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Archive for December 15th, 2022

AG Rantos in Super League and ISU: towards continuity and consistency in the case law

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Advocate General Rantos’ much awaited Opinions in ISU and Superleague were released earlier today (see here for the first and here for the second).

For experienced competition lawyers, the legal interpretation suggested in both Opinions does not come as a surprise. Advocate General Rantos proposes, in essence, to follow the case law. Accordingly, he invites the Court to set aside the General Court’s judgment in ISU, which, as explained here, departed from the said case law in some important respects.

Advocate General Rantos is also explicit about the rules laid down by the UEFA and the FIFA. He strongly implies that they are not in breach of Articles 101 and 102 TFEU insofar as they appear to be ancillary to a legitimate aim. This is true, in particular, of both of the pre-authorisation requirement to set up a rival tournament (such as the Superleague) and of the sanctions (or the threat thereof) that may come with the breach of this requirement.

The two Opinions taken together make three fundamental points about the relationship between competition law and sports governance:

  • First, the so-called conflicts of interest (that is, a governing body that has the power to authorise or prohibit competing ventures) are not, in and of themselves, problematic under competition law.
  • Second, the ancillarity of a restraint and the object of the said restraint are two separate stages of analysis that must not be conflated.
  • Third, the protection by a sports association of its economic interests is not anticompetitive in and of itself.

In any event, the two Opinions are a tour de force that provide a comprehensive analysis of the case law on object restrictions and on ancillarity: from vertical agreements (such as Maxima Latvija) to horizontal co-operation agreements (such as GøttrupKlim).

This overview shows that the issues underlying ISU and Superleague are relevant well beyond sports. Because the Opinions effectively address some common misunderstandings and remind us of the logic underpinning the relevant case law, they will provide helpful guidance in future non-sports cases.

International Skating Union: back to orthodoxy

The General Court’s judgment had given rise to some controversy insofar as it appeared to deviate from the relevant case law. Advocate General Rantos proposes to follow the orthodoxy. Doing so, in the specific circumstances of the case, means concluding that the rules at stake are not restrictive by object (and setting aside the first instance judgment).

Most readers will remember that the ISU case is, in essence, about a set of eligibility rules applicable to athletes taking part in competitions organised by the skating federation. These rules (of which there were variations over the years) amounted in practice to a non-compete obligation: taking part in unauthorised competitions came with sanctions for these athletes.

Advocate General Rantos rectifies the General Court’s analysis in a number of important ways. He points out, first, that the discretionary nature of the rules cannot lead to the conclusion that the object is anticompetitive. If anything, discretion might say something about the effects of the federation’s rulebook. The same is true of the severity of the penalties.

Second, Advocate General Rantos notes that the cases that were at the heart of the General Court’s analysis (OTOC and MOTOE) are not capable of substantiating the conclusions drawn from them at first instance.

In the first of these rulings (OTOC), the Court expressly held that the contentious rules were not restrictive by object; the second (MOTOE) was about State regulation, rather than a decision by an association of undertakings.

Third, and perhaps more importantly, the Opinion addresses the conflation, by the General Court, of two separate stages of analysis: objective necessity, on the one hand; and restrictive object, on the other. As explained by Advocate General Rantos, Meca Medina dealt with the ancillarity of sporting rules, and at no point did the Court hold that disproportionate rules are necessarily restrictive of competition.

Rules that do not satisfy the objective necessity test may or may not restrict competition. A conclusion in this sense requires, however, a case-by-case evaluation of their anticompetitive effects.

Superleague: the orthodoxy confirmed

The Superleague case concerns different angles of the same set of regulations laid down by FIFA and UEFA. The most relevant ones, in theory and practice, are those that have to do with the need to gather prior approval to organise a competition and the (threat of) sanctions for setting up a breakaway tournament.

In relation to these rules, Advocate General Rantos clearly suggests that they do not have a restrictive object. They appear to relate to legitimate sports-related objectives and therefore their adoption can be rationalised on pro-competitive grounds. As in ISU, the fact that the application of the criteria allow for some discretion or are not transparent and reviewable does not mean that their object is anticompetitive.

In addition, the Opinion lays down a comprehensive framework to evaluate whether or not the rules fall outside the scope of Article 101(1) in light of the ancillary restraints doctrine. Advocate General Rantos identifies four stages of analysis in this regard.

First, the objectives to which the rules relate must be legitimate. In the specific circumstances of the case, Advocate General Rantos has few doubts about the fact that the underlying objectives are not only legitimate, but relate directly to the so-called European model of sport.

Second, the rules must be inherent to the objectives pursued by the agreement (or decision by an association of undertakings). In this regard, Advocate General Rantos is explicit about the fact that both a pre-authorisation system and sanctions scheme appear to be objectively necessary to attain the objectives sought by FIFA and UEFA.

Third, the practical opeation of the rules. Advocate General Rantos engages with the closed nature of the Superleague and explains that, to the extent that it could undermine the legitimate sporting objectives sought, the non-recognition of the breakaway tournament seems inherent to the operation of the structure created by FIFA and UEFA.

Finally, proportionality. Even if it is ultimately for the referring court to deal with the matter, Advocate General Rantos signals strongly that sanctions against football clubs taking part in the Superleague (as opposed to the players themselves) would be proportionate. Crucially, he notes, again, that MOTOE is not the benchmark against which this criterion is to be assessed.

The analysis under Article 102 TFEU is not fundamentally different. It may be worth mentioning that, in the Advocate General’s view, the infrastructure around FIFA and UEFA would not quality as an ‘essential facility’ and that, even if it were qualified as such, a refusal to share it with breakaway teams could be objectively justified.

Written by Pablo Ibanez Colomo

15 December 2022 at 8:36 pm

Posted in Uncategorized