The Application of European Union Competition Law to the Sports Sector

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The Application of European Union Competition Law to the Sports Sector

Stefano Brustia - Attorney of the Rome Bar

1. Intro

The relationship between European Union (EU) competition law and the sports sector has been shaped by several landmark rulings of the Court of Justice of the European Union (CJEU). While sports have a unique cultural and social significance, they are also subject to economic rules, particularly when sporting bodies or federations engage in activities that impact the market. The CJEU has consistently upheld that EU competition law applies to sports when there is a significant economic dimension, and this has led to important limitations on how sports federations can regulate their disciplines.

2. General Overview of EU Competition Law in Sports

Under Article 101 and Article 102 of the Treaty on the Functioning of the European Union (TFEU), restrictive agreements between undertakings (Article 101) and the abuse of a dominant position (Article 102) are prohibited. These rules apply to sports organizations when their actions have economic effects that may distort competition within the EU market. While sports federations have significant autonomy in regulating their sports, this autonomy is not without limits, particularly when their rules or decisions restrict competition or access to the market.

3. Key Rulings of the Court of Justice

a. Meca-Medina (C-519/04)

The Meca-Medina case, decided in 2006, is a cornerstone for the application of EU competition law to the sports sector. In this case, two professional swimmers challenged the anti-doping rules of the International Swimming Federation (FINA) after being suspended for failing drug tests. The athletes argued that the anti-doping rules restricted competition by preventing them from pursuing their professional careers.

The CJEU held that sporting rules could fall within the scope of EU competition law if they have an economic impact. However, the Court also recognized that certain restrictions inherent in the organization of sports may be justified, provided they pursue a legitimate objective (such as ensuring the fairness and integrity of competitions) and are proportionate to that objective. In other words, restrictions are permissible if they are necessary for the proper functioning of the sport and do not go beyond what is required to achieve that aim.

This case established the two-step test for sports-related rules:

• Legitimacy: Does the rule pursue a legitimate sporting objective, such as maintaining competitive balance or ensuring athlete safety?
  
• Proportionality: Is the rule proportionate to achieving that objective, without unduly restricting competition?

b. European Superleague (C-333/21)

In the European Superleague case, twelve football clubs from England, Spain, and Italy attempted to create a new competition outside of the established structure governed by UEFA. UEFA and FIFA opposed the initiative, threatening sanctions against the clubs and players involved in the new league.

The CJEU ruled that sports federations such as UEFA cannot impose unjustified barriers to entry for new competitions. However, the Court also emphasized that sports federations have a legitimate interest in maintaining the integrity of the sport and protecting existing competitions. The decision clarified that while federations have the authority to regulate sports, they must not abuse their dominant position by imposing disproportionate sanctions or limitations on clubs and players seeking to participate in alternative competitions.

c. International Skating Union (ISU) (C-124/21)

In the International Skating Union (ISU) case, the governing body for ice skating imposed severe penalties on athletes who participated in events not authorized by the ISU. The CJEU found that these sanctions were disproportionate and constituted a restriction of competition. The ISU’s rules effectively prevented athletes from participating in independent competitions, which constituted an abuse of its dominant position.

The ruling stressed that sports federations must provide non-discriminatory access to competitions and that any sanctions imposed on athletes must be proportionate to the objectives pursued.

4. Limitations Imposed on Sports Federations

Based on these rulings, sports federations face significant limitations in how they can regulate their respective sports disciplines. The CJEU has established key criteria that federations must follow to ensure compliance with EU competition law:

a. Non-Abuse of Dominant Position

Many sports federations occupy a dominant position in the market due to their control over the organization and regulation of competitions. The CJEU has made it clear that federations must not abuse this position by imposing unjustified restrictions on athletes, clubs, or other stakeholders who wish to participate in alternative competitions. For example, the ISU case demonstrated that sports federations cannot impose disproportionate sanctions on athletes for participating in unsanctioned events.

b. Proportionality and Objective Justification

Any restrictions imposed by a sports federation must be proportionate and justified by a legitimate sporting objective. This principle was central in Meca-Medina, where the Court accepted that anti-doping rules serve a valid purpose but emphasized that they must not excessively restrict competition. Similarly, in the European Superleague case, while UEFA's aim of protecting existing competitions was legitimate, any punitive measures against clubs or players must be proportionate to that objective.

c. Non-Discriminatory Access to Competitions

Federations must ensure non-discriminatory access for athletes, teams, and organizers to participate in competitions. This was underscored in the International Skating Union case, where the CJEU ruled that the ISU’s rules, which prevented athletes from competing in non-authorized events, unfairly restricted competition. Federations are obligated to allow fair participation, provided that athletes or teams meet the necessary sporting criteria.

5. Conclusion

The application of EU competition law to the sports sector emphasizes the need for a careful balance between the autonomy of sports federations and the protection of competition within the internal market. While sports federations can impose rules to ensure the integrity of their respective sports, such rules must be proportionate, pursue legitimate objectives, and not create unjustified barriers to competition. The Meca-Medina, European Superleague, and International Skating Union cases have shaped the legal landscape, providing clear guidance on the limitations that sports federations must observe when regulating their disciplines.