Cancelled or delayed? European Super League competition law case study

As fans breathe a sigh of relief that the ESL plans have been dropped, we consider potential competition law claims that both UEFA and the teams could have made

14 May 2021

Introduction

Whilst the European Super League (the 'ESL') may not have come to fruition (this time), it managed in its brief conception phase to create a turmoil in the football world. On the one side of the pitch there were 12 team owners who had decided to break away from the Champions League and create the ESL and on the other side UEFA, national and international football regulatory bodies, and the breakaway teams’ fans, managers and players that opposed the creation of the ESL –  both sides arguing that their motives were to protect football.

The debate has already seen its day in a national court in Spain, and now things may be heating up, with the Spanish Mercantile court requesting an expedited preliminary ruling from the European Court of Justice ('ECJ') on the very competition law issues that could make or break the legal footing of the ESL altogether. The questions posed by Spanish court appear to be one sided, namely asking whether UEFA (and FIFA) can be in breach of competition rules in blocking the ESL. There is no guarantee however, that the ECJ will come to these questions in a prompt manner, and even if it does it may well not be prepared to go beyond restating existing case law.

In our view, from a competition law perspective, the topic appears to be more multifaceted. While we wait for the ECJ’s preliminary ruling, and in the spirit of fair play, we outline below competition law arguments which each side might make against the other, and let you decide who scores the most points. In the best tradition of entertaining football, we have focused on ‘attack’ rather than ‘defence’… 

The arguments

Potential ESL arguments: Decisions by an association of undertakings, that have as their object or effect the distortion of competition are anti-competitive under UK and EU competition law. Although what constitutes an ‘association of undertakings’ is not explicitly defined, a relatively recent decision of the European Commission whereby the Commission found that the International Skating Union (the 'ISU') breached competition rules by forbidding skaters from taking part in competing tournaments with those organised by the ISU, stands as a clear reminder that sports organisations, and in particular regulatory bodies organising and financially exploiting competitions are very much at risk of competition law scrutiny.  

In fact, in its decision, the Commission reiterated that ‘UEFA’ was deemed to be such an ‘association of undertakings’ (see para.140, citing Commission decision of 23 July 2003, OJ L 291 of 8 November 2003, p. 25, COMP 37.398, paragraph 109). The Commission’s decision in the ISU case was upheld in the General Court on 16 December 2020 in Case T 93/18, International Skating Union vs Commission, which the ESL could cite to potentially argue that UEFA’s actions in this case should be scrutinised. Such associations may avoid competition law scrutiny where their actions relate to the organisation of their sport through rules, and in particular where such rules pursue a legitimate objective, the restrictive effects of such rules are inherent in the pursuit of that objective, and the rules are proportionate to achieving that objective.

Bearing the above in mind, UEFA’s joint statement in response to the ESL proposals left little to one’s imagination on how severely UEFA would respond to the act by the teams to break away from Champions League in forming the ESL. For instance, the biggest threat for the clubs and players participating in the ESL is that they would not be able to participate in any other European or national competition. In fact, the joint statement outlined what appeared to be a nuclear option, noting that '[a]s previously announced, by FIFA and the six Confederations, the clubs concerned will be banned from playing in any other competition at domestic, European or world level, and their players could be denied the opportunity to represent their national teams.'

It is hard to see how UEFA, and the other parties to that statement, could sustain such action without facing immediate antitrust claims from the breakaway clubs. In fact, soon after they had released that statement, an interim ruling by a commercial court in Madrid noted that UEFA (and FIFA) should not prevent the clubs from setting up the ESL. In its deliberation (in Spanish), the court considered the potential competition law issues from such action by UEFA which would have been considered further in the principal hearing.

In its decision the Court reiterated that both UEFA and FIFA are private bodies which have a monopoly in the authorisation and organisation of international football competitions. As such, the Court placed UEFA and FIFA in the immediate position of ‘treading carefully’ in as much as they could be found to abuse their dominance in that market. This led the Court to conclude that UEFA and FIFA should not issue any declarations or do any such acts that would impede the preparation of the ESL. Another interesting feature of the judgment related to discussion around ‘media rights’. If flows that control over competitions also brings control over, and exploitation of, among other things, media rights. Interestingly, the Court stated that FIFA’s articles requiring that clubs forgo their media rights to competitions could be seen as an abuse of dominance. Perhaps this last point, could give clubs a negotiating chip going forward to shake up the control of media rights in a more decentralised and distributed fashion.

Potential counter-arguments: Agreements that prevent, restrict or distort competition are prohibited under UK and EU competition law. Broadly speaking, European football currently operates an open sporting competition whereby success on the field results in financial rewards in terms of greater shares of broadcasting revenues, more matches and ticket sales, more valuable players and more supporters. Those opposing the ESL proposals could have potentially sought to argue that the ESL would have restricted or distorted the degree of competition that currently exists in European football (even if this was not totally prevented in theory) and limited the top levels of success on an ongoing basis (and therefore revenue) to a select few. 

They could have potentially sought to argue further that not only would the distortion have taken place at the level of European football, it would have also had an impact on national leagues (assuming the members of the ESL were still permitted to take part). For example, that the proposed ESL format would have made it much harder for other clubs to compete with the ESL founding clubs for players and that this would have given the ESL clubs an advantage in their national leagues leading to them winning an additional share of the available revenues from those at the cost of non-ESL clubs. 

The ESL statement complained of the 'instability in the existing European football economic model'. But those opposing the plans might have queried whether this is reflected in reality on the basis that no major clubs have gone bankrupt (even in the pandemic) and arguing that the largest clubs still remain the most successful in most years, despite the larger amount of debt they find themselves in. We note that the Premier League is currently seeking an exclusion from UK competition law scrutiny as regards the extension of its current broadcasting deals due to the importance of securing the broadcasting revenues to the football pyramid model in the UK.

Agreements which are anti-competitive can be exempted from competition law prohibition if, very broadly, they include the minimum restrictions necessary to improve matters, particularly for consumers. The ESL statement talks of 'the need to provide higher-quality matches', but those opposing the plans may have queried how the ESL would do this with similar clubs playing each other to the present (albeit maybe with a greater share of the world’s best players) is not explained. It also talked of 'additional financial resources for the overall football pyramid', but those opposing the plans may have also argued that although 'uncapped solidarity payments' were referred to, the genuinely long term source of the revenue increase to fund these was also unclear. 

Conclusion

Given the current reluctance of Real Madrid, Barcelona, and Juventus to drop the proposal, it appears that we may be just witnessing the start of a long and arduous litigation match (with extra time and penalties almost guaranteed). What we do know is that the reaction from fans, managers and players appears to have been sufficient for the English clubs, swiftly followed by some of the Italian clubs, to back away from the proposals with incredible speed. This may be an example of consumers and employees being more powerful than the law which is there to protect them, if they are sufficiently stirred into coordinated action. These questions, at least for now, can go back in the theoretical folder, but the idea of a ‘superleague’ of some sort seems unlikely to have gone away forever, and a further battle for access to funds and media rights may be imminent.

This article was written by Noel Beale and Paschalis Lois

Our sports law practice has a broad range of experience across many different sports. In particular, the interaction of sport and competition law frequently raises interesting questions as sport requires a degree of coordination between competitors to function and such coordination can raise competition law issues. If this article prompts any questions please do not hesitate to get in touch with Noel Beale or your usual Burges Salmon LLP contact.

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Noel Beale

Noel Beale Director, Competition – Regulation

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