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Introduction<\/span><\/b>\u00a0<\/span><\/p>\n Advocate General Emiliou delivered three interlocking Opinions concerning decisions of football governing bodies. Two of these cases were brought to challenge elements of the FIFA Football Agent Regulations (Case C-209\/23, <\/span>RCC Sports<\/span><\/span><\/a> and Case C-428\/23, <\/span>Rogon<\/span><\/span><\/a>). The third concerns a decision of the Portuguese Competition Authority which had found that a no-poach agreement by football clubs during the Covid pandemic restricted competition (Case C-133\/24, <\/span>Tondela<\/span><\/span><\/a>). The Opinions are relevant not only for the sports sector but more generally for an understanding of basic principles of EU competition law. This blogpost focuses on the manner in which the Opinions frame the justifications available to undertakings and associations of undertakings whose conduct infringes competition law and internal market law.<\/span>\u00a0<\/span><\/p>\n Some fundamental premises should be stated at the outset (<\/span>RCC Sports<\/span><\/i>, paras 29-33). It is lawful, as a matter of EU Law, for a private association (like FIFA or a national football association) to set up rules governing its activities and those of economic actors affiliated to it. However, if these rules harm competition, then Article 101(1) TFEU applies; and if they have an adverse effect on the internal market, so do the free movement provisions (e.g. if the rules hamper the provision or receipt of services contrary to Article 56 TFEU). There is no automatic immunity for anticompetitive rules issued by sport governing bodies. However, on a case-by-case basis, associations may justify restrictive regulations. A brief remark on the way the theory of harm is articulated in these Opinions will be helpful first before discussing justifications.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Theories of Harm<\/span><\/b>\u00a0<\/span><\/p>\n In <\/span>RCC Sports<\/span><\/i> and <\/span>Rogon<\/span><\/i>, the rules (e.g. those limiting agent remuneration) may have an adverse effect on competition in two markets: the market for the services provided by agents (where competition among agents may be distorted) and the market for the transfer of players (where competition among football clubs may be distorted). The AG suggests that the test to determine if such rules are anticompetitive rests on asking whether they limit \u2018the ability and incentive of those market operators to compete against their rivals\u2019. When it comes to competition between agents, the advice is to consider whether the rules limit agents\u2019 incentives to provide services or decrease their incentives to invest in improving their services. As regards competition between football clubs, the question is if the rules prevent clubs from offering higher fees to secure their services (<\/span>RCC Sports<\/span><\/i>, paras 65-67).<\/span>\u00a0<\/span><\/p>\n Looking at these same rules from an abuse of dominance perspective, they serve to leverage one\u2019s dominance in the market for the organization of football competition. The abuse could be exploitative by imposing unfair trading conditions or exclusionary insofar as they restrict market access to agents and thus limit competition in the two markets. (<\/span>RCC Sports<\/span><\/i>, paras 114-142)<\/span>\u00a0<\/span><\/p>\n Note that there is no mention of consumer welfare. Under Article 101 and under a theory of exclusionary abuse, the harm is to the competitive process demonstrated by showing a reduction in allocative or dynamic efficiency. Under an exploitative abuse perspective, the harm is to the economic actors whose welfare is diminished, a distributive justice consideration.<\/span>\u00a0<\/span><\/p>\n In contrast, the analysis of no poach agreements in <\/span>Tondela<\/span><\/i> is puzzling. At first, the AG suggests that conduct can restrict competition by object when the labour side of the market is harmed. No poach agreements mean that employers do not compete to offer better conditions for workers, resulting in a \u2018suboptimal allocation of human resources.\u2019 (<\/span>Tondela<\/span><\/i>, para 52)\u00a0 Up to here the analysis is comparable to that in\u00a0 the football agents cases: does the agreement harm the other side of the market by reducing efficiency?<\/span>\u00a0<\/span><\/p>\n However, when looking at the specific facts of the case (i.e. that the no poach agreement was a temporary measure designed to make sure that for the final stretch of the football season rich clubs did not go on a shopping spree of players from poorer clubs) the AG suggests that the agreement would be seen as pro-competitive because it prevented the richest clubs from acquiring all the best players and thereby made the remainder of the football season exciting. If football transfers had been allowed, some clubs would definitely go down while the rich ones would be at the top of the table, having bought all the talent. A predictable league would harm the interests of supporters in watching matches, of sponsors in funding football clubs, and of broadcasters to pay to show matches. This might have led to reduced investments and \u2018a lose-lose situation for clubs and players.\u2019 (<\/span>Tondela<\/span><\/i>, para 65) Furthermore, the AG criticises the competition authority for not providing a meaningful answer to questions about the harm caused to consumers (<\/span>Tondela<\/span><\/i>, para 69). This leaves me a bit puzzled as to what the correct theory of harm should be in cases involving the exercise of monopsony power. Is it sufficient to show harm to the labour side of the market? (A partial equilibrium analysis.)\u00a0 Or must one look at the overall impact on both workers and economic actors on the other side of the market? (A general equilibrium analysis.) Or should one trace any anticompetitive effects to final consumers? For what it\u2019s worth, in my view it should suffice to prove harm to one side of the market and there is no need to trace this harm back to final consumers or to carry out some sort of overall welfare standard by which all effects are weighed up. We have Article 101(3) for an holistic analysis. More generally, a restriction of competition is about finding harm in a relevant market and when Article 101(3) is engaged, it is countervailing effects on that market which matter. We don\u2019t do total welfare in EU competition law.<\/span>\u00a0<\/span><\/p>\n Recall that challenges to the agent regulations were also brought under Article 56 TFEU on the basis that they restrict the freedom to provide services. Article 56 applies to a sports federation because they are in a position to impose on a group of individuals (in casu, football agents) rules that adversely affect their capacity to exercise their fundamental freedoms. Triggering this prohibition is much simpler than applying competition law. There is no need to define markets, find market power or show anticompetitive effects.\u00a0 It suffices to show that the rules make it more difficult for service providers and recipients to, respectively, provide and obtain services outside their jurisdiction. Arguably this is justified because the economic power of a football association where membership is compulsory is such that one can presume that its rules harm economic efficiency (<\/span>RCC Sports<\/span><\/i>, paras 144-145).<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Justifications\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n There are four pathways that may be pursued by undertakings who seek to justify anticompetitive practices. The AG discusses three of\u00a0 these fully and brings some novelties to each. To foreshadow the analysis, note that since multiple EU rules may be applied to challenge the same conduct, it is important that the justifications that may be provided are consistently applied irrespective of how the case against the defendant is framed.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Purely sporting exclusion<\/span><\/i>\u00a0<\/span><\/p>\n The first is to claim that the rule is purely about sport. This excludes the application of EU internal market and competition law. According to the AG this rule is an application of two principles (<\/span>RCC Sports<\/span><\/i>, paras 17 to 28): (1) that EU internal market and competition law are concerned with economic activities and a pure sporting rule is not directly linked to an economic activity and (2) even if there is some indirect effect on economic activities, this is de minimis. These two legal foundations do not really work well as principles: the second contradicts the first. The AG is right in saying that some regulatory choices should not require a costly discussion about their compatibility with EU Law (e.g. the number of players that each team may field). However, this is a category that is difficult to define ex ante as there may be settings when we do want to test a rule\u2019s compatibility with the internal market even if at first blush it looks like the rule is only about sport. A better approach might be to create safe harbours where it is presumed some rules do not offend EU Law.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Albany International<\/i><\/p>\n The second (of which the <\/span>Albany International<\/span><\/span><\/a> strand of case-law is the sole exemplar) is to claim that there is more to life than competition because the EU ranks other things more highly. On the facts of <\/span>Albany International<\/span><\/i>, collective bargaining between workers and employers when this concerns working conditions falls outside of Article 101 and no explicit trade-off is necessary. We tolerate anticompetitive effects in the name of protecting workers\u2019 rights to bargain collectively, irrespective of the consequences this has for economic welfare. Somewhat bizarrely, the AG seems to subsume this precedent under sporting rules (<\/span>RCC Sports<\/span><\/i>, footnote 20). With respect, this is not right. The <\/span>Albany International<\/span><\/i> judgment creates a self-standing rule of exclusion. It is a generous exclusionary rule\u00a0 because all that has to be shown is that the \u2018nature and purpose\u2019 or the agreement justifies the exclusion of Article 101(1) (See <\/span>Albany International<\/span><\/i> para 60). However, since proportionality is a general principle of EU Law, it probably should also apply to this exclusion.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n What remains open for discussion is what other public interests can benefit from this exclusionary rule. What about, for example, Article 11 TFEU, requiring that environmental considerations be integrated in the EU\u2019s policies?<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n The Wouters defence<\/i><\/p>\n In <\/span>Wouters v General Council of the Dutch Bar<\/span><\/span><\/a>, the Court found a third way to justify restrictive agreements. AG Emiliou summarises the standard (which he refers to as the <\/span>Meca Medina<\/span><\/span><\/a> test, a judgment where <\/span>Wouters<\/span><\/i> was applied to FINA\u2019s anti-doping rules) by reference to <\/span>Superleague<\/span><\/span><\/a>: (i) they are justified by the pursuit of one or more legitimate objectives in the public interest which are not per se anticompetitive; (ii) the specific means used to pursue those objectives are genuinely necessary for that purpose; and (iii) even if those means prove to have an inherent effect of, at the very least potentially, restricting or distorting competition, that inherent effect does not go beyond what is necessary, in particular by eliminating all competition.\u201d (<\/span>RCC Sports<\/span><\/i>, para 49). In discussing this justification, the AG makes a number of points worthy of comment, by which the AG provides safeguards so that this justification does not become a \u2018Get Out of Jail Free\u2019 card for self-governing bodies (<\/span>Rogon<\/span><\/i>, para 41):<\/span>\u00a0<\/span><\/p>\n What all of these points have in common is that they align the <\/span>Wouters<\/span><\/i> defence to the analysis of justifications carried out when Member States justify restrictions of free movement. <\/span>As I argued many years ago<\/span><\/span><\/a>, <\/span>Wouters<\/span><\/i> is best seen as an application of the so-called mandatory requirements case-law in internal market law to EU competition law.<\/span>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Article 101(3) TFEU<\/span><\/i>\u00a0<\/span><\/p>\n The fourth pathway to escape Article 101 is found in Article 101(3). There is ample literature debating the scope of Article 101(3). The most through account today is Or Brook\u2019s <\/span>Non-Competition Interests in EU Antitrust Law<\/span><\/span><\/a> (Cambridge, 2022). The AG Opinion makes significant points with respect to the first and second conditions of this provision.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n The first condition is that the agreement \u2018contributes to improving the production or distribution of goods or to promoting technical or economic progress.\u2019 According to the AG this includes \u2018benefits of a non-economic nature, provided that they have tangible positive repercussions on the relevant market or on markets which are strictly connected to them.\u2019 (<\/span>RCC Sports<\/span><\/i>, para 93).\u00a0 He goes on to explain that if a rule restricting competition serves to prevent the abusive exploitation of young athletes, then this is a positive effect that counts under Article 101(3) because it improves the functioning of the \u2018football ecosystem\u2019.\u00a0 This wide approach is defended in four ways (<\/span>RCC Sports<\/span><\/i>, paras 88-92, but reshuffled in this list): (i) it is consistent with precedent; (ii)\u00a0 there is no need to quantify the positive effect, but the association has to have adequate reasons and evidence that there is a real positive effect (in passing the AG criticises the <\/span>2004 Guidelines on Article 101(3)<\/span><\/span><\/a> as being too strict); (iii) the concept of \u2018economic progress\u2019 is the lynchpin on which non-economic gains may be pleaded and this term is not a synonym of economic growth; (iv) this interpretation is consistent with the defences available in the case-law on free movement rules and a comparable framework of analysis is logical, he says, to avoid paradoxical results. (Observe the similarity of the interests protected with the list in the <\/span>Wouters<\/span><\/i> defence above.)<\/span>\u00a0<\/span><\/p>\n The second condition is that \u2018consumers\u2019 (or users if you look at e.g. the French, Italian and Dutch versions of the Treaty) secure a fair share of the resulting benefits. The AG says that while football supporters are clearly included, other categories of users count. Following <\/span>\n
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