We blogged about acquisitions of football clubs and the German 50+1 rule a while ago. But there are far more antitrust aspects clubs, associations and organisations should keep in mind. This post gives an overview of recent developments and outlines what it means to play fair and square in antitrust terms.
Whilst cooperations between competitors, be it joint purchasing or technical cooperations, traditionally raise antitrust concerns, sport clubs somewhat require a mutual umbrella to systemically compete in the first place. It is hard to imagine football clubs playing against each other based on various bilateral agreements instead of relying on their organization’s predetermined match schedule. So, the starting point for bringing clubs together und forming leagues seems to be quite logical and is not really in the focus of antitrust authorities worldwide.
Things change, however, already when it comes to joint marketing models which, at least on the face of it, represent anticompetitive agreements only justified by various advantages. In Germany, for instance, the Bundeskartellamt has traditionally green lighted new marketing models for a given rights circle only subject to certain self-commitments (in particular adherence to the so-called non-single buyer rule). Irrespective of that, regulators have had to increasingly deal with three other issues. It can be expected that those will stay in the focus of regulators for quite some time not least because there might still be room for greater awareness of the relevant rules and standard compliance measures in the broader sports world.
Saving money – salary cap as a solution?
What is known as the standard in US sports seems to be a more and more interesting option for various sports organisations worldwide: Especially in difficult and economically uncertain times, capping the salary of players might provide more planning security and a level playing field – in any case, with a salary cap, unlimited salary outbidding between clubs is not possible anymore.
In Meca Medina, dealing with common (anti-)doping rules adopted by the International Olympic Committee, the European Court of Justices left some room for these kind of arrangements, finding that rules that are inherent to a legitimate object are not in the scope of competition law and can additionally benefit from an individual exemption. So, arguing that a cap is required for economic reasons, competitive balance or equal distribution of talents might not be hopeless, but recent examples have shown that caution is advised: In September the Mexican regulator fined 17 professional football clubs for coordinating cap wages for female players. It did not help that the agreement was approved by the league. On a similar note, regulators in Eastern Europe have fined various sports club for agreeing on salary cuts due to the financial losses of the pandemic.
What’s mine is mine
For many years, no-poaching agreements (i.e., agreements not to solicit another company’s employee) seemed to be a US enforcement priority only. This view should, at the latest, have changed after Ms Vestager delivered a speech in October this year in which she basically said that the Commission would increasingly focus on cartel activities in labour markets (you first, even prior to the speech, read about this upcoming focus here).
What that has to do with sports? Various national authorities seem to have thought in line with the Commission and already opened investigations into no poaching agreements – many of which were remarkably sports related: Lithuania (basketball), Poland (basketball) and Portugal (football). The Columbian regulator also seems to follow the trend and initiated proceedings against the national football association and 16 clubs only at the beginning of this month. Going through the daily football coverage and reading certain hands-on statements by officials more closely one has to expect that there is more to come in this area.
In or out?
A third issue gained quite some prominence this year: To what extent can a governing body restrict its members from looking for opportunities outside the existing ecosystem? In April, twelve Spanish, English and Italian football clubs announced the launch of a European Super League which met widespread criticism from fans, smaller clubs and the broader public. Whilst most clubs quickly abandoned the project, Real Madrid, FC Barcelona and Juventus Turin formally remain part of it.
UEFA’s (and FIFA’s) response went even beyond pure scepticism – they prohibited the participation in alternative competitions. The company behind the European Super League filed an abuse of dominance complaint to a Madrid court, which indeed quickly issued interim measures ordering FIFA and UEFA to stop claiming that clubs could not participate in other competitions. Only two months after that, the court found that UEFA was in breach of those measures and, rather outspokenly, requested UEFA to stop – a mere suspension was not sufficient (!) – any investigation or other forms of hidden sanctions against the three remaining clubs.
However, the legal dispute and its political implications are far from over. Only last week, as reported inter alia here, the Council of the European Union reemphasized the importance of open competition in a resolution, highlighting that a VIP-members-only-competition such as the Super League, does not meet the key features of a European sports model such as a pyramidal structure, one federation per sport and solidarity with lower-tier levels. With a similar line of arguments, the Union of European Leagues of Basketball filed an antitrust complaint against the organiser of the Euroleague last year, claiming that Euroleage had taken control over the entry system and awarded slots note merely on sporting merits.
Not quite as much in the spotlight (at least in Europe), the Indian regulator most recently ordered a probe into three local associations of table tennis for prohibiting players, coaches, and clubs from joining or playing for unaffiliated groups.
The final whistle on these issues has not been blown yet. In fact, it might not even be halftime. The discussion around players’ salaries (in particular in football) and the Super League has sparked greater political and regulatory interest, which is there to stay for a while. Antitrust should be high on the agenda of sports clubs, associations, and organisations, including from a strategic perspective.