One of the most discussed topics among the sports lawyers currently is the disputed compliance of UEFA Financial Fair Play regulations and the EU competition law regime. UEFA claims that EU officials have approved the document, with competition commissioner Joaquin Almunia lending it his support. UEFA European Football Federation representatives have declared all along that Financial Fair Play meets the requirements set by European Union law. However, is it in fact so?
Can football be at all analysed under competition law provisions?
Rational financial policy in the more general sense, living within one’s means – these and similar objectives have been pursued by the European Federation of Football when adopting the Financial Fair Play. Failure to adhere to the provisions may result in sanctions (discussed in the,,previous article), but the question remains – is UEFA is within the bounds set by EU competition law?
Treaty on the Functioning of the European Union guarantees the proper functioning of competition law by the operation of Articles 101 do 109. For the present considerations focus will be given to Article 101. It prohibits, as incompatible with the internal market, all agreements, decisions and practices between undertakings and associations of undertakings ‚which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market’. Article 101 is applicable to companies – that is economic entities engaged in economic activities, regardless of their legal status (ECJ rulings in cases C-41/90 Macrotron and C-67/96 Albany). Given the way football clubs and UEFA operate – most definitely for-profit – they are economic entities within the ambit of EU competition law and their activities must be in compliance with Article 101. ECJ rulings in cases C-325/08 Olympique Lyonnais and C-309/99 Wouters are very significant here. These have established that only such anti-competitive activities that are necessary to achieve the required purpose and are an integral part of of reaching it will be tolerated. Whatever goes beyond this framework will be considered invasive with respect to market participants. Also, Article 101 (3) lists situations giving where restrictive methods are permitted. These include, among others, improved production or distribution of goods. All other activities will be void under Article 101 (2).
Now is the right moment to consider the existence of the ‚specificity of sport’ concept. Established by the ECJ in the case Case C-36/74 Walrave, it argues for a slightly different treatment of sport within the EU law. The Court of Arbitration for Sport in the cases FC Pyunik and Matuzalem held that the analysis of measures introduced in football has to be carried out not only in terms of black letter law but also with due consideration for the particular nature and needs of football. However, the ECJ ruling in case C-519/04 Meca-Medina - establishing the primacy of EU law over the regulations of particular sport associations and bodies, in effect limiting the scope of tthe specificity of sport principle – it can be said that EU competition law will be applicable to a) clubs belonging to national football associations which are UEFA members, b) UEFA itself. This is due to significance and scope of the FFP – the regulations will have a real impact on the rapidly growing trade sector, namely the football market. Such a conclusion suggests that the FFP – given its status as a decision within the relevant association) lends itself to an EU competition law analysis analysis and, subsequently, can be contested under Article 101.
Daniel Striani and EU Commission complaint
The complaint lodged by Jean-Louis Dupont (formerly representing Marc Bosman in the famous case which completely changed the EU legal landscape) on behalf of the Belgian football agent Daniel Striani illustrates the possible ways in which EU competition law provisions can be used to point out the current misgivings of the FFP regime. It argues that Financial Fair Play will have a negative impact on trade between the clubs – and thus adversely affect the free movement of capital and people between member states. This in turn will affect the earnings of Mr Striani. The EU legal order has always placed a particular emphasis on the protection of four basic freedoms; the complaint contends that two of them are violated by he FFP. It is argued that the objectives pursued by the European Federation of Football when adopting the Financial Fair Play could have been achieved in another way – if so, then such state of affairs causes incompatibility of the regulations in question with EU regulations, within the meaning of ECJ rulings in Olympique Lyonnais and Wouters. It is submitted that for the complaint to be successful it will be of vital importance to prove the absence of any pro-competitive benefits the measures may have, according to the list contained in Article 101(3). However, it is clear that in a situation where a party is able to determine the application of competition law to measures such as Financial Fair Play, the assurances given by UEFA to its member associations regarding the apparent legal ‚bulletproof vest’ can turn out to be worthless. The European Court of Justice has accepted the arguments of the plaintiff in its Bosman ruling, which has proved its independence from any political pressure. Nothing indicates that something else would be likely to happen here.
At this particular junction in time it can not reliably be predicted whether the European Commission – which acts on behalf of the applicant in his proceedings under Article 101 – will be willing to undermine their own assurances given to UEFA only a few years ago. One can also find doubtfulthatan action lodged by an individual would prove sufficient incentive to restructure the entire complex mechanism of Financial Fair Play. However, it is hereby submitted that the development of Striani’s proceedings should be observed and followed carefully. Regardless of its outcome, it has already established a precedent which may become a contribution towards changing the existing status quo.