A Recent CAS Decision in the Scope of European Union Competition Law: FIFA vs. Agents
Introduction
At the meeting of the Fédération Internationale de Football Association (“FIFA”) held on 16 December 2022, the FIFA Council approved the FIFA Football Agents Regulations (“FFAR”). In the FFAR, various amendments have been made, such as the introduction of a maximum service fee limit that football agents are entitled to, the introduction of a written exam requirement for license conditions, and regulations regarding the limit of the duration of the contract to be concluded by the parties. Subsequently, after various meetings and negotiations with FIFA, the Professional Football Agents Association (“PROFAA”) brought the matter before the Court of Arbitration for Sport (“CAS”) to determine whether the FFAR complied with various regulations. The CAS analyzed the provisions of the FFAR by comparing them with the laws of the European Union and various Member States, mainly with respect to competition law, personal data law, free movement of workers and fundamental rights and freedoms (“Decision”/ “CAS Decision”). This Newsletter will focus on the impact of the CAS’s review on sports and competition law.
FIFA Football Agents Regulations in General
In recent years, the growth of football in terms of both viewership and economic volume has led to a significant increase in the salaries paid to players and in the amount of transfer fees that clubs are entitled to. With the increasing use of social media, a perception has started to emerge that football agents play a decisive role in the transfers of young football players, especially those who are stars or star candidates and that they demand ‘high’ fees over these transfer fees. As a matter of fact, FIFA, which is the competent institution in terms of regulation and organizational activities of football worldwide with a total of 221 member countries, has prepared the FIFA Football Agents Regulations, which includes various regulations on agents to be binding on all member country federations. These regulations basically provide for the issuance of licenses to agents on the condition that they pass an exam organized by FIFA, the assessment of a fee in football player transfers involving the transferring club and the club selling the player, and various criteria and maximum service fee cap (ceiling fee) on agent’s fees. Subsequently, the FFAR was brought before CAS and examined from various angles.
Main Arguments Analyzed in the Decision and CAS’s Assessment
The Panel first addressed a fundamental question concerning FIFA’s establishment and powers: Can FIFA extend its regulatory powers beyond its mandate to govern football to regulate peripheral economic activities and, in particular, the market for football agents’ services? This issue, which had previously been left ambiguous in the Piau[1] decision, was examined by the Tribunal, which concluded that FIFA was competent to regulate the remuneration of agents. In other words, various regulations on agents were upheld by the FFAR, emphasizing that agents are directly concerned with the organization and functioning of the market for player services in relation to the transfer of players, i.e. one of the fundamental aspects of the sport of football, insofar as they represent the interests of clubs and players.
It is important to note, however, that agents operate as quasi-independent businesses and compete with each other for clients. Imposing uniform regulations on agents may restrict competition as well as limit players’ choices, with potentially anti-competitive consequences. Unlike FIFA’s authority and activities in relation to transfers, organization, and the functioning of football, agents are private law persons acting on commercial considerations, representing the interests of players and clubs through contractual negotiations. As such, the place and position of agents in football is different from that of players. For this reason, although the Tribunal primarily examined and assessed that FIFA has the authority to regulate the remuneration of agents, there are debates regarding FIFA’s ability to regulate the remuneration of agents, given their place in football and their role in football, which is defined as different from that of players.
In addition, the Tribunal examined the nature of FIFA as an institution, its dominant position, whether the rules set out in Wouters[2]/Meca-Medina[3] cases applied to the facts of the case, and whether FIFA had the benefit of the doctrine of discretion. The Tribunal correctly considered that FIFA is an association of undertakings and the FFAR is a decision of an association of undertakings. In addition, although FIFA objected that the market definition set out in the Piau case and certain other decisions of the General Court of the European Union was outdated, it was held that FIFA had a ‘collective dominant position’ in the market for football agents’ services pursuant to Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).
The Tribunal also examined the extent to which the ‘sporting exception’ doctrine introduced by the Meca-Medina case applies to the facts of the case. It found that, according to the established case law of the Court of Justice of the European Union, anti-competitive agreements will justify a breach of Article 101(1) of TFEU if the act helps to achieve legitimate objectives recognized by the legal order of the European Union, including not only commercial objectives but also broader regulatory objectives, including public interests, and is appropriate and proportionate to achieve the intended objectives. In this regard, by referring to the established case law of the CAS, it was held that, as long as the provisions of the FFAR are appropriate and proportionate to achieve the intended objectives, FIFA may have regard to the public interest objectives recognized by the European Union legal order when adopting the FFAR, even if the challenged provisions of the FFAR are likely to infringe European Union competition law. In addition, in the Piau case referred to in the Decision, the General Court of the European Union stated that the regulations of the General Court of the European Union for the football agents’ market, which can be considered as the relevant market in the concrete case, do not fall within the scope of the sporting exception. However, it was considered that the General Court of the European Union in the Piau case did not in principle preclude the possibility of justifying anticompetitive behavior within the framework of broader regulatory side limits based on a more detailed proportionality assessment.
The Tribunal also acknowledged that FIFA had availed itself of the doctrine of discretion in examining whether the provisions of the FFAR under review were appropriate and proportionate to achieve the public objectives set out by FIFA and took this into account in its assessment.
Main Antitrust Discussions Analyzed in the Decision
Professional Football Agents Association has raised various competition concerns about the FFAR, both in the context of Switzerland in particular and European Union regulations in general.
Professional Football Agents Association argues that the fee caps violate Article 101 TFEU because they set a maximum price equivalent to horizontal price fixing, which is a restriction ‘by object’. In addition, it is argued that the provisions imposing fee caps have the effect of restricting competition ‘by effect’. It is argued that the restriction of competition in terms of effect is mainly due to the fact that there is no room for price differentiation, thereby significantly reducing competition.
In addition, it is argued that FIFA had abused its dominant position in breach of Article 102 TFEU as FIFA’s collective dominant position in the market for football agents’ services under the case law of the Court of Justice of the European Union and the fee cap introduced by Article 15 of the FFAR, amounted to horizontal price fixing and the imposition of an unfair price or trading condition, given that the fee cap had no reasonable relationship with the economic value of the services provided by football agents.
Professional Football Agents Association further argued that the fee cap did not pursue a legitimate aim recognized by the Court of Justice of the European Union, such as the protection of the integrity of sport, but instead protected the economic interests of FIFA acting on behalf of football clubs.
FIFA, on the other hand, argued that the FFAR was neither restrictive in purpose nor in effect and did not constitute an abuse of a dominant position. Even if it is considered for a moment that the FFAR is a prima facie restriction, it is argued that the act in question falls outside the scope of European Union competition law by referring to the Wouters/Meca-Medina decisions. In response to the allegation of abuse of dominant position, it was argued that an agent is not prohibited from providing a general service such as administrative assistance to a player, that such a service would be considered as other ‘services’, that it would not be affected by the fee cap imposed by the FFAR and that the conditions for abuse of dominant position were not met.
CAS’ Assessment of the Antitrust Discussions
It was emphasized that Article 15(2) of the FFAR, which regulates the fee cap, does not in itself fix prices and allows agents to compete below this cap. Furthermore, it was stated that this cap was tiered depending on the type of client and the wage level of the player being transferred and this was not considered as a restriction in terms of purpose within the meaning of Article 101(1) TFEU.
In analyzing whether there was an anticompetitive restraint in terms of effect, firstly, it was stated that the European Commission’s Guidelines on Vertical Restraints states that, as a rule, only minimum (resale) prices are considered as a hardcore restraint. Subsequently, the Tribunal addressed the claim of the Professional Football Agents Association that the level of the cap was set at a point that deprived the overwhelming majority of small and medium-sized agents of earning a reasonable income and often even covering their costs. As a result of the assessments made, and in particular emphasizing that agents can still operate without a cap in the context of other services, the allegation of an anti-competitive act in terms of effect was not accepted.
The allegations of unfair price and customer discrimination in relation to abuse of dominant position under Article 102 of TFEU were also not assessed positively, as the arguments and evidence of the Professional Football Agents Association were not considered necessary and sufficient.
The Tribunal considered whether Article 15/2 of the FFAR restricted competition in effect within the meaning of Article 101 TFEU or whether there was an abuse of a dominant position within the meaning of Article 102(a) or (c) in the context of the Wouters/Meca-Medina decisions. In this context, it was concluded that the concerns pursued legitimate objectives recognized by the legal order of the European Union and the case law of the Court of Justice of the European Union, that they were appropriate actions to pursue those objectives and that they were proportionate.
Conclusion
In this decision, FIFA’s attempt to establish a uniform regulation on agents affiliated with different country federations and the European Union competition law dimension of this issue were examined in detail. Although the assessment of the FFAR by CAS is expected to be a positive development by football stakeholders, it is likely that this decision on agents, who are arguably one of the main actors of football, will be the subject of various debates. As a matter of fact, in a case[4] filed against the FFAR in Germany, the Dortmund Regional Court prohibited the German Football Association from implementing some of the articles of the FFAR. Accordingly, it is likely that other lawsuits will be filed against the Instruction in member states.
- Piau v. Commission (T-193/02)
- Wouters v. Algemene Raadvande Nederlandse Ordevan Advocaten (C-309/99)
- Meca-Medina v. Commission of the European Communities (C-519/04P)
- Injunction LG Dortmund, 24.5.2023, 8 O 1/23 (Kart)
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