1 Introduction

On December 21, 2023, the Court of Justice of the European Union (CJEU) delivered its judgments in two important cases concerning to what extent European Union (EU) law limits how sport governing bodies (SGBs) wield their regulatory power: European Super League (ESL)Footnote 1 and International Skating Union (ISU).Footnote 2 Of the many important legal issues addressed in ESL and ISU, this contribution focuses on a core issue of private—and frequently transnational—governance: How do we ensure that private regulators—i.e. non-public entities that have regulatory, controlling, and sanctioning powers—respect EU law, in particular as they seek to regulate economically active actors?Footnote 3 This is a question of great importance within sports, but also more generally in a world where transnational private actors play an increased regulatory role.Footnote 4

Where EU law affords physical and legal persons rights, the corresponding duties most immediately and naturally lie with the Member States. However, as the Court of Justice has observed multiple times, physical and legal persons sometime find themselves and their rights subject to the regulatory power of non-governmental organizations and other private actors.Footnote 5 When those private regulators derive their powers from Member States by delegation, the reasoning is straightforward: regulations issued by such private regulators, and actions undertaken to enforce them, are considered state measures and are, like all such measures, subject to all Member States’ obligations under the Treaties.Footnote 6

The more problematic situation is one where a private actor has become a de facto regulator in a sector without an explicit delegation of state powers,Footnote 7 or, as expressed in ISU, where “that power originates … from the autonomous behaviour” of a private actor.Footnote 8 We know from CJEU jurisprudence that this is not extremely uncommon and that trade unions,Footnote 9 professional associations,Footnote 10 and SGBsFootnote 11 are examples of such private regulators.

EU law provides two primary avenues for exercising control over such de facto private regulators and the private regulations that they produce and apply: (1) (quasi-horizontal) direct effect of fundamental freedoms against private actors that aim to collectively regulate market conditions and in doing so are capable of neutralizing the abolishment of national barriers;Footnote 12 and (2) EU competition law bans on anti-competitive agreements under Article 101 of the Treaty on the Functioning of the European Union (TFEU) and abuse of dominant position under Article 102 TFEU.Footnote 13 Although ESL and ISU primarily focus on the competition law avenue, the Court of Justice also had an opportunity in those judgments to address and clarify the scope and application of the fundamental freedom avenue.

As elaborated on immediately below, one important contribution of the two judgments is that EU law now, in a clearer and stricter manner than before, imposes requirements of good governance on private regulators when they exercise their regulatory power and enforce their regulations. While this is an important and welcomed development, the scope of application of these good governance requirements is not entirely clear. While they clearly apply when private regulators act as gatekeepers against external commercial actors that seek to establish competing activities, as were the circumstances in ESL and ISU, it is less clear to what extent EU law affords similar good governance guarantees to other subjects of private regulatory power, for example individual athletes and clubs who’s claims are unrelated to a commercial challenge of the dominant SGBs’ monopoly on competitions. This contribution explores this issue and concludes by arguing that there are compelling reasons for giving the good governance requirements a broad, general, and uniform scope of application that covers all those who’s EU law rights are restricted by private regulators.

2 Enhanced good governance in ESL and ISU

In ESL and ISU, the CJEU applies and enforces what for the sake of simplicity and brevity here are referred to as good governance requirements. This term signifies legally enforceable requirements that serve to enhance the transparency, foreseeability, and accountability of how regulatory power is exercised. Good governance in this manner shares the principle of legality’s and the rule of law’s aim of preventing the arbitrary exercise of power.Footnote 14 Good governance is a broad concept that is used to mean slightly different things in different contexts,Footnote 15 and it can be noted that the good governance requirements articulated in ESL and ISU include some of the principles of good governance articulated by the International Olympic Committee (IOC), particularly with regard to the regulatory framework,Footnote 16 but that the latter also includes a number of additional elements.

The power that needed to be checked against arbitrary exercise was traditionally that of states. However, as private regulators, who frequently operate on a transnational level, increasingly take over some of the regulatory powers of states, the application of good governance—as well as the related concepts of legality and rule of law—to private regulators becomes more pressing and motivated.Footnote 17 The CJEU’s judgments in ESL and ISU can be seen as part of this development as they address many of the core elements of good governance: Whether the SGBs in exercising their regulatory powers had observed sufficient standards of objectivity, transparency, and non-discrimination were central to the questions referred by the national court in ESLFootnote 18 and to the Commission’s decision in ISUFootnote 19. In its judgments, the CJEU builds on this and confirms that both free movement rights and EU competition law includes what can broadly be characterized as good governance requirements.

This includes, first, requirements applicable to the substantive content of those regulations or, differently phrased, substantive good governance requirements. In ESL, the CJEU held that a prior approval scheme that restricts free movement of services can only be justified if it is “based on objective, non-discriminatory [substantive] criteria which are known in advance.”Footnote 20 It also follows from both ESL and ISU that similar requirements apply under competition law. Under Article 102 TFEU, undertakings having “the power to determine the conditions in which potentially competing undertakings may access the market” constitute abuse of a dominant position “by its very existence” unless that power is “placed within a framework of substantive criteria which are transparent, clear and precise [and] suitable for ensuring that such a power is exercised in a non-discriminatory manner and enabling effective review…”Footnote 21 Related sanctioning rules, the Court adds, must also be “transparent, objective, precise, nondiscriminatory and proportionate”.Footnote 22

Moreover, according to ESL, under Article 101 TFEU, when such a framework is missing, “rules on prior approval, participation and sanctions such as those at issue in the main proceedings reveal, by their very nature, a sufficient degree of harm to competition and thus have as their object the prevention thereof”.Footnote 23 Similarly, the Court held in ISU that when assessing whether an association having regulatory powers has exercised those powers contrary to Article 101, “it is relevant to determine, first of all, whether that power is circumscribed by substantive criteria which are transparent, clear and precise [and that] have been clearly set out in an accessible form, prior to any implementation of the powers that they are intended to circumscribe.”Footnote 24 When such rules, “like the prior authorisation and eligibility rules, are not subject to suitable restrictions [they] must be regarded as having as their object the restriction of competition.”Footnote 25

The good governance requirements articulated in ESL and ISU are however not limited to the regulations as such, but extend, second, to how the regulations are applied and enforced. This can be referred to as procedural good governance requirements. In ESL, the CJEU held that for the purpose of free movement analysis, a failure to respect the procedural good governance requirements established in its competition law analysis means that regulations such as those in question were incapable “of being justified by a legitimate objective in the public interest.”Footnote 26 That is to say, a restriction of free movement can never be justified unless the private regulator respects procedural good governance.

The Court also held that a power that can be used “to deny potentially competing undertakings access to a given market” and that is “different to those normally available to undertakings”, violates Article 102 TFEU unless it is “placed within a framework of transparent, non-discriminatory detailed procedural rules” that “have been laid down in an accessible form prior to any implementation of those rules.”Footnote 27 Finally, according to ESL, under Article 101 TFEU, the absence of such procedural rules means that the private regulation of the type in question constitute a “decision by an association of undertakings having as its object the prevention of competition.”Footnote 28

To summarize, it follows from ESL and ISU that EU law contains good governance requirements of both substantive and procedural nature that private regulators must, at least under certain conditions,Footnote 29 comply with. Some of these requirements are quite extensive and qualified. For example, the above quoted requirement that private rules must be transparent, clear, precise, and accessible is strongly reminiscent of Fuller’s elements of moral law.Footnote 30 There was some support for these requirements in existing jurisprudence and in support of its findings the Court relied quite extensively on its previous case law, including OTOCFootnote 31 and MOTOE.Footnote 32 In ESL and ISU the Court did however also expand significantly on the requirements previously established in these rulings, both in terms of the standard of those requirements and their scope.Footnote 33

How these requirements apply and to what effect varies slightly between different areas of law. The legal consequences of these requirements are in the end primarily felt by the private regulators if they need to justify their rules that restrict free movement rights or competition. When analyzing whether a private regulator has abused its dominant position through the exercise of regulatory power, a failure to respect both the substantive and procedural good governance requirements set out in ESL and ISU constitutes a violation of Article 102 TFEU per se, since that provision is subject to no exceptions. Similarly, under free movement law a failure to respect the requirements removes any possibility of justifying a free movement restriction. Only under Article 101 TFEU does a private regulator that fails to respect good governance have any room for justification a restriction of competition, but the two judgments still significantly narrow its room for doing so to what falls under the Treaty-based exception found in Article 101(3) TFEU. In this manner, EU law imposes serious, significant, and potentially effective limitations on the arbitrary exercise of private regulatory power.

It should, finally, be noted that there are some small differences between these areas in how the Court formulates the exact nature of the good governance requirements. These differences are curious and seemingly unnecessary: That rules are accessible and knowable in advance, transparent, clear, and precise, as well as objective and non-discriminatory, are all fundamental legal values related to the principle of legality and the rule of law. There are no obvious and compelling reason why the elements of these requirements should vary depending on which Treaty article (Article 101 or 102 TFEU for the competition law avenue or one of the Treaty articles guaranteeing free movement rights) subjects rely on to challenge how private regulators exercise their regulatory powers. It therefore seems likely that such differences in language are unintended, perhaps a consequence of the Court borrowing language from its separately developing lines of case law.

3 Good governance beyond gatekeeping competitors?

It remains to determine whether the good governance requirements articulated in ESL and ISU always apply to private regulators, assuming the situations falls under the scope of EU competition or free movement law, or whether it is subject to conditions. Specifically, is it only certain types of private regulation or certain classes of regulated subjects that fall within the scope of the good governance requirements laid down in ESL and ISU? In ESL the applicants were themselves commercial actors seeking to organize sporting events that would directly compete with the events organized by the SGBs, and in ISU the applicants’ claims were attached to similar efforts by an organizer of competing events.

When exploring this matter, it is important to keep the particular facts and procedural context of ESL and ISU in mind. In ESL, the CJEU responded to the questions posed by the referring national court and which related to the facts in the individual dispute before it. ISU was arguably even more context bound. It was a direct action in which the Court was tasked to assess the General Court’s reviewFootnote 34 of the Commission’s decisionsFootnote 35 of the ISU’s regulations and actions. It is therefore not surprising that the Court in both judgments explicitly referred to the specific ‘rules at issue’, or that the Court only explicitly held that the requirements apply to, for example, “the power to determine the conditions in which potentially competing undertakings may access the market”Footnote 36 and “rules on prior approval of sporting competitions and participation in those competitions”Footnote 37. Such language does, however, raise the important question of whether the good governance requirements only apply in such situations and to such rules, or whether, for example, a club or an athlete, unrelated to any effort to establish competing events, could invoke the good governance requirements expressed in ESL and ISU against an SGB’s regulations. While the two judgments do not explicitly rule this out, they also do not directly support it, but leaves it open to interpretation.

With regard to the application of substantive good governance requirements in the context of fundamental freedom restrictions, the CJEU found support its previous case law for its holding in ESL.Footnote 38 This includes its decision in TopFit. In that case, the Court relied on a substantive good governance requirement that it had previously established for state-imposed prior authorization schemes,Footnote 39 and extended it to private regulators—in that case specifically an SGB.Footnote 40 The regulation concerned in TopFit held that foreign nationals, including those from other EU Member States, could not compete in the final of a national amateur athletics championship.Footnote 41 Thus, the Court found in TopFit that substantive good governance requirements under EU law apply to an amateur athlete who’s challenge of a prior authorization scheme was unrelated not only to the establishment of competing commercial events, but to commercial activities altogether.

A combined reading of TopFit and ESL is an authority for the proposition that any person who is subject to and seeks to challenge a prior authorization scheme laid down by a private regulator on the grounds that it limits free movement can invoke substantive good governance requirements against that private regulator, and that it is immaterial whether that claim has any connection to that private regulator seeking to ‘gatekeep’ against the introduction of competing events.Footnote 42 Moreover, it follows, as illustrated by ESL and ISU, that in order for that substantive protection to be effective, such a person must also enjoy procedural good governance guarantees. It is technically possible to construe the scope of the good governance requirements in these situations narrowly to only specifically cover prior authorization schemes. However, it hardly makes sense to reward private regulators that erect barriers to free movement with lowered expectations of good governance if they fail to provide any system of authorization. The most obvious conclusion would therefore seem to be that the scope of the good governance requirements laid down in ESL and ISU apply broadly to all free movement claims.

There is even more uncertainty regarding the scope of good governance requirements under competition law, as they are seemingly even more closely than under free movement law connected to the case-specific circumstances and context. It clearly follows from ESL and ISU that an external actor that seeks to establish competing events has a right to substantive good governance that can be enforced against a gatekeeping private regulator under both Articles 101 and 102 TFEU. However, the Court carefully distinguish these cases from its previous judgment in Meca-Medina, a non-gatekeeping case concerning the application of anti-doping rules against professional swimmers.Footnote 43 In that case, the Court applied the Wouters doctrine in order to find that the anti-doping rules were not captured by Article 101(1) TFEU since they were “justified by a legitimate objective”.Footnote 44 According to the Court, this was not possible in ESL or ISU, since the sport regulations in these cases had as their ‘object’ the distortion of competition, whereas in Meca-Medina the restriction of competition was merely a ‘result’.Footnote 45

It follows clearly from ESL and ISU that Meca-Medina remains good law and that the restriction of competition in that case was one of ‘result’ rather than ‘object’. How the Court comes to that conclusion is however not entirely clear. From the understanding of the approach outlined in ESL and ISU presented in Part 2 above, the Court’s conclusion implies that in Meca-Medina (1) the substantive anti-doping were transparent, clear, precise, and accessible, (2) that the accompanying sanctioning rules were transparent, objective, precise, nondiscriminatory, and proportionate, and (3) that the application of these rules was subject to “effective review”Footnote 46 under “transparent and non-discriminatory detailed procedural rules … suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate”.Footnote 47

Another, possible interpretation is that, despite the seemingly clear language to the contrary in ESL and ISU, lack of good governance is not per se sufficient for a finding of restriction-by-object.Footnote 48 That is to say, that there is some relevant factual difference between ISU/ESL and Meca-Medina, such as the difference between regulations gatekeeping competitors and anti-doping regulations. This is however, in my opinion, a less convincing interpretation. If the application of good governance requirements laid out in ESL and ISU are not applicable to situations such as the one in Meca-Medina, the Court could and presumably would have distinguished the case on that ground. At the same time, if the CJEU wished to establish a generally applicable principle of good governance in sports, it had an opportunity to do so in Royal Antwerp. One should be careful not to draw far going conclusions from what the Court does not say, but that the Court in that case did not explicitly hold that good governance requirements apply is one data point worth considering.Footnote 49

4 Looking ahead

Advocate General Jacob wrote in his opinion in Pavlov that “[t]he main challenge for every competition law system is therefore to prevent abuses of regulatory powers without abolishing the regulatory autonomy of the professions.”Footnote 50 Good governance, as well as the principle of legality and the rule of law with which good governance is strongly connected, fundamentally serves to prevent abuse of regulatory power. In line with this, the CJEU’s judgments in ESL and ISU place significant emphasis on and make significant improvements towards preventing private regulators from exercising their powers in an arbitrary and discriminatory manner.Footnote 51

This is not a surprising development. Preventing abuse of regulatory powers and enhancing good governance is not only a general good idea for any regulatory system, but also part of clear and consistent EU policy. As Mataija points out, the EU’s approach has for some time been to encourage SGBs to act in accordance with good governance principles, and “[i]n return for implementing ‘good governance’ reforms, sporting bodies expect to continue largely governing our own affairs.”Footnote 52 This view is for example reflected in the Council of the European Union’s declaration on the key features of a European sports model:Footnote 53

Good governance in sport is a prerequisite for the autonomy and self-regulation of sport organisations and federations, in compliance with the principles of democracy, transparency, integrity, solidarity, gender equality, openness, accountability and social responsibility. It is essential that sport organisations and federations uphold and, where possible, raise their standards of good governance by giving voice to athletes and to fans. … Sport organisations of all types and at all levels shall commit to developing a culture of transparency and establish procedures based on good governance principles which ensure the irreproachable management of their financial resources, stringent controls to prevent conflict of interests, corruption and limited periods of elected positions.

ESL and ISU are welcome and important contributions to the Court’s jurisprudence on EU law’s requirements on private regulators in that they make clear(er) what (apparently) followed from, inter alia, OCOT, TopFit, and Canal Satéllite Digital. To the extent that competition and free movement law apply, private regulators must respect both substantive and procedural elements of good governance. In the interest of preventing increasingly common and powerful private regulators from abusing their regulatory powers, it is important that this requirement applies broadly across all types of cases. It is also difficult to see why, as a matter of EU law and policy, physical and legal persons that enjoy EU law rights would only deserve protection against private regulators abusing their powers in situations where commercial actors seek to compete with the private regulator’s business. Similarly, it would be unfortunate if EU law’s protection of good governance varied between free movement law, Article 101 TFEU, and Article 102. The fundamental interest—preventing abuse of private regulatory power—remains the same regardless of legal basis and which basis a claim is based on can vary based on small and insignificant factual differences. There are thus compelling reasons why the substantive and procedural good governance requirements laid down in ESL and ISU ought to be applied in a general and uniform manner across EU law.

Without detracting from this recommendation, it should also, at the same time, be acknowledged that this could have far-reaching consequences. Consider, for example, a situation like the one in Deliège.Footnote 54Deliège concerned, like ESL, an SGB that restricted free movement of services and, like TopFit, the non-admission of an athlete to a sports competition. Moreover, in Deliège, the SGB had exercised its regulatory power in ways that raised serious good governance concerns: there was a complete lack of pre-existing criteria governing admission and this could, and in fact did, result in the SGB exercising its discretionary power in an arbitrary manner. It seems possible, even likely, that a situation like the one in Deliège would fail to meet the good governance requirements formulated in ESL and ISU, and that more transparent, objective, and precise selection rules would need to be established.Footnote 55 Another example can be found in the area of anti-doping. The existing anti-doping regime has been questioned and criticized, inter alia, for a lack of transparency,Footnote 56 non-discrimination,Footnote 57 proportionality,Footnote 58 and the availability of effective and independent review,Footnote 59 and this makes it vulnerable to good governance-based challenges. These examples do not mean to suggest that it would be wrong to apply good governance requirements. To the contrary, they arguably illustrate the need to impose such requirements, but also that the consequences of doing so can be potentially far-reaching.