CJEU rulings highlight balancing act for sports governing bodies over competition law challenges

The Court of Justice of the European Union (CJEU) recently handed down judgments in important competition law cases involving football regulation which will have significant impact for clubs, managers and governing bodies both in the game and across wider sporting interests.

Angelique Bret, competition law expert at Pinsent Masons, said the rulings clarified how the ‘sporting rule exception’ continues to apply to decisions governing bodies – and how these may fall outside the scope of competition law altogether where in pursuit of legitimate sporting objectives.

“However, rules which could impact economic activities must be necessary and proportionate to achieve these objectives in order to benefit from this exception and, if not, they can breach the competition law rules,” she added. “For example, in 2023, the CJEU found that the International Skating Union rules on the prior authorisation of international skating competitions and the conditions for athletes to participate, breached the competition law rules.”

“Rules on access, representation, remuneration, disclosure and sanctions can all shape how markets operate. Sports governing bodies should expect those rules to be tested by reference to evidence, proportionality and process. The competition law rules are increasingly being used to challenge decisions of sporting bodies,” Bret said.

One of the recent CJEU cases involved a dispute between Germany’s football association – the DFB – and players’ agents who were challenging the association’s rules on agents’ activities, which include registration requirements, obligations to accept FIFA, DFB and Bundesliga rules and jurisdiction, restrictions on remuneration and penalties. While the case is pending before the German Federal Court of Justice, some questions were referred to the CJEU for clarification under EU competition law.

In its so-called “preliminary ruling”, the CJEU noted that, consistent with established precedents, the DFB’s rules in question may constitute anticompetitive restrictions under EU competition law given that – aside from their sports context – they do affect economic activities, in this case those of agents. As an extension to the doctrine derived from the Wouters and Meca-Medina case, however, the court found that restrictions imposed by sports federations may fall outside the scope of Article 101(1) TFEU, which generally prohibits anti-competitive agreements, provided they pursue legitimate public-interest objectives and are appropriate, necessary and proportionate – even in a case such as the one at hand, where the restrictions affect third parties that are not members of the federation but operate within the wider “ecosystem” that the federation regulates.

The German court will now have to assess whether, in light of the CJEU’s guidance, the contested rules amount to restrictions within the meaning of Article 101(1) and, if so, whether they can be justified and exempted.

Christian Peeters, competition law expert at Pinsent Masons, explained that the intersection between antitrust law and sport continue to keep European courts busy.

“This latest judgment is an interesting expansion of established doctrine, according to which a sports association’s restrictions that are inherent in the pursuit of sports and necessary to keep sports events attractive, may not amount to anticompetitive arrangements – even if non-members are the ones primarily affected by these rules,” he said.

“While this judgment plays out in the sports arena, it is sure to have important implications also in other sectors where professional associations and governing bodies should tread carefully when devising their rules and regulation to make sure they are supported by legitimate objectives, applied consistently, and designed no more restrictively than necessary,” he said.

A ruling in a similar case, handed down just days later, concerned a challenge to rules around multiple representation, agent remuneration, licensing, approaches to new clients and the disclosure of information on FIFA’s platform. The CJEU said it was for the referring national court – also in Germany – to decide whether those rules infringe EU competition law or can be justified.

It did, however, identify one rule as particularly problematic. It said a restriction on approaching clients bound by exclusive representation agreements outside a two-month window appeared incompatible with Article 101 of the TFEU because it gave incumbent agents an undue advantage.

The court also considered the application of EU competition law that prohibits the abuse of a dominant market position, under Article 102 of the TFEU. It said FIFA may be regarded as dominant in the market for agent services connected with international transfers and in the employment market for players and coaches, because of its regulatory, supervisory and sanctioning powers.

Whether FIFA abused that position, and whether any conduct can be justified, remains for the national court to assess, the CJEU determined.

Tadeusz Gielas, a competition law expert with Pinsent Masons, said the decisions by the CJEU show how competition law increasingly matters in sport governance in the wake of increased scrutiny.

“Rules that affect agents, clubs, athletes and executives can shape access to economic opportunities, and EU law is increasingly central to how those rules are assessed,” he explained.

“For sports governing bodies, the judgments highlight the need to review – from a competition law compliance perspective - rules that affect market access, remuneration, licensing, transfers, sanctions, dispute resolution and the ability of third parties to provide services. For clubs, agents, players, coaches and executives, the judgments provide further support for competition law challenges to rules or decisions that restrict commercial opportunities without sufficient justification,” Gielas added.