FIFA v Agents – the new FIFA Football Agent Regulations under scrutiny

Football agents play a crucial role in the mechanics of professional football which is reflected in their profits: in 2022 alone, agents generated USD 622m worth of fees for facilitating international transfers. Recently, FIFA introduced a new regulation in the form of the FIFA Football Agents Regulations (FFAR) which among others seeks to cap the fees received by agents.

We take a look at the new regulations, the heavy criticism and in particular the reasons why a regional court in Germany recently stated that the FFAR creates a “hardcore cartel in the form of a price or purchasing cartel”.

Overview of the new FIFA Football Agent Regulations 

The FFAR’s stated aims are to protect the interests of both players and clubs, ensuring transparency, fair representation, and ethical conduct throughout the transfer process. Its key elements are:

• Licencing requirement for agents: a licence is only granted upon application via the newly established FIFA Platform after successfully passing the FIFA agent exam and the payment of the annual licence fee (USD 600 in 2023).
• Multiple representation: is now prohibited with the only exception being the representation of both a player and the engaging, i.e. the buying club.
• Fee cap: (i) agent acting for the engaging club or player: 3 or 5% of the player’s annual remuneration; (ii) permitted multiple representation: 6 or 10% of the player’s annual remuneration; (iii) agent acting for the releasing, i.e. the selling club: 10% of the total transfer compensation.
• Market monitoring system: agents need to disclose details about their ongoing business conduct via a new market monitoring and clearance system to allow the enforcement of the FFAR.  

While the new licence regime already entered into force on 9 January 2023, the core substance of the FFAR will become effective on 1 October 2023. 

Various legal challenges in the EU and UK

The FFAR immediately drew heavy criticism by agents and various legal actions have been brought before the Court of Arbitration for Sport (CAS), as well as national courts in the Czech Republic, Germany, the Netherlands and Spain to challenge the compliance of the FFAR with EU competition law.In addition, different agencies have most recently commenced arbitration proceedings to challenge the implementation of the FFAR in the UK. 

However, while final decisions in all these cases have not yet been handed down, the Regional Court of Dortmund in Germany recently issued an interim injunction against FIFA and the German Football Association (DFB), effectively prohibiting the implementation of the FFAR in Germany. 

Competition law as the main battlefield and the Regional Court of Dortmund’s unexpected move

Most of these cases hinge on the question as to whether the FFAR is subject to EU competition law. FIFA argues that the FFAR is exempted from the application of competition law because the regulation shall “ensure integrity and functioning of the transfer market, sporting competition and the professional football generally”. It is further claimed that both FIFA and the DFB specifically in Germany are responsible for regulating the football agent market due to negative developments such as unreasonably high agent fees and non-transparent and unethical agent behaviour. 

While the associations’ defence is based on the application of the well-known Meca-Medina test established by the European Court of Justice (ECJ), the Regional Court of Dortmund explicitly rejects the applicability in its decision (unlike several other courts). 

According to the Meca-Medina test, measures in the form of sporting rules are exempted from competition law if (i) the measures serve a legitimate purpose, (ii) they are necessarily related to the pursuit of such purpose, and (iii) their restrictive effects on competition are proportionate. However, according to the German court, the FFAR does not qualify as sporting rules because it relates exclusively to economic activities. The regional court further concludes that even if the Meca-Medina test was applied, the FFAR would fail to fulfil the first two criteria. 

Further, the court also states that an exception to Article 101 TFEU cannot apply based on the principle of the autonomy of sports associations. While associations can regulate their internal affairs, according to the court, this right does not cover the regulation on third parties outside of the association. 

After analysing compliance with the competition rules, the court considered the key elements of the FFAR to be a so-called hardcore infringement of competition law by object pursuant to Article 101 TFEU given that all clubs would be bound by these rules. Further, the court saw strong arguments for an abuse of dominance by the associations pursuant to Article 102 TFEU. Ahead of the FFAR coming into force, the court issued an interim injunction to prohibit the implementation and enforcement by FIFA and the DFB.

What happens next?

In the meantime, FIFA has filed an appeal against the decision of the Regional Court of Dortmund with the Higher Regional Court of Düsseldorf. Accordingly, the pending cases before the CAS and the ECJ gain even more importance as potential precedents: 

• It is expected that the CAS will provide a ruling by the end of July 2023, specifically addressing the compatibility of the FFAR with EU law. So far, the CAS has applied EU competition law (and the European fundamental freedoms) only in a few cases and has (until now) always declined to find an infringement. 
• The timeline for the ECJ’s decision is unclear. On average, it takes c. 15-18 months to obtain a decision from the ECJ on a preliminary ruling request. In Piau vs. Commission, the ECJ found that implementation of FIFA’s 2008 agent regulations was compliant with EU competition rules because the licence requirement would ensure objectivity and transparency. However, it remains uncertain how the ECJ will rule here considering that the FFAR goes far beyond the 2008 FIFA agent regulations. 

The FFAR proceedings are only one piece of a wider dispute between football associations and agencies. The compliance of national rules with EU competition law has already been challenged, e.g. in Germany. The German Federal Supreme Court has recently referred an appeal on the DFB’s 2015 agent regulation to the ECJ in June 2023. Since the FFAR is only applicable to all agency contracts with an "international dimension", the respective national regulations remain applicable – with the national associations being obliged to enact regulations consistent with or even stricter than the FFAR. Against this wider picture, it would not be a surprise to see more legal actions in the future.

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