Sport & Antitrust: EU summer round-up

Competition (law) is the new buzzword in sports regulation. As those subject to sporting regulations are becoming more aware of their rights, we have seen a recent swathe of complaints and potential challenges on competition law grounds. Some of these challenges have been triggered by the disruption caused by COVID-19; others have been rumbling on in the background and come to life in recent weeks.

In this post we analyse some recent noteworthy “Sport & Antitrust” developments in Europe, and consider the impact of such cases for stakeholders across sport.

Governing bodies and alleged abuse of dominance: in hot water over cold ice

Way back in 2014, two professional speed skaters complained to the European Commission (EC) that certain governance rules established by the International Skating Union (ISU) amounted to an abuse of a dominant position and thereby breached competition law. ISU’s governance rules prevented skaters from participating freely in international events organised by third-parties, and particularly in a speed skating event organised in Dubai by Icederby. On the basis that ISU was concurrently imposing the rules on competition and itself organising competitions for profit, the EC concluded that such rules restricted competition and required ISU to either abolish such rules or modify them. However, the EC decided not to impose a fine. This was based, inter alia, on the novelty of the case: the first concerning the rules set by a sports governing body.

Six summers after the initial complaint, the General Court of the European Union (GC) has heard the appeal brought by ISU against the EC’s decision. The GC will have to determine whether ISU’s alleged ethical concerns about the betting component of Icederby’s event constitute a legitimate objective. It will also examine ISU’s arbitration rules regarding appeals against its decisions, which are amenable to appeal only before the Swiss Federal Tribunal and do not include infringements of competition rules as a valid ground of appeal. Finally, the GC will decide whether the remedies imposed by the EC were adequate, sufficiently specific and precise. Whatever conclusions the GC draws, most likely in 2021, its judgment is expected to become a key precedent going forward for sports governing bodies, which have increasingly found themselves under the antitrust spotlight over the last couple of years.

Seeking relief through competition law: Belgian football clubs pave the way

A number of football clubs across Europe have raised concerns, on antitrust grounds, with league scheduling and decision-making in the wake of the pandemic. Given the significant financial impact of relegations – or of missing out on participation in the lucrative European competitions – we expect to see further legal challenges.

In Belgium, the Pro League (BPL) took the decision in May to bring an end to the 2019-20 season of the top-tier Division 1A. At that time, 29 of the 30 scheduled matches of the regular season had been played. One regular-season fixture remained, to be followed by play-off competitions for the championship and qualifying places for European competitions. The BPL’s decision meant that Waasland-Beveren, which after 29 matches found itself bottom of the 1A Division, would be relegated to the second-tier 1B Division. If the last of the 30 matches had been played, Waasland-Beveren could theoretically have leapfrogged KV Oostende, thereby avoiding relegation.

Waasland-Beveren requested that the Belgian Competition Authority (BCA) impose interim measures to maintain its status in the 1A Division for the 2020-21 season1. The BCA found that the decision of the BPL constituted a decision by an association of undertakings under Article 101 TFEU (and its Belgian equivalent). However, according to the BCA the decision to conclude the competition after 29 matches did not constitute a prima facie infraction which would warrant the imposition of interim measures. In light of the COVID-19 crisis, the measures taken by the BPL were deemed to be not unreasonable.

However, the Belgian Court of Arbitration for Sport subsequently separately quashed the BPL’s May decision on non-competition related grounds. As such, Waasland-Beveren shall not be relegated, leading to a chaotic month for all Belgian football stakeholders, with the new season beginning on 8 August. The BPL has now approved a new expanded format, with 18 (instead of 16) teams to play in Division 1A for the next two seasons. This decision was itself subject to a fresh legal challenge by Division 1B club KVC Westerlo, which voted against the new format and was not granted one of the two extra spots in Division 1A. Westerlo’s challenge was dismissed by the Enterprise Court of Antwerp on 7 August, just in time for the new season to begin, with 18 teams playing in Division 1A.

In a separate challenge, Division 1B club Excelsior Virton requested interim measures from the BCA against the decision of the Royal Belgian Football Association (RBFA) to deny it a licence for professional football. However, the BCA found the decision of the RBFA to be prima facie compatible with competition law and again refused to impose interim measures.

To date, there is not a seminal decision for clubs to rely on by way of precedent, as competition authorities have so far held the line and rejected any such challenges. However, clubs continue to watch with interest as legal battles wage on across the continent.

Sports broadcasting rights: still under the spotlight

Sports broadcasting rights are en vogue. The pandemic – and consequent suspension of fan attendance at sporting events – has shone an even brighter light on the lucrative sums exchanging hands through the broadcasting of live sport. We take a closer look at the recent activity of competition authorities in Italy, Germany and Croatia.

Serie A exclusive rights gone for good: ban for Sky Italia confirmed

The decision of the Italian Competition Authority (AGCM), confirmed by Italy’s top administrative court, to prevent Sky Italia from acquiring exclusive content rights over internet platforms until 2022, was one with extensive repercussions. The ban encompasses the vastly lucrative rights on broadcasting matches in Serie A, the top-tier Italian football division.

In 2019, the AGCM found that Sky Italia’s completed acquisition of Mediaset Premium’s online platform (R2) led to the strengthening of its dominant position as well as the removal of Mediaset Premium as a competitor on the retail pay-TV market and the market for the licensing of broadcasting rights. To remedy such concerns, Sky Italia decided to de-merge R2 from the Sky group and reinstate it as a separate entity back under Mediaset’s control. However, the AGCM concluded that it was already too late: the effects on the market were irreversible and the competitive conditions that existed before the acquisition impossible to restore. The AGCM therefore determined that a three-year ban over exclusive online content rights was the only way to restore the market.

The implications of the ban are far-reaching. On the one hand, the decision incentivises competing online platforms. On the other, the inability of Sky Italia to deliver exclusive content on its platform may discourage it from bidding aggressively for broadcasting rights. This also comes at a time when Serie A is very publicly engaged in negotiations with several funds, who are reported to have submitted offers for a stake in a new media company to market broadcast rights. The saga is far from over.

German Federal Cartel Office discontinues proceedings against Sky and DAZN

In mid-April, as Germany was entering its second month of lockdown, the German Federal Cartel Office (FCO) discontinued its proceedings against Sky Ltd. (Sky) and DAZN Group Ltd. (DAZN).

The FCO initiated its proceedings against Sky and DAZN in 2018 due to suspected anti-competitive agreements in connection with the award of UEFA Champions League broadcasting rights between the 2018/2019 and 2020/21 seasons. Sky had initially acquired the rights to broadcast all matches in Germany and subsequently sublicensed these rights to DAZN. The FCO was investigating whether Sky had violated restrictions that apply when co-operating with competitors by virtue of its dominant position in the German broadcasting market. In addition, the FCO suspected that both companies had agreed to split the broadcasting rights prior to the award procedure. Under competition law, co-operation between competing broadcasters following the conclusion of the bidding and award processes is permissible under certain circumstances. However, any collusion prior to the award, which has the object or effect of restricting competition, is prohibited.

After 18 months of scrutiny, the FCO concluded that the initial allegations were not substantiated. It discontinued the proceedings accordingly. The FCO noted, in particular, that new players participating in the award procedure for the 2021/22 broadcasting rights indicated that the market is becoming increasingly dynamic and competition is therefore still intact. Interestingly, the FCO also concluded that the impact of the COVID-19 pandemic on the 2019-20 football season would make it difficult to assess the effects of an intervention by the FCO under competition law.

Closer scrutiny of marketing and tender processes

Despite the discontinuation of the Sky/DAZN proceedings, football broadcasting rights are nonetheless firmly on the radar of German antitrust authorities. The Monopolies Commission, an advisory body of the German government, has suggested that the FCO should be more vigilant in relation to the currently central marketing model of football broadcasting rights. In particular, it advised the FCO to analyse the limited price competition of central marketing more closely and record its positive economic effects more systematically.

Meanwhile, the Croatian Competition Agency has opened an investigation into, inter alia, the abuse of dominance of the national Football Federation in relation to its most recent tender for the sale of TV broadcast and other media rights for its football and futsal competitions.

Comment

It was not so long ago that sport was considered to be outside the purview of competition law. Authorities which had previously hesitated to intervene in sporting disputes have now made it clear that the sports sector – and its actors – are subject to competition rules. Most recently, the German Monopolies Commission has called on the EC to intervene more in the sports sector and to adopt guidelines on the application of EU competition law to the sports sector, to encourage more uniform application throughout the EU. The floodgates are not yet wide open but competition law is cool (again) – it’s the new buzzword in sports regulation.

Sign up to SportingLinks for more dedicated legal opinion on topical issues in the sports sector.

 

1 The BPL’s decision also stated that clubs challenging the decision to any authority or body (including the BCA) would be denied the benefits of the compensation fund set up by the BPL. Waasland-Beveren also asked the BCA to prohibit the BPL from imposing such sanctions, and the BCA duly ordered the BPL to suspend the relevant provision.