The European Court of Justice Kicks in: A Game-Changing Showdown in the Super League Case

Background

In April 2021, various professional football clubs sought to initiate a revolution against the football system as established and controlled by UEFA and FIFA. Notably, clubs such as Real Madrid, FC Barcelona, and Juventus Turin attempted to establish a new international football competition project known as the “Super League” which would imply the withdrawal of the clubs involved from the UEFA Champions League (UCL). They formed the European Super League Company (ESLC), a privately governed company established in Spain. This initiative aimed to challenge the dominance of UEFA and FIFA. The Super League envisioned a new European football competition, including 12 to 15 professional football clubs as “permanent members” and an as-yet-undefined number of professional football clubs as “qualified clubs,” selected through a predetermined process.

Not surprisingly, UEFA and FIFA cried foul and threatened to ban the Super League clubs and their players from all UEFA/FIFA competitions, including European and World Championships. The legal basis for these threats rested on the statutes of UEFA and FIFA that preclude competing competitions. While many other football clubs, including Bayern München and Borussia Dortmund, abandoned the Super League project in light of the threats and risks involved, the Spanish clubs decided to sue UEFA and FIFA, alleging an abuse of dominant market position.

Issues and Legal Assessment

The Commercial Court of Madrid, asked by the claimants to determine whether UEFA’s and FIFA’s behavior constitutes an infringement of competition law, referred the case to the European Court of Justice (ECJ) and sought clarification on whether UEFA’s and FIFA’s actions comply with European law, in particular EU competition law (Articles 101 and 102 TFEU), and certain fundamental freedoms provided under the TFEU (Articles 45, 49, 56, and 63 TFEU).[1]

The ECJ considers the organization of football competitions and the exploitation of their media rights to be an economic activity.[2] Even though football sporting events are ruled, controlled, and sanctioned by associations such as UEFA and FIFA, the associations are also competitors in the organization of such events. Consequently, EU competition rules apply. The case involves a question of whether Articles 101 and 102 TFEU preclude rules set by the specific football associations, UEFA and FIFA, which would designate them as original owners of rights for the football competitions under their jurisdiction.

As established in the CJEU’s Tetra Pak judgment[3], a company that has a market share exceeding 90% is considered to be market dominant. According to the Commercial Court of Madrid, UEFA and FIFA collectively hold a 100% market share in international football competition events, indicating an inherent monopoly position. Operating as a monopoly, UEFA and FIFA and dictate the competition’s regulations and retain authority over sanctions and disciplinary measures, leaving competitors with no possibility to challenge these regulations. This dominance represents a monopoly position in the market which could create a conflict with Article 102 TFEU. But because of various specific characteristics of professional football competitions there is a generally accepted principle to subject the organization to, and conduct, common rules in order to guarantee homogeneity and coordination of those competitions. However, the UEFA and FIFA statutes and the corresponding application of sanctions could represent an insurmountable obstacle to competition, so that the entry of new competitors in national and international football competitions and their commercial exploitation would be completely excluded. According to the statutes, football clubs and their players who joined the Super League would be excluded from major international competitions, such as the European Championship, the World Cup, and the Olympic Games, so that the application of the statutes could be considered disproportionate. The threatened sanctions, including potential exclusion from international football matches, create a clear deterrent effect, resulting in an unjustified and disproportionate restrictive impact on competition.

Additionally, Article 67 of the FIFA statutes holds economic implications, as FIFA maintains exclusive exploitation rights. The rights include, in particular, property, audiovisual recording and broadcasting, multimedia, and promotion and marketing rights, as well as intellectual property rights such as trademark rights and copyrights. The allocation of these rights is absolute and applies without any time limit.

The ECJ clarified that such rules are not inherently prohibited as they respect variations in property ownership systems across member states. However, it emphasized concerns when the rules exclusively dictate the commercial exploitation of rights, potentially violating competition law. The court noted that the rules, which grant UEFA and FIFA exclusive control over rights, could restrict competition, affect market functioning, and harm consumers. According to the court, any justification for such rules must be thoroughly examined by considering efficiency gains, fair profit distribution, and indispensability. Ultimately, the ECJ held that while rules designating ownership are not prohibited, exclusive powers over commercial exploitation require justification under competition law, subject to fulfilling specific conditions that UEFA and FIFA do not meet. Accordingly, they are abusing their dominant market position.

Since UEFA and FIFA, as companies with a dominant market position, make the entry of new competitors dependent on prior approval without the existence of transparent, non-discriminatory, objective, and proportionate criteria, they are acting contrary to Article 101 TFEU and therefore unlawfully. In addition, due to the paramount importance of the media, control over commercial exploitation is likely to restrict competition. However, these restrictions must be based on transparent, non-discriminatory, objective, and proportionate criteria, which the statutes of UEFA and FIFA do not meet. Accordingly, they are abusing their dominant market position.

The ECJ also considered whether there were violations of fundamental freedoms, including, in particular, the freedom to provide services (Art. 56 TFEU), the free movement of workers (Art. 45 TFEU), and the freedom of establishment (Art. 49 TFEU). According to the ECJ, the licensing, control, and sanction provisions are also arbitrary in nature and constitute unjustified restrictions on the freedom to provide services (Art. 56 TFEU). As long as UEFA and FIFA are responsible for football on the world and European levels, and also pursue in parallel various economic activities related to the organization of competition, there have to be rules to ensure a transparent, objective, non-discriminatory, and proportionate competition.

Conclusions

Under current laws, UEFA and FIFA are facing difficulties while they are trying to prevent the creation of the Super League or similar football tournaments. To exert control over access to football competitions, UEFA’s and FIFA’s statutes must undergo changes to ensure transparency and fairness for competitors. Non-compete provisions must be proportionate and limited to what is absolutely necessary for the existence of the UEFA/FIFA competitions. If the statutes can legally reflect these requirements, UEFA and FIFA might be able to maintain control over competing projects. But this is not a given. The ECJ held that UEFA’s and FIFA’s rules regarding media rights exploitation may hinder the exploration of new, potentially innovative, and interesting competitions. New and innovative competition projects could improve the financial situation for professional football clubs and offer viewers a more diverse range of options. And this is not just a theory. The Kings League is highly successful with an influencer powered football competition (7 vs. 7 players, two times twenty minutes games) in Spain, and the roll out in Europe has just begun. Traditional soccer is losing ground with a young audience for a number of reasons, among others the lack of innovation of the rules of the game. NFL shows how innovation continuously improves a product, and American football is increasing its fan base in Europe, with impressive audience ratings on TV and a strong presence in social media.

The ball is now in the court of UEFA and FIFA to reconsider their rules and decide whether to impede or embrace new sporting events. As of now, the challenge of their dominance is active, and their unproportionate threat against the defecting clubs is neutralized. UEFA and FIFA must comply with EU laws if they want to maintain the status quo, and they will have to embrace innovation in order for their tournaments to remain competitive. The pressure is on, and how it will play out is at least an undecided game.

[1] Summary of the request for a preliminary ruling pursuant to Article 98(1) of the Rules of Procedure of the ECJ, Case C-333/21.

[2] The following paragraph is a summary of the European Court of Justice ruling, ECJ Case C-333/21.

[3] General Court, Case T-83, 91, para. 109.