Thursday, December 15, 2022

Advocate General Rantos issues opinion in Super League ECJ case, deems soccer bodies' rules compatible with EU competition law

The European Court of Justice has just issued a press release (PDF) on the Advocate General's opinion in the European Superleague Company case (case no. C-333/21). It is the highest-profile antitrust case pending before Europe's top court by some measure. For instance, more than 20 EU and European Economic Area member states intervened at the July hearing in support of the European Sports Model that UEFA (the European soccer federation) and FIFA (the world soccer body that is organizing the ongoing World Cup) are defending--more than in any other case in the Court's history.

The so-called European Super League is--or was--an attempt to form a European-level breakaway league. It fell apart within about 48 hours of its botched launch in April 2021 due to resistance by fans, but three clubs--Real Madrid (a client of mine more than 15 years back), FC Barcelona, and Juventus FC--are still pursuing their vision. They obtained a preliminary injunction in Spain against sanctions that UEFA and/or FIFA might impose on clubs or players participating in their envisioned breakaway league, which was lifted a few months later. Within days of the complaint, and prior to counsel for any party other than the plaintiff side having entered an appearance, a Spanish trade judge referred the matter to the European Court of Justice in the form of a preliminary reference (i.e., asking the top EU court for guidance on how to interpret EU competition law in this context).

The European Commission supported the traditional European Sports Model against this legal attack through its written observations and various official statements, including a public statement after the renewal of a cooperation agremeent that an MEP close to one of the Super League clubs wrongly criticized.

At the July hearing, Advocate General Athanasios Rantos' first question to the breakaway side (represented by Clifford Chance and a sports-specialized lawyer) was why they claimed to be able to do a much better job at running a soccer competition but at the same time insisted on access to domestic leagues (such as Spain's La Liga) run by the existing pyramid of sports bodies. Clifford Chance made an essential facility type of argument, which came down to cherrypicking and failed to convince.

What is know now is that AG Rantos has answered every single one of the six referral questions in favor of UEFA and FIFA, finding no fault in their system of sanctions that are imposed unless a new competition is preauthorized by them. AG Rantos' opinion--which is not binding on the 15 judges of the Court's Grand Chamber, but has a high statistical likelihood of being more or less adopted--appears to give considerable weight to the specific nature ("specificity") of sport, which is recognized by Article 165 of the EU Treaty. I discussed the relevance of Art. 165 to the application of EU competition rules to the professional sports sector in a LinkedIn post shortly before the Luxembourg hearing.

According to AG Rantos, sports bodies are within their rights to require preauthorization of competitions, provided that certain criteria are met (objective, transparent and non-discriminatory rules). The "European Super League" has yet to formally request preauthorization. What AG Rantos recognizes in principle is that UEFA's and FIFA's rules that the "Super League" is challenging pursue legitimate objectives and are necessary, inherent, and proportionate to the pursuit of those objectives.

This is an across-the-board victory for UEFA and FIFA at this stage of proceeding. It is a bit of a procedural oddity that the latter declined to appear in the Spanish court, but very much did show up at the ECJ hearing. Be that as it may, UEFA has consistently defended its perspective, it has the support of a vast majority of EU Member States (and, therefore, the EU Council) and of the European Parliament, and is backed by the European Commission, especially by Vice President Schinas, who is in charge of Education and Culture, which includes sports policy.

While I want Clifford Chance to succeed with its EU antitrust complaints against Apple (where they represent Spotify and Epic Games) and Google, I find it odd that such a reputable firm would speak out publicly on this case--such as at a recent Madrid conference--while the AG was working on his opinion and with the judges not even having begun their deliberations yet. It's unorthodox at best and disrespectful at worst. There's a right way and a wrong way to excude confidence during the pendency of a case.

The leaders of the three hold-out clubs and the CEO of their marketing firm (A22 Sports Management) argued that the European Court of Justice could only find in their favor. They are now facing an uphill battle as the Advocate General assigned to this case fundamentally disagrees with them. The leaders of those clubs may have listened to the wrong advisers. And one of those clubs--Juventus FC from the Northern Italian city of Turin--is now in trouble over charges of false accounting, which resulted in the resignation of the entire board of directory of the publicly traded company that owns the team. It is rather rich for them to claim that they could do a better job at Financial Fair Play than the existing sports bodies.

I'm generally in favor of strong competition enforcement, but the rule of law is an equation that has two sides. The boundaries of competition law--and especially any carve-outs such as the specificity of sport that are the result of democratic rulemaking processes--must not be disregarded. The positions espoused by the "Super League" and Clifford Chance are ignorant. You can't treat a non-profit soccer body like the world's richest corporations with their gatekeeping power over digital markets when the unique nature of sport and its societal dimension are explicitly recognized by the EU's de facto constitution. Selective ignorance gets you nowhere in antitrust law.

In the U.S., there is no statutory equivalent to Art. 165 TFEU. That's why I absolutely agree with the key lesson from NCAA v. Alston, which is that only procompetitive justifications can be considered under a rule of reason. Just yesterday I shared observations on a certain divergence of U.S. and EU antitrust laws. Today--while not yet a final ruling--is another example. I applaud AG Rantos for having properly taken into consideration the European statutory framework, just like I believe the U.S. judges who ruled against the NCAA reached the appropriate conclusions under the Sherman Act.

It would now make a lot of sense for the "Super League" to negotiate a settlement enabling its founder clubs to rejoin the soccer family on an amicable basis. Given that Clifford Chance has plenty of other fee-earning opportunities, especially those way bigger tech competition cases they are working on, they shouldn't have a conflict of interest and just tell their clients that they are on the wrong track.