Sport and Competition Law
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1 Sport and Competition Law Recent developments and unfinished business Dr. Ben Van Rompuy UCL Faculty of Laws, CLES - 10 October 2012
2 1. Introduction 2. EU competition law and sport - uneasy bedfellows 3. Decisional practice European Commission 4. Recent developments and challenges ahead 5. Conclusions
3 1. Introduction
4 Modernization of EU antitrust enforcement in Articles 101 TFEU (concerted practices) & 102 TFEU (abuse of dominant position) 1. Procedural: decentralization since More economic approach + 3. New conception of the objectives
5 Since late 1990s: Our aim is simple: to enhance economic efficiency and promote consumer welfare Scope and interpretation of Article 101 TFEU: goals pursued by other Treaty provisions can be taken into account to the extent they can be subsumed under the four conditions of Article 101 (3) TFEU = exit non-efficiency considerations?
6 Commission s narrow interpretation of Article 101(3) TFEU does not put matter to rest: Purist approach marginalizes obfuscates the role of non-efficiency considerations in the application of Article 101 TFEU
7 2. EU competition law and sport: uneasy bedfellows
8 Application EU (competition) law to sport CJ: Walrave (1974), Donà (1976) Issue gathered momentum mid-1990s Commercialization of sport Bosman judgment (1995) Amsterdam Declaration (1997) Social significance of sport Particular characteristics of amateur sport
9 Helsinki Report (1997) the sporting activity strictly speaking >< economic activities generated by that sporting activity Nice Declaration (2001) (EU) must in its action under the various Treaty provisions, take account of the social, educational and cultural functions inherent in sport and making it special Meca-Medina judgment (2006) Dismisses the notion of a purely sporting exception
10 White Paper on Sport (2007): strategic guidance Sporting rules: Wouters test Revenue-generating activities related to sport:?? e.g. legitimacy of joint selling media rights Lisbon Treaty: Article 165 TFEU Sport as supporting EU competence Direct EU action must take into account the specific nature of sport, its structures and its social and educational function
11 3. Decisional practice
12 How to give weight to the specific characteristics of sport and its societal function under EU competition law?
13 UEFA Financial Fair Play rules White Paper on Sport (2007): important outstanding legal issue Communication (2011): The Commission welcomes the adoption of measures aimed at enhancing financial fair play in European football while recalling that such measures have to respect internal market and competition rules Joint statement 21 March 2012: The objective (of preserving fair competition between football clubs) is consistent with the aims and objectives of EU policy in the field of state aid
14 UEFA broadcasting regulations (1) 1989: Blocked hours = restrictive effect on broadcasters freedom to broadcast football events = protecting stadium attendance and amateur participation in sport 2001: The Commission s examination of the UEFA broadcasting rules takes into account those two conflicting interests is a good example of how to reconcile competition rules and the special characteristics of sport
15 UEFA broadcasting regulations (2) Actual decision: No appreciable effect on trade > Article 101(1) TFEU Since the Commission has found that the broadcasting regulations have no appreciable effect on the broadcasting market, it is not necessary for the purpose of the Decision to substantiate whether and to what extent there is a negative impact on stadium attendance and amateur participation in the sport due to the televising of football
16 Joint selling of sports media rights (1) Horizontal agreements that prevent clubs from individually competing in the sale of media rights; Market foreclosure (downstream and neighboring markets) Price-fixing Output reductions Financial solidarity justification: promotes and maintains a competitive balance UEFA Champions League (2003), DFB (2005), FAPL (2006)
17 Joint selling of sports media rights (2) UEFA Champions League (2003) Article 101(1) TFEU Article 101(3) TFEU: objective efficiency gains Single point of sale Maintenance of a quality branded product Football club s opportunities for individual sale of rights
18 Joint selling of sports media rights (3) Remedies: Segmentation of rights in different packages Reduction in exclusive right to sell (fallback option) Offering of all media rights Reduction in hold back for internet & mobile services Contractual period max. 3 years No single buyer obligation
19 Joint selling of sports media rights (4) UEFA Champions League = a balanced solution between competing interests: allowing for more competition in the market while safeguarding financial solidarity in the sport Financial solidarity justification? Arguably taken into account, but: it is not necessary for the purpose of this procedure to consider the solidarity argument An exemption is justified because of the creation of a branded league product which is sold in packages via a single point of sale
20 Joint selling of sports media rights (5) DFB and FAPL = could only be exempted if the restrictions of competition were strictly necessary to ensure the legitimate goals pursued by the arrangements for example solidarity between the clubs But: commitment decisions
21 Joint buying of sports media rights (1) EBU/Eurovision (1993) Competition greatly restricted, if not eliminated Pro-competitive benefits: cost and distribution efficiencies; promotion development of single European broadcasting market; more varied and larger offer for consumers PSB v. commercial operators: different approach
22 Joint buying of sports media rights (2) GC: annulment of decision indispensability EBU membership conditions public mission obligation not substantiated Eurovision (2000): annulled as well 2007: case closed
23 3. Recent developments and challenges ahead
24 Joint selling of sports media rights Commission s remedies blueprint Tender procedure: Germany (2012), Spain (2012), Poland (2007), No single buyer obligation: Romania (2012), Belgium (2009) Length of exclusivity: 3 years, but e.g. Netherlands, Hungary Packages: Italy (Article 102 TFEU) Financial solidarity argument?
25 Consumer benefits? Trickle-down competition policy European Commission: FAPL versus Bundeskartellamt (2009): Kirch deal; free-television highlights but 2012: media rights: scenario 1 (first highlights on TV) or scenario 2 (first highlights on web-tv or mobile)
26 Joint buying of sports media rights Unfinished competition business FAPL v. QC Leisure / Karen Murphy (2011)
27 Cost control mechanisms Hard salary cap Soft salary cap Luxury tax 101(1) TFEU Legitimate objective Inherent Proportional HC, SC, LT HC, LT LT France: Code du Sport
28 4. Conclusions
29 Sporting rules: clear methodological framework Revenue-generating aspects of sport: lack of methodological framework: need for guidance and transparency Rhetoric versus actual decisions
30 Guidelines on Article 101 (3) goals pursued by other Treaty provisions only under Article 101(3) TFEU only when economic efficiency benefits Outside Article 101 Under Article 101(1) Under Article 101(3) Other Exclusion Wouters test Requirements not met Additional justifications Remedies Commitment decisions
31 Dr. Ben Van Rompuy T.M.C. Asser Institute, The Hague Thank you for your attention
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