Checks and balances: the Court of Justice sets framework for sport governing bodies powers

On 21 December 2023, the Court of Justice of the European Union (CJEU) delivered three significant judgments for the future of sports governance in Europe. This blog post considers some implications of two of those, relating to (i) a Madrid Commercial Court’s request for a preliminary ruling following an application by the European Super League (ESL); and (ii) whether the General Court’s judgment in respect of the International Skating Union (ISU) case should be set aside.  

Amidst a wave of legal challenges in recent years, the authority of Sports Governing Bodies (SGBs) across disciplines — including in ice skating, football, and equestrian sports — has been rigorously tested, with EU law lying at the heart of the discourse (see here, for a recap of the facts of both cases and our previous analysis). Yesterday’s judgments provided further clarity on the standards and conditions that SGBs must meet and operate within. 

SGBs can define rules and impose sanctions, but not without appropriate safeguards 

The CJEU clearly recognised that SGBs, even dominant ones, are allowed to set rules requiring authorisation of other competitions and impose sanctions for non-compliance. In particular, it determined that SGBs could impose conditions on international club competitions aimed at preserving the “homogeneity and coordination” of a common calendar and to promote competition based on merit and equality of opportunity. 

However, the CJEU insisted that SGBs bear the responsibility to ensure that their regulations are subject to criteria which ensure that the rules are transparent, objective, and non-discriminatory, and that they are applied in a proportionate manner. Without these critical safeguards, there is a risk of unfairly excluding potential competitors and unduly hindering the establishment of new sporting competitions by third parties. By doing so, the CJEU clarifies that the sporting activity – and related SGBs – have specific characteristics but remain fully subject to competition rules. 

Ultimately, the CJEU declared that any potential restrictions of competition rules might be justifiable by SGBs, contingent upon their ability to conclusively demonstrate compliance with well-established efficiency defence conditions. Such conditions would most likely not be fulfilled absent these safeguards.

FIFA, UEFA, and the ISU 

By reference to these safeguards, both FIFA and UEFA rules (at the time) and ISU’s eligibility rules were found to be insufficient and unlawful. In particular, the CJEU found that: 

• ESL: FIFA and UEFA rules on prior approval of new interclub football projects and on prohibiting clubs and players from playing in those competitions, along with their powers to impose sanctions, infringe EU competition rules to the extent that these rules do not contain material criteria and procedural modalities able to ensure their transparent, objective, non-discriminatory, and proportionate nature.  

• ISU: the CJEU emphasised the importance of ensuring that rules set by ISU do not unjustifiably restrict competition or abuse a dominant position. The CJEU found that, in the absence of safeguards to ensure transparency, objectivity, non-discrimination and proportionality, the ISU's regulations are deemed to be an inherent violation of competition law. The cornerstone of this lies in the ISU’s ability to unilaterally set market access conditions and define the scope and terms of competition within the market. Such power conferred upon the ISU gives them a clear advantage over its competitors, which carries detrimental effects for athletes, consumers, and broadcast audiences. The rules in question obstruct athletes' participation in events and consequently deny spectators and television viewers the chance to witness these competitions.  

Toolkit for competition compliance? 

In its guidance to the referring national court, the CJEU provides several indications as to how SGBs can comply with EU law, most notably in paragraph 151 of the ESL judgment. Consequently, rules on prior approval of sporting competitions and participation in those competitions will comply with EU law if:

• The rules are enacted in an accessible format, prior to their implementation.  
• The rules do not impose requirements on the organisation and marketing of alternative competitions and the participation of clubs and players other than those also applicable to competitions organised and marketed by the SGB itself.   
• The requirements set by these rules do not need to be identical but must not be impossible or unreasonably difficult to meet in practice by an entity which does not enjoy the same powers or quality of association as the SGB.  
  Sanctions should also be governed by the same criteria and should be proportionate, bearing in mind the nature, length, and scope of the alleged infringement. 
• These criteria and modalities must be capable of being subject to effective review and must be subject to transparent and non-discriminatory detailed procedural rules. 

The ISU judgment reinforces the conclusions of the ESL judgment and makes clear that to determine whether a measure by an SGB has the effect of preventing, restricting or distorting competition, it is critical to consider whether such measure is circumscribed by transparent, clear, and precise criteria which prevent it from being used arbitrarily. These criteria must promote equality of opportunity and merit, and be non-discriminatory, objective, and proportionate. 

What next? 

Yesterday’s judgments make clear that, while SGBs may establish rules regarding competition approvals, athlete participation, and corresponding sanctions, these must adhere to crucial procedural and substantive protections consistent with EU law. Consequently, organisations and SGBs will need to consider whether they need to undertake comprehensive reforms to ensure their regulatory frameworks provide these essential safeguards. 

Proponents of the ESL, including its founding clubs, have claimed victory from the judgments, though it’s worth noting that UEFA has done the same. The CJEU, on its part, clarified that its judgments should not be interpreted as an endorsement of the ESL initiative. Competition law has had its say – for now. The PR war wages on. 
 
Linklaters LLP is instructed by the Premier League to advise on aspects of the ESL proceedings.  

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