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Luca Ferrari | Does Uefa have the right to punish breakaway ESL clubs?

Luca Ferrari, head of the global sports practice for legal firm Withersworldwide, examines whether Uefa is within its legal right to punish the three clubs that have refused to repent their involvement in the breakaway European Super League

Luca Ferrari

The pandemonium produced by the startling, and rather clumsy, announcement of the European Super League (ESL) still resonates across the European football industry. Further particulars continue to emerge about the genesis and development of the project (according to the New York Times, Fifa knew of and somehow silently endorsed the project before reviewing its position when squarely confronted by Uefa).

Football is a business, no doubt about it, and a big one too. But at the same time it is a sport and so a very special kind of business which enjoys an exemption from the application of EU competition law. It is therefore interesting to consider the legal implications that will play a role in the contraposition between established, official football, governed by Fifa and Uefa, and an outsider, a challenger in the form of a private league.

From a legal perspective, it pretty much comes down to this: can a sports governing body prohibit its members (players and clubs) from playing outside its control, i.e. without its authorisation? Can Uefa ban ESL clubs from the Champions League and their players from the European Championship? And now, after the sedition has failed, can it command an apology from Barcelona, Real Madrid and Juventus? Can it punish them?

The ESL’s brief moment

The ESL was announced at midnight on April 18. Participation in the breakaway league was reserved to fifteen teams, twelve founding clubs and three further permanent members, to be joined each season by five qualifiers. As we know, the announcement prompted protest and fierce opposition across Europe, from media, fans, politicians, football pundits and, quite obviously, Uefa. The football establishment was quick to describe it as a putsch designed to relegate the Uefa Champions League and top domestic leagues to ‘second-tier’ football, undermining the traditional pyramidal structure of the game.

Opposition from football’s governing bodies by means of fresh anti-Superleague regulation, and warnings that players participating in the breakaway league would not be eligible to participate in international competitions have raised many eyebrows among competition lawyers. Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) have been wielded, questioning the legitimacy of the ESL.

EU antitrust rules

Antitrust law often plays an important role in sport. In 2006 (Meca-Medina and Igor Majcen v. Commission of the European Communities) the Court of Justice of the European Union (CJEU) explained that sporting rules and decisions whose effects are restrictive of economic competition, would be deemed compatible with Article 101(1) of the TFEU only where such effects are inherent in the pursuit of “purely sporting interests” and are “limited to what is necessary to ensure the proper conduct of competitive sport”. Do these qualifications also prohibit breakaway leagues?

The Greek Motorcycling Federation (Motosykletistiki Omospondia Ellados (MOTOE)) v Elliniko Dimosio is a good case in point. Here, the CJEU ruled in favor of Greek motorcycling federation MOTOE, which was refused the authorisation to organize motorcycle competitions by ELPA, the national representative of the International Automobile Federation (FIA). The CJEU found that ELPA occupied a dominant position for the purposes of (what is now) Article 102 of the TFEU and further clarified that sports governing bodies, acting both as regulators and undertakings, must exercise their powers and rights in relation to deciding which sports events should take place, with due respect to anti-trust laws, in a transparent, reasonable and impartial manner.

Therefore, following MOTOE we can broadly say that a sports governing body like Uefa is exempt from European competition law if and to the extent it exercises its regulatory power reasonably and proportionately to safeguard certain key aspects of the sport competition. But looking at the rules adopted and decisions taken or threatened against clubs and players in reaction to the ESL project, would this be the case?

The club badges of the three remaining clubs in the European Super League (Photo by Visionhaus/Getty Images).

The power to punish

In 2017 the European Commission decided that International Skating Union (ISU) rules imposing severe penalties on athletes participating in speed skating competitions not authorised by the ISU were in breach of EU antitrust law and ordered the ISU to change those rules.

On December 16, 2020, the CJEU’s General Court rendered its judgment in the ISU case. In essence it found that the European Commission was correct in considering that the ISU’s eligibility rules were disproportionate in so far as they went beyond what is necessary to safeguard legitimate sports objectives, such as, in the words of the EU Commission, the protection of the integrity and proper conduct of sport, or the health and safety of athletes.

As recently as January 2021, a court in Nuremberg, Germany, referring to the ISU case, ruled that the German Wrestling Federation was not allowed to prevent athletes from taking part in international competitions while participating in the “German Wrestling League”.

In this context, on April 20, 2021, a commercial court in Madrid rendered a preliminary ruling (“Pieza de Medidas Cautelares”) which, in a nutshell, states that Fifa, Uefa and the national football associations must not apply any disciplinary sanctions or adopt “any measure that prohibits, restricts, limits or conditions in any way” the creation of the ESL. The Spanish court reached such a preliminary decision on the basis of the aforementioned Articles 101 and 102 of the TFEU.

According to the court, should Fifa and Uefa apply the measures they announced against the clubs and the players, they would be abusing their regulatory power as well as their market dominance. The court went on to say that the mere presence, in the Fifa and Uefa statutes, of sanctions against clubs and players who form or take part in competitions not organized by those governing bodies would constitute “an insurmountable barrier for those wishing to enter the relevant market”. The preliminary ruling should prevent Fifa and Uefa from acting until a decision is issued at the end of ordinary legal proceedings.

Compromise?

Two days before the Madrid ruling, Uefa and other European governing bodies released the following, unambiguous joint statement: “As 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.”

Two weeks later, nine of the ESL founding members apologised to Uefa, pleaded for mercy, and offered a €15m ($18.3m) contribution to grassroots football, further contributions from their next participation in Uefa competitions and agreed on heavy penalties in case of future breaches. Alexander Čeferin welcomed their “contrition and future commitment to European football”.

Juventus, Real Madrid and Barcelona have refused so far to repudiate the ESL and are braced for Uefa’s wrath.

Where this does leaves us? Perhaps a political decision and a clever compromise will eventually be reached. But the underlying tensions need to be addressed: elite clubs invest huge amounts of money creating a huge entertainment spectacle and despite their contrition, they want to be running it as well. Having again nipped the ESL in the bud, Uefa will have to think of a response and a strategy. Both need to be lawful.

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