‘No poaching’ football player pact may breach EU competition law

In its judgment, handed down on 30 April, the Court of Justice of the EU (CJEU) ruled that the “no poach” agreement publicly struck by football clubs not to hire players that had left rival sides during the pandemic was in principle a serious restriction of competition by object – akin to cartels – even if adopted during a crisis.

However, the CJEU has left the referring Portuguese national court to decide if the specific pandemic-driven context and the aim of protecting a sporting competition is enough to justify the clubs’ conduct, if proven to be strictly necessary and proportionate.

Angelique Bret, a competition law expert with Pinsent Masons, said the court ruling highlighted that even nuanced approaches to no-poach agreements remain very high risk and face a stringent legal test.

“This judgment follows the European Commission’s first antitrust infringement decision involving labour market practices last year, in a different sector, which led to substantial monetary fines,” she explained.

“The current CJEU decision sends a clear message that even crisis-driven agreements by competing organisations not to hire each other’s employees – or, in this case, football players – will be treated as serious anti-competitive conduct, in breach of EU competition law, unless an exceptionally strict legal test is met.”

The case arose after the Portuguese football league and clubs publicly agreed in April 2020 not to sign players that had left rival clubs due to the Covid-19 pandemic restrictions that were imposed by Portuguese government authorities in March of that year.

In April 2022, the Portuguese competition authority had fined the football clubs €11.3 million, finding that the conduct amounted to unlawful market-sharing of players, but after an appeal judges in Portugal asked the CJEU whether this type of no poach agreement should automatically be considered illegal or if exceptional circumstances like the pandemic could make the conduct permissible under EU competition law.

The CJEU ruling has confirmed the general rule that organisations colluding not to recruit each other’s staff may ‘per se’ infringe EU competition law, especially in a labour market like professional sports. It noted the agreement “constitutes a manifest restriction of a competitive parameter” – talent recruitment – which plays an essential role in football and could have knock-on effects on players’ wages.

The CJEU also underlined that no general exemption from competition law applies, even in unprecedented situations such as a global pandemic, finding that although the occurrence of the pandemic is not per se such as to justify an exception to the prohibition of anticompetitive conduct, the Portuguese court will have to take account of those circumstances.

However, the court also acknowledged the clubs’ argument that ensuring roster stability during the crisis was needed to safeguard the integrity of the football competitions if the season resumed, confirming that maintaining a level playing field in exceptional circumstances represents a “legitimate objective” in the public interest.

This could justify restrictive measures, the court held, if they are truly necessary and do not go beyond what is needed to achieve that objective. The Portuguese court must now examine, in light of the CJEU ruling, whether - even if the no-poach agreement served a pro-competitive aim - it was proportionate and indispensable.

Paul Williams, a competition law expert with Pinsent Masons, said the judgment was consistent with the CJEU’s other decisions in the sporting sphere.

“This latest judgment dovetails with earlier case law - such as the FIFA transfer rules case - which similarly found that rules to discourage ‘poaching’ players amounted to a by‑object infringement of competition law,” he said.

“The trend is that sports-related arrangements will get full competition law scrutiny, even when argued to serve sporting interests.”

In October 2024, the CJEU struck down aspects of FIFA’s international transfer system for their anti-competitive effects on player mobility and freedom of movement, drawing parallels with non-poaching agreements. That case, involving former France player Lassana Diarra, is now back before the Belgian courts for final resolution.

The latest CJEU ruling also comes amid an EU-wide focus on anti-competitive practices in labour markets more generally, with the European Commission last year issuing its first competition law fines - totalling €329 million - against companies involved in a no-poach cartel in the food delivery sector.

Tadeusz Gielas, a competition law expert with Pinsent Masons, said the latest ruling should prompt all employers to think twice about arrangements limiting staff mobility.

“Competition enforcers across Europe – and globally – are focusing on ‘no poaching’ and ‘wage-fixing’ practices in labour markets,” he warned.

“The CJEU’s judgment provides further legal guidance on assessing no-poach agreements under EU competition law – in the context of a public health crisis and in a professional sport setting.

“Businesses in any sector should ensure their recruitment and talent retention strategies do not stray into no‑poaching behaviour and comply with competition laws, or otherwise risk substantial monetary penalties and legal exposure.”

Bret added that in the in the UK, Competition and Markets Authority (CMA) has also targeted anti-competitive recruitment and talent retention practices.

“Last year, the CMA imposed fines totalling over £4 million against broadcasting and production companies for exchanging information on rates of pay for freelancers,” she said.

“The CMA also issued further guidance on competition law compliance in labour markets.”