EU regulator backs objectives behind 'Financial Fair Play' rules

Out-Law News | 23 Oct 2014 | 11:42 am | 2 min. read

The EU's competition regulator has given its "wholehearted" support for the aims of financial regulations imposed on football clubs in Europe, but has not given its formal backing to the regulations.

The 'Financial Fair Play' regulations, developed by European football's governing body UEFA, require clubs operating across Europe to 'break even' over a three year period or otherwise face a ban from competing in its flagship Champions League competition or another other pan-European competition, the Europa League.

The FFP rules are, though, currently the subject of a legal challenge before the Belgian courts. Football agent Daniel Striani has challenged whether the rules infringe EU competition law.

In a speech in Rome on Tuesday, EU commissioner for culture, Androulla Vassiliou, said that the European Commission "wholeheartedly agree with the central objective of FFP, namely to 'live within your means' or 'break even'".

She said those objectives "ensures prudent economic management that will serve to protect both the interests of individual clubs and players as well as the football sector in Europe as a whole".

However, Vassiliou said that there are a number of ways to pursue the objectives identified by UEFA for its FFP scheme. "The implementation on the ground of the philosophy of Financial fair Play can take different forms," she said.

The merit in the object of regulation is one factor in any consideration of whether the rules correspond to founding principles of EU law on fair competition. Under EU competition laws, measures which have either an anti-competitive object or effect are generally prohibited, but there are exceptions that can be applied.

"Breaches of competition law can be considered justified and therefore benefit from an exemption if they are aimed at achieving legitimate objectives and provided that they are necessary and proportionate to the achievement of these objectives, competition law expert Angelique Bret and global head of sport Trevor Watkins of Pinsent Masons, the law firm behind Out-Law.com, said recently when examining a new cooperation agreement signed by the Commission and UEFA.

If it is found that UEFA's FFP rules are anti-competitive and that the object of them can be achieved in a less offensive manner, those rules will be arguably "unenforceable", Bret and Watkins said.

Vassiliou said that the Commission "will cooperate with UEFA in its efforts to promote a more transparent and fair football".

Commenting after Vassiliou's speech, Watkins said: "It is noteworthy that the recent co-operation agreement pointed to many areas where the Commission acknowledges valid objectives but equally recognises the importance of ensuring they comply with legal principles."

At a debate over the governance and regulation of football at Soccerex Americas this week, moderated by Watkins, the chairman of AFC Bournemouth and Football League director Jeff Mostyn emphasised how the game was adapting.

"The concern over unequal distribution of revenues within football and fetters over equity investment in clubs were two factors brought out in the debate and which were likely to lead to change in the way English football regulates the game," Watkins said. "It underscores how leagues, in particular those within England, are undertaking considerable scrutiny of how the new world order of financial regulation should be developed and applied. I predict further change given this transparent debate emerging between law makers and stakeholders in the game."