1 Introduction

Over the past few decades there has been a significant increase in antitrust interest in the sports sector. That said, one can count all of the competition law cases with a European dimension in the sports regulatory sector on the fingers of one hand.Footnote 1 In December 2023 the European Court of Justice (hereinafter: ‘the Court’) delivered three highly anticipated competition law judgements related to the regulations of the international sports governing bodies (hereinafter: ‘SGBs’). In two of them, International Skating Union v Commission (hereinafter: ‘ISU’)Footnote 2 and European Superleague Company (hereinafter: ‘Superleague’)Footnote 3, the Court scrutinised the gatekeeping mechanisms established by supranational SGBs to regulate the access of third parties to the markets for the organisation and exploitation of sports events. In many ways, this is not a new issue in the sports industry, but given the growing commercialisation of sport,Footnote 4 the stakes are now higher than ever before. On the one hand, the market dynamics (in 2023, the European football market was assessed at €29,5 billion)Footnote 5

should imply a full-fledge business-like treatment. On the other hand, the European Sport Model, the main pillar of the organizational architecture of European sports, is potentially endangered by the influx of profit-oriented undertakings.Footnote 6 In its 21 December judgments, the Court opted for a balanced solution: it embraced a pragmatic efficiency-oriented approach but focused rather on possible improvements of sports governance than on ‘newcomers’. In particular, the Court actively suggested regulatory reforms to preserve the legitimacy of SGBs. But will SGBs sustain the challenge of the new, market-driven principles of sports governance?

2 Problem

2.1 Gatekeeping

At the centre of the ISU and Superleague cases lie the SGBs’ gatekeeping function. This is an important competence of sports federations allowing them to keep their respective sports disciplines uniform and competition calendars consistent.Footnote 7 In practice, the gatekeeping mechanism usually comprises multiple elements. First, and more generally, the system is based on the statutory hierarchy, in which the rules of an umbrella organisation become binding for all its members. Second, there are more specific provisions that ‘can be equated with non-competition and exclusivity clauses’:Footnote 8 eligibility and licensing rules making participation in organised sport conditional on, among other requirements, abstaining from taking part in non-sanctioned events. The effectiveness of the regulations is ensured by the threat of disciplinary sanctions for possible violations. The penalties may vary from a warning to a lifetime ban from official competitions run under auspices of SGBs.Footnote 9

In parallel, third-party organisers wishing to set up their own events should obtain an authorisation from the respective SGBs. As a rule, an application should be submitted several months in advance and contain detailed financial, organisational, and technical information concerning the event in question. The applicant can also be asked to prove compliance with ethical and sporting requirements. Appeals against SGBs’ decisions are usually subject only to internal review and/or to a review by an arbitration tribunal, such as the Court of Arbitration for Sport (hereinafter: ‘the CAS’).

2.2 Conflict of interest

But gatekeeping is not an antitrust problem per se.Footnote 10 As a rule, SGBs detain exclusive competence in policymaking, decision-making and disciplinary powers in their respective sports.Footnote 11 On top of it, most SGBs – with a few exceptionsFootnote 12 - perform simultaneously a regulatory function (when they decide which competitions should be authorised) and an economic function (when they organise and market their own competitions).Footnote 13 The combination of these roles results in a conflict of interests as SGBs have not only the legal means to obstruct potential competitors, but also a considerable economic interest in doing so Footnote 14 in order to favour their own activity.Footnote 15 This situation ‘invites abuse’Footnote 16 since ‘a system of undistorted competition […] can be guaranteed only if equality of opportunity is secured as between the various economic operators.’Footnote 17 In the long run, prevention of the growth of competition entails limited production (few competitions) and hindered innovation (few attractive competitions)Footnote 18 to the detriment of both undertakings in the downstream markets (sponsors, broadcasters, etc.) and end consumers, e.g. fans.Footnote 19 The conflict of interest is often reinforced by the lack of clear and precise procedural rules with substantive criteria which could guarantee equal and fair treatment of all actual and potential competitors and remove the risk of arbitrary decisions of gatekeepers.Footnote 20 But most SGBs lack such procedural frameworks and, because of it, fail to withstand the scrutiny of the competition law test.

3 Solution

3.1 Market-driven approach vs. traditional approach

Both in ISU and Superleague, the Court adopts a more economic, pragmatic approach favouring market needs and efficiency concerns, in opposition to the ‘traditional’ approach based on the social and educational values enshrined in Article 165 TFEU.

3.1.1 Article 165 TFEU

Advocate General Rantos built his Opinion (delivered one year before the Court’s judgment) in Superleague around the concept of ‘specificity of sport’ embedded in Article 165 TFEU. He stated that ‘the application of the provisions of the FEU Treaty to the sporting field cannot be limited solely to Articles 101 and 102 TFEU, since Article 165 TFEU can also be used as a standard in the interpretation and the application of the above-mentioned provisions of competition law.’Footnote 21

In contrast to the Opinion of AG Rantos, the Court distanced itself from the socio-cultural approach pushing Article 165 TFEU to the margin: ‘…although the competent Union institutions must take account of the different elements and objectives listed in Article 165 TFEU when they adopt […] incentive measures or recommendations in the area of sport, those different elements and objectives, as well as those incentive measures and recommendations need not be integrated or taken into account in a binding manner in the application of the rules on the interpretation of […] the competition rules (Articles 101 and 102 TFEU).’Footnote 22

Put shortly, Article 165 TFEU is, as Weatherill qualified it long before Superleague, ‘a re-statement and acceptance of conditional autonomy.’Footnote 23 In addition, it is difficult to disagree with Meier et al. who call paradoxical the fact that ‘notwithstanding the hyper-commercialisation of European football, the EU discourse on football regulation seems to be almost completely dominated by the socio-cultural regulatory frame’Footnote 24 while this frame is rooted in the European amateur tradition.Footnote 25

The Court overcomes this paradox and is sober about the scale acquired by the sports industry and treats it as a full-fledged economic sector. That said, the pragmatism of the Court allows to invoke specific characteristics of sport but only in the context of and in compliance with the conditions and criteria of application of the respective competition law provisions.Footnote 26

3.1.2 Broad interpretation of MOTOE

The Court had the opportunity to clarify a long-standing question concerning the scope of application of MOTOE case-law: it applies broadly, e.g. to undertakings in a dominant position performing a gatekeeping function regardless of the origin of this function. More particularly, the competence of deciding on access to a given market can stem both from publicly-granted exclusive or special rights (as it was in MOTOE) and from undertakings’ own conduct (as is the case with most SGBs which are associations governed by private law that are allowed to operate as a monopoly by virtue of the specific characteristics of sport).Footnote 27 Similarly, the Court does not distinguish between the gatekeeping powers exercised de jure and de facto.Footnote 28 In all these cases, dominant undertakings endowed with gatekeeping functions bear a special responsibility not to allow their conduct to impair genuine undistorted competition.Footnote 29

3.1.3 Wouters test vs. efficiency gains test

Another point worthy of analysis is which role is given by the Court to - commonly used in the sports antitrust cases - objective justifications. As a rule, an undertaking entering an agreement restrictive of competition can justify the restriction by passing a three-fold test, commonly referred to as ‘Wouters test’ or ‘Meca-Medina test’: it should establish that: (1) this agreement has a legitimate objective(s) and is the public interest; (2) the restriction is genuinely necessary for attaining this objective; and (3) its restrictive effect does not go beyond what is necessary to attain this objective. This test is commonly used for the rules adopted by sporting and other professional associations in order to reconcile anticompetitive elements embedded in such rules with certain ethical or principled objectives deemed legitimate.Footnote 30

In Superleague and ISU, the Court removes the possibility to proceed via the ‘Wouters test’ in cases in which the anticompetitive conduct is harmful enough to be qualified as a restriction of competition by objectFootnote 31 or when it infringes Article 102 TFEU by its very nature.Footnote 32 Consequently, the analysis of objective justifications in the framework of the ‘Wouters test’ remains open only after having established the absence of a restriction of competition by object. Failing this, the only possibility left is to proceed through efficiency gains test embedded in Article 101(3) TFEU.Footnote 33

This was found to be the case for UEFA and for ISU. Their gatekeeping systems were found to be harmful enough to competition to be disqualified from relying on the ‘Wouters test’ and should proceed towards the efficiency defences. The conditions of Article 101(3) TFEU are stricterFootnote 34 and ‘more objective’: SGBs should demonstrate ‘genuine, quantifiable efficiency gains’ and the way they compensate for the disadvantages caused to competition by the restrictive rules.Footnote 35 Does the SGB’s gatekeeping system appreciably improve the production, distribution and/or quality of sports competitions so that it compensates for the disadvantages caused by it?Footnote 36 Do different categories of users, including national SGBs, professional, amateur and grassroot clubs, and the athletes and fans, sufficiently benefit from those improvements?Footnote 37 Are the restrictions indispensable or necessary to achieving such improvements or there are less intrusive measures apt to achieve them?Footnote 38 Doesn’t the SGB get an opportunity to eliminate all competition on the market (especially given the monopolistic position held by most SGBs and the absence of detailed procedural rules governing their gatekeeping systems)?Footnote 39

The Court is again pragmatic and defends the principle of the competitive marketplace. The efficiency defences are accessible in all scenarios but require from SGBs highly objective and quantifiable assessments of their policies. Although monopoly-level undertakings are rather unlikely to fulfil the requirement of non-elimination of effective competition, the dominance of SGBs is recognised as a norm.Footnote 40 In addition, dominant undertakings can produce considerable efficiency advantages.Footnote 41 Meanwhile, in the case of Superleague, one could argue that the clubs behind the breakaway league can also harm effective competition: constituting an oligopoly on the downstream market for the provision of football services,Footnote 42 these clubs can use the breakaway league merely as a corporate shield aimed at protecting and/or increasing their market share.

3.2 Good governance: a roadmap to a better sport

If there is a phrase summarising the general message behind the Court’s judgments in ISU and Superleague, this should be ‘good governance.’ The Court continues its logic in MOTOE, referring to the standards of transparency, objectivity, proportionality and non-discrimination as special responsibilities of sports gatekeepers.

And it seems a suitable, reasonable, and well-balanced solution. It is fully reasonable to expect a big undertaking, such as an (inter)national SGB, to implement gold standards of corporate good governanceFootnote 43 in its policy- and decision-making: transparency, clarity, objectivity, neutrality, precision, proportionality, and non-discrimination (arm’s length principle) between members and third parties and among members, as well as effective judicial review.Footnote 44 It is also applicable to many smaller sports federations of limited economic scale in view of their unchangeably stronger bargaining power vis-à-vis other stakeholders, predominantly, athletes.Footnote 45 Also, compliance with good governance standards can be not only relevant but often decisive in assessing regulations in the framework of the test of Articles 101(3) and 102 TFEU. Finally, the focus on good governance ensures a right balance between the special status claimed for the ‘European sports model’ and the requisites of effective competition: on the one hand, it allows more flexibility for SGBs to decide how to administer their disciplines in line with the principle of sports autonomy; on the other, it does not overlook the minimum guarantees for other market operators.

3.3 What about CAS arbitration?

The availability of an effective mechanism of judicial review is one of good governance standards. It is also a procedural guarantee for undistorted competition among several operators, one of whom is a gatekeeper.Footnote 46

In ISU, the Court reminded that CAS arbitration does not enjoy the general shield from antitrust rules but should be assessed in the light of its compliance with all the requirements of public policy, including the effectiveness of EU competition rules which have direct effect.Footnote 47 Since the judicial review of the CAS awards is of limited character,Footnote 48 and lies within the exclusive jurisdiction of the Swiss Federal Supreme Court, while the latter neither recognises EU competition law as public policy, nor is able – if needed - to refer a question to the Court, the effectiveness of EU competition law is undermined.Footnote 49 Moreover, it can be remedied – contrary to the General Court’s findings – neither via EU competition law public enforcement mechanisms, nor by an action for damages in the framework of private enforcement.Footnote 50

Although, the CAS system – with all its cost-, time-, and expertise-based advantages, remains unchallenged as an institution, the fact that the jurisdiction of CAS over appeals against final decisions rendered by SGBs is mandatory and exclusive, renders this system vulnerable in the light of antitrust assessment. The Court analyses it with a functional, almost behavioural, approach and, most importantly, from the point of view of a weaker party, e.g. athletes.Footnote 51 Are SGBs more likely to shield their activities from antitrust scrutiny keeping dispute settlement within the CAS system? Are athletes deterred from engaging in antitrust litigation? Is such litigation apt to compensate for athletes’ careers in case of harsh sanctions of ineligibility? The Court finds that the CAS arbitration system in its actual form aggravates other problems in sports governance. Therefore, in these circumstances, to be considered effective, the threshold for the judicial review is raised higher. The system, in which the power of review over the decisions affecting the proper functioning of the EU’s internal market is conferred to a non-EU court (the Swiss Federal Tribunal) and is limited to very few grounds – to the exclusion of the one relating to the violation of EU antitrust provisions – does not pass this threshold.Footnote 52

4 Impact on sports governance

In its judgments in ISU and Superleague the Court has demonstrated a fresh and market-driven approach towards the old problems of sports governance. To become compliant with EU law SGBs are required to undertake considerable reforms, especially in respect of their procedural rules. These reforms have already started. ISU Eligibility Rules have considerably evolved since the initially contested 2014 Edition.Footnote 53 Likewise, in June 2022, UEFA introduced Authorisation Rules governing International Club Competitions containing a more detailed procedural framework with diverse criteria to be met by potential organisers.Footnote 54

The question on the degree of precision, objectivity, transparency, proportionality, and non-discrimination necessary to satisfy the requirements of EU competition law remains open and is to be assessed on the case-by-case basis. In addition, the Court’s position in support of good governance may be further developed and include accountability, stakeholder representation, inclusiveness, innovation, and efficiency as principles guiding SGBs’ policymaking.

A more global consequence of the ISU and Superleague judgments revolves around the re-structuring of the markets for organisation and marketing of sports competitions and, more generally, around the prospects of organised sport. The European Sports Model keeps playing an important role even in the efficiency-based market paradigm: the Court defended the principles of sporting merit, uniformity of regulatory and technical conditions, equality of opportunity, ant the coherence of sports calendars because, in many ways, they are vital for the very functioning of sport.Footnote 55 On the other hand, SGBs must abstain from closing off sports markets on an arbitrary basis. The solution to reconcile the two ends of the Court’s position could be in a further evolution of the European Sports Model. Footnote 56 A new model in which SGBs will coexist with alternative competitions, but this expanded system would be based on the same principles of openness, sporting merit and participation in solidarity mechanisms. Naturally, in this case, the business models of newly established leagues should be developed with the view to coexist with the events of the SGBs. This scenario also leaves the question of

how SGBs and third-party organisers will divide the jurisdiction over new events: how much control will keep the former versus how much autonomy will obtain the latter. For instance, will sports federations have the supreme authority in sporting questions over ‘alternative events’ in case something is changed after the authorisation or the license has been granted? Which proportion of ‘alternative events’ can be reasonably integrated in the final calendar? How and on which conditions will the solidarity mechanisms be operating?

5 Conclusion

The ISU and Superleague judgments certainly come with important implications for sports governance worldwide. First of all, they entail inevitable regulatory changes, in particular, ensuring procedural guarantees for stakeholders and third parties. Second, they incentivise further work on implementing good governance principles within the regulatory and disciplinary activities of SGBs. Finally, and most importantly, SGBs are invited to reconsider their approach in administering sport with a view towards a more flexible and pragmatic mindset.

It is unlikely that changes will materialise instantly. Even in 2024, SGBs keep on resisting breakaway leagues. For example, in the end of 2023, the Italian Football Federation announced the inclusion of an ‘anti-Superleague clause’ to its Licensing Regulations for 2024–2025 season.Footnote 57 Given that such clauses are clearly incompatible with Articles 101 and 102 TFEU, SGBs’ strategy should turn towards substantial reactive and proactive (?) reforms. As the Court has alluded to, neither fierce gatekeeping nor squelching breakaway projects would keep the European Sports Model together better than a real and pragmatic need in open and merit-based competitions as well as in transparent and non-discriminatory governance.