen years prior in MOTOE due to inadequate restrictions, obligations, and review in the prior approval process.

Therefore, governing bodies, including UEFA, must adapt and enhance their practices. Assuming they do, and a governing body establishes a ‘gatekeeping’ power adhering to transparent, clear, and precise criteria that prevent arbitrary use, ensuring non-discriminatory power exercise and effective review, along with transparent and non-discriminatory procedural rules, what more does EU law demand? Crucially, within authorization decisions, which criteria can legitimately exclude third-party organizers, and which cannot? This is key to understanding the limitations the Court imposed on UEFA’s gatekeeping powers on December 21, 2023.

The Court provides some further guidance, though the complete picture remains unclear.

The analysis is structured around three questions: Firstly, could UEFA reject a closed league and penalize participants? Secondly, could UEFA reject a second Champions League—identical to its own but managed by external entities—and penalize participants? Thirdly, could UEFA decline a new, open competition with a comparable format to its own but operated by external entities, and penalize participants?

(i) Addressing the First Question

Could UEFA refuse to authorize a closed league and penalize participants? While impossible under the inadequate framework preceding the December 21 rulings, could it do so with a process aligned with the Court’s requirements for transparency, objectivity, etc.?

The author argues that UEFA could legitimately refuse a closed league. ESL para 143 (Article 102) emphasizes that participation in and conduct of competitions hinge on sporting merit, only achievable through homogeneous regulatory and technical conditions ensuring a level playing field. Para 144 legitimizes common rules for international professional football competitions to promote equal opportunities and merit-based competition, enforceable through prior authorization and sanctions for violations. ISU para 132 echoes this emphasis on sporting competitions based on equality of opportunity and merit.

ESL para 175 (Article 101), after aligning itself with Article 102, highlights that the nature of international football competitions and the market for their organization and marketing justify rules on prior approval—provided they are objective and transparent. Para 176 states that these rules can pursue legitimate objectives like upholding the principles, values, and rules underpinning professional football.

Para 253 extends this approach to Article 56 TFEU on the free movement of services.

Therefore, a prior authorization system, if objective, transparent, etc., can legitimately refuse a competition lacking sporting merit. Rejecting closed leagues and penalizing participants would then be a legitimate exercise of gatekeeping.

The legal basis for excluding closed leagues remains somewhat ambiguous. The December 21 rulings downplay the role of Wouters and Others (C‑309/99) and Meca-Medina and Majcen v Commission (C‑519/04 P) in this context. Conduct inherently infringing Article 102 TFEU cannot invoke the Wouters/ Meca formula (ESL, para 185). Similarly, conduct exceeding mere restriction of competition and demonstrably harming it to the point of aiming to “prevent, restrict, or distort competition” cannot rely on this formula (ESL, para 186, Royal Antwerp, para 115). Only if conduct doesn’t inherently prevent, restrict, or distort competition can a governing body employ the Meca-Medina route, demonstrating that its practices are essential for achieving legitimate objectives and thus fall outside Treaty competition rules.

Notably, this comes after the Court’s acceptance of sporting merit and equal opportunities as foundational principles and its acknowledgement that prior authorization rules can pursue legitimate objectives, including upholding football’s core values (ESL paras 143, 144 for Article 102, para 176 for Article 101; see also ISU para 132). Therefore, actions upholding sporting merit are not inherently anti-competitive under Article 101(1) and benefit from the Meca-Medina formula.

Requiring open, merit-based competitions doesn’t aim to stifle competition but rather pursues “legitimate objectives, such as ensuring observance of the principles, values, and rules of the game underpinning professional football” (ESL para 176). This mirrors the Meca-Medina case, where the Court, while acknowledging the restrictive effect of anti-doping rules, placed them outside Article 101(1) due to their objective of safeguarding fairness, integrity, and ethical values in sport (ESL para 184, Royal Antwerp para 114, ISU para 112, citing Meca-Medina and Majcen v Commission, C‑519/04 P).

In conclusion, suppressing a competition lacking merit-based access can be lawful, contingent on demonstrating transparent, objective, and non-discriminatory criteria. This significantly empowers UEFA to defend a merit-based model, obligating its own competitions to adhere to the same principle. While the Court’s rulings are more restrained than Advocate General Rantos’s 2022 opinion advocating for the “constitutionalization” of the European Sports Model, they align with his stance on protecting open competitions.

(ii) Addressing the Second Question

Could UEFA reject a second Champions League, mirroring its format but managed by external entities, and penalize participants?

The author believes not.

ESL para 151 (Article 102) emphasizes non-discrimination, noting UEFA’s economic activity within the market subject to its pre-authorization power. Consequently, the criteria cannot favor UEFA over others. If UEFA can host a competition, it cannot prevent a similar one by a third party.

Furthermore, UEFA cannot impose restrictions favoring its competitions. For instance, it cannot mandate participation in both a new competition and the UEFA Champions League.

Though UEFA revised its prior approval rules after the ESL referral but before the December 21, 2023 rulings, the author argues that even the clarified rules, accessible at https://documents.uefa.com/v/u/_rmtminDpysQUj1VGB01HA, potentially violate the non-discrimination principle. Requiring third-party organizers to confirm clubs’ ability to field their strongest teams in all UEFA and national competitions, along with imposing conditions to “protect the sporting merit of UEFA Champion Club Competitions” and prevent adverse effects on their functioning, appears to prioritize UEFA competitions.

The ESL ruling seemingly opens the door to competing football competitions. While the author has questioned whether UEFA could justify a single, definitive European competition for elite clubs, the rulings offer no support for this. Instead, they hint at the possibility of multiple Champions League-like competitions. The economic viability of such a scenario is another matter.

(iii) Addressing the Third Question

Could UEFA reject a new competition that is not identical but similar to its own (open and not closed) and run by external entities, and then penalize participants?

The author believes it’s possible only if UEFA can demonstrate its competitions’ superiority based on predominantly economic criteria recognized by EU law.

This hinges on whether the ESL ruling limits UEFA beyond a simple non-discrimination standard, potentially revolutionizing European football.

The author argues that it does, though the extent of the Court’s implications remains debatable.

ESL para 176 (Article 101 TFEU) appears to go beyond non-discrimination. It notes that pre-authorization rules can restrict alternative competitions, even those offering innovative formats attractive to consumers, denying spectators and viewers the chance to engage with them (see also ISU para 146). This suggests tighter control over UEFA, demanding an assessment of competition attractiveness by national courts and potentially the Commission. UEFA can no longer solely rely on its existing model—its quality must be demonstrably assessed.

This clarifies the significance of the Court’s refusal to apply the Meca-Medina formula to practices inherently infringing Article 102 TFEU (ESL para 185) or conduct exceeding mere restriction of competition and demonstrably harming it (ESL para 186, Royal Antwerp para 115, ISU para 113). The open-ended Meca-Medina test is replaced by a narrower one, requiring UEFA’s pre-authorization scheme for new, open, merit-based competitions to comply with Articles 101(3) and 102.

While exemption under Article 101(3) is possible, the Court in ESL meticulously outlines the requirements, emphasizing the need for careful assessment by national courts without presuming UEFA’s compliance. Efficiency gains must benefit all market participants, not just UEFA (ESL para 152, Royal Antwerp para 121), and must demonstrably benefit everyone, from national associations and clubs to players, spectators, and viewers. The conduct must be indispensable, and it must not eliminate competition (ESL paras 199, 207).

Shifting to Article 102, the Court aligns its interpretation with Article 101(3) (ESL, paras 201, 205). A dominant entity can avoid abuse condemnation by demonstrating its conduct is objectively necessary or that efficiency gains outweigh potential harm to competition and consumers. In this case, if UEFA’s amended rules are transparent, precise, etc., they can be justified by “technical or commercial necessities” (ESL para 203) or efficiency gains outweighing harm to competition and consumer welfare.

The crux is that both Article 101(3) and Article 102 demand “convincing arguments and evidence” (ESL para 205, Royal Antwerp para 120), establishing the actual existence and extent of efficiency gains (ESL para 204, Royal Antwerp para 121). This is a task for the national court, demanding a rigorous inquiry.

Royal Antwerp similarly stresses the need for concrete evidence regarding incentives and efficiency gains (para 129) and the perspective of spectators and viewers (para 130), albeit in the context of home-grown player rules. For free movement, the national court must conduct a comprehensive assessment considering all submitted evidence (para 149).

Similar concerns drive the Court’s approach to UEFA’s media rights management (ESL paras 210-241). While not excluding its justification despite potential anti-competitive effects, the Court insists on scrutinizing the exemption under Article 101(3) and claimed efficiency gains under Article 102.

The Commission’s 2003 decision on the joint selling of Champions League rights (2003/778/EC, AT.37398) is relevant here. This decision didn’t consider solidarity as a justification due to the economic benefits of joint selling satisfying Article 101(3). In contrast, ESL acknowledges potential benefits of centralized selling, including improved production and distribution, solidarity redistribution benefiting fans and citizens involved in amateur football, balanced opportunities for clubs, and a trickle-down effect on smaller clubs. However, concrete proof of these benefits for all stakeholders, including viewers and spectators, is required (ESL para 236).

In essence, UEFA cannot block new competitions without satisfying Articles 101(3) and 102, demanding criteria exceeding what UEFA currently has. ESL marks just the beginning in understanding how far UEFA can go in excluding new, open, and merit-based competitions that differ from existing formats. The potential for competition in the European football market has expanded.

Conclusion

The Court’s rulings have opened the door for change in European football. While not guaranteeing a SuperLeague or similar upheaval, they weaken UEFA’s control over the structure of football competitions. The outcome depends on various factors, including the actions of elite clubs, fan sentiment, funding sources, and the strategies employed by UEFA and its challengers.

While the established power structure in football is strong, tensions between UEFA and elite clubs are not new. Despite the historical tendency for competing leagues to struggle, the situation might change. Numerous political, commercial, cultural, and social factors are at play. However, the legal landscape has shifted: UEFA’s authority as the sole gatekeeper shaping European football competitions has diminished.