Written by Ankush Kalsule, The author is a law student pursuing BA.LLB from National Law University Odisha.
BACKGROUND AND THE ISSUE
The world of football came across a sudden standstill after the announcement of the European Super League (ESL). The announcement was met with heavy criticism from football fans across the globe who were concerned with possible damages that the proposed league could have on the traditional form of European football consisting of the Union of European Football Associations (UEFA) Champions League followed by the Europa League & Conference League. The current issue dates back to April 18, 2021 when a group of 12 European clubs proposed the ESL hours before the decision to make some reforms in the existing Champions League were to be made. The mastermind behind the Super League Florentino Perez stated that the existing UEFA club competitions were a hindrance for the clubs in enhancing their business and subsequent development. The proposal was prompted by losses that the clubs incurred due to Covid-19, presenting an ideal chance to earn profits.
Following the announcement of ESL, Fédération Internationale De Football Association (FIFA) & UEFA threatened sanctions against the founding clubs of the breakaway league along with expulsion of respective associated players from competitions organised by them. In response, the ESL requested an injunction against these citing alleged breach of Article 101 & Article 102 of Treaty on Functioning of the European Union (TFEU). The Madrid court could not decide on the issue itself and hence referred the case to the Court of Justice of the European Union (CJEU) for the purpose of interpreting these provisions in light of the current issue.
The Bosman case emphasised on the criteria of ‘economic activity’ in the context of competition law. The actions of FIFA & UEFA, such as exploitation of rights and organising competitions was considered to be an economic activity. Therefore, the present facts of the case fulfil the criteria.
DECODING THE JUDGEMENT
The primary questions before the court were to determine whether FIFA & UEFA rules with respect to ‘prior approval’ and ‘sanctions’ were anti-competitive in nature and if the two organisations held a ‘dominant position’ for the purpose of Article 102. Article 101 considers actions by undertakings which could affect competition in the ‘internal market’ in addition to trade between member states. The internal market was determined by characteristics of the product and geographical standpoint. The complementary actions of organising interclub competitions within European Union along with exploitation of various rights emanating from the competition are considered part of the internal market. The dominant position of these organisations arose by virtue of their long-standing monopoly and the ability to act independently.
The CJEU ruled that for the purpose of Article 102, adoption of rules regarding prior approval for a third party to establish another league without a framework, substantive criteria and procedural rules that ensures transparency constitutes an abuse of dominant position. For the purpose of attracting these provisions it is essential to show that the action has the effect of restricting an equally competing undertaking in the market. Additionally, even the object to restrict a competing undertaking at an earlier stage by placing obstacles or measures to prevent its entry in the market would attract sanctions under Article 102.
The interpretation of Article 101(1) with regard to facts in the present case was strictly done on the basis of ‘objective criteria’ which enshrined that undertaking whose actions have harmed the effective competition irrespective of having a subjective intention (legitimate objectives) would attract the provision of Article 101. Rules similar to that of prior approval are usually incorporated with the objective of observing sports integrity and rules of the sports but excessive power in the hands of organisations have led to establishment of monopoly which has restricted entry of other efficient competitors in the respective market ultimately affecting the public interest.
The judgements have time and again reiterated the importance of maintaining the public interest and is considered to be an essential element in determining the anti-competitive nature of an act. On adoption of the principle of public interest in the present issue, it can be argued that there is prevalence of two distinct types of public interest. The first being with respect to loyal fans of the existing European competitions who are criticising the ESL and other public interest lies in the fact that lack of effective competition between the leagues would lead to financial burden as the same would lead to increase in price tickets and accumulation of profits generated out of the league in only a handful of clubs. Hence, careful consideration needs to be done by the Commercial Court of Madrid while deciding on the actual dispute as to avoid any future anticompetitive acts by organisations which may affect the public interest.
The tests and interpretations discussed above have primarily highlighted the fact that certain international sports organisations, such as FIFA in the present case have conferred themselves with the right to determine who would be authorised to compete with them in the market, the same has led to conflict of interest for the reason that these organisations have started to carry out dual role of a ‘legislator’ as well as a ‘party’ in the same market. Since a majority of these international sports organisations are non-government undertakings, the concept of competitive neutrality cannot be effectively applied to them and the concern for duality of role persists potentially at the expense of public interest mentioned above.
DOMINANT POSITION EXERCISED BY BCCI
The example of the Board of Control for Cricket in India (BCCI) & Indian Premier League (IPL) can be used to demonstrate how granting excessive monopoly to an organisation leads to continuous abuse of the dominant position by the reason of it being a regulator as well as a player in the same market. In the case of Surinder Singh Barmi vs Board of Control for Cricket in India, the Competition Commission of India (CCI) established that the BCCI exercises dominant position in the market with respect to the organisation of professional domestic cricket leagues in India. The court emphasised on the need of showing connection of restriction with the integrity of sports and interests of the consumers and for the reason of this the protection of commercial interest of the media company was not considered to be an objective justification. Additionally, the case of Pan India Infraprojects Private Limited vs BCCI highlighted the exclusionary acts of BCCI where the informant was blacklisted from participating in the bidding related to broadcasting rights. The exclusionary act was in light of litigation between BCCI & Indian Cricket League (ICL) with the informant being the promoter of the latter. The ICL’s Season 3 could not be organised due to the alleged blatant use of regulatory power by the BCCI. The IPL backed by BCCI as its promoter impeded ICL and its effective first mover advantage in the relevant market. The above-mentioned comparison intends to highlight the need for careful consideration before granting approval to such leagues as well as to ensure that an undertaking is only allowed to use its discretionary power when it is backed by sufficient framework to ensure that the same is transparent, proportional and does not impede effective competition in the market.
EXISTING CONCERNS AND THE WAY FORWARD
The CJEU mentioned that rules such as Article 49 of the UEFA statute, which deals with prior approval are anti-competitive as they lack a well-defined established framework and regulate discretion associated with the same. While, the same does not mechanically approve competitions like the ESL, critics of this judgement as well as the for critics of the development of the ESL argue that the CJEU has missed out on an opportunity to provide necessary guidelines on the issue. The European Commission (EC) is actively taking strides to frame guidelines with respect to the exclusionary abuses but the same needs to be done keeping in the mind the integrity and value associated with that sport. This unregulated discretion often leads to abuses and thus advocate for need of an effective oversight mechanism.
The author is additionally concerned about the closed nature of the proposed league. The closed league is likely to facilitate the obvious exploitation of dominant position. The initial proposal contained 12 permanent members who have huge following around the world and the creation of a new competing league in Europe would lead to shifting of viewership and fans to the ESL. This may result in the emergence of another monopoly because of the huge wealth and influence these clubs have owing to their fans. In this situation the group of permanent members might abuse their dominant position and restrict entry of other effective competition in that market. While the introduction of European Super League could be highly beneficial for the consumers on one hand, the concerns with respect to the closed nature of the proposed league and likelihood of abuse of dominant position should not be ignored while granting approval to the league. The concern regarding the same can be possibly avoided by making them subject to a predetermined framework and substantive criteria which would ensure that their actions are constantly regulated as to avoid any anti-competitive practices by them.
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