The European Super League vs UEFA: Redefining Competition Law in Sport

The European Super League (ESL), proposed in 2021, was a highly controversial closed league involving 12 of Europe’s wealthiest clubs, designed to rival UEFA’s Champions League. While the ESL promised greater financial returns for participating clubs, it faced immediate backlash from fans, players, and other stakeholders for abandoning the principles of open competition.[1]

In response, the ESL accused UEFA of violating Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), arguing that its prior authorisation rules and severe sanctions constituted anti-competitive practices. The matter was escalated to the Spanish Court, which sought guidance from the European Court of Justice (CJEU).[2]

This article examines the ESL case, focusing on the advice issued by the CJEU on the 21^st of December 2023. It also explores the broader implications of competition law on sports governance and the regulatory practices of Sports Governing Bodies (SGBs).

Context and background

The ESL is a breakaway league that challenges the European sports model, where a single governing body, like FIFA, oversees the sport globally, with regional bodies such as UEFA managing continental affairs, followed by national associations, local bodies, clubs, and players.[3] This centralised structure ensures sporting integrity, fair competition through promotion and relegation, and equitable resource distribution across all levels. In contrast, the ESL offered a closed league system, similar to the U.S. model, targeting Europe’s wealthiest clubs.

However, the European model has its flaws, particularly the conflict of interest arising from Sports Governing Bodies (SGBs) being the sole regulators and commercial beneficiaries of their sports.[4] While governing bodies legitimately govern their sports, they also profit significantly from sponsorships, TV rights, licensing, and merchandising.[5] This creates tensions when new competitors, like the ESL, attempt to enter the market and threaten to diminish their commercial interests.

UEFA and other SGBs can use prior authorisation rules and sanctions to safeguard their dominance, maintaining their position in the market. Historically, courts have been hesitant to intervene in sports governance, recognising its unique characteristics under the “specificity of sport.”[6] However, Article 165 TFEU requires courts to consider these characteristics when assessing cases against SGBs.

The case

After the ESL was announced it quickly collapsed due to fan, player, and club criticism. However, the ESL company applied to the court in Madrid claiming UEFA had breached articles 101 and 102 TFEU in its prior authorisation rules and sanctions.

1. Article 101 TFEU prohibits agreements or decisions by associations of undertakings that prevent, restrict, or distort competition.
2. Article 102 TFEU prohibits the abuse of a dominant market position by one or more undertakings.[7]

UEFA responded by banning participating clubs and players from their competitions and along with FIFA, threatened bans from national team competitions.[8] UEFA argued the ESL had not complied with its prior authorisation rules and so they had the right to impose sanctions to ensure compliance. Article 49 of UEFA’s statutes states that:

‘International matches, competitions or tournaments which are not organised by UEFA but are played on UEFA’s territory shall require the prior approval of FIFA and/or UEFA and/or the relevant Member Associations’.[9]

The Spanish court agreed with UEFA, finding its actions anti-competitive but justified to defend the European sports model.

CJEU Decision

The CJEU later overturned this view, finding UEFA’s rules to be a restriction of competition by object under Articles 101 and 102. The court criticised UEFA’s rules for lacking transparency, objectivity, and proportionality, deeming its penalties too severe and unjustly restrictive.[10]

This marked a significant departure from precedents like Meca-Medina, where anti-competitive conduct was judged by its effects rather than its inherent nature. The decision also signalled stricter court scrutiny of SGBs’ practices.

The implications for Competition law

The ESL case signalled a shift in how competition law is applied to sports governance. Courts now focus on object restrictions first, making it harder for SGBs to justify their actions. Exemptions under Articles 101(3) and 102 now require stronger evidence of tangible consumer benefits.[11]

This stricter approach could have significant implications:

1. Increased Legal Scrutiny: Governing bodies may face more frequent challenges to their practices, requiring them to demonstrate compliance with competition law.
2. Potential for Market Entry: By curbing monopolistic practices, the decision could pave the way for new entrants in the market, if there is no fan, club, or player opposition.
3. Higher Standards of Governance: Sports bodies will need to align their policies with best practices in transparency, accountability, and proportionality.

Future of sports law and competition law

The ESL case has brought an interesting discussion on sports governance into the picture. While competition law curbs some abuses of SGB power, it doesn’t address broader governance issues such as corruption, human rights abuses, gender inequalities, and inadequate fan protections.[12] Examples include FIFA’s 2015 corruption scandal and the exploitation of migrant workers during Qatar’s 2022 World Cup preparations.

Although more regulatory oversight is then needed on SGBs, EU competition law can only deal with competition-specific issues. At the same time, a balance needs to be struck between more court interference, whilst still acknowledging sports specificity and upholding the European model of sport.

To address these issues, potential reforms could include:

1. Ex Ante Regulations: Setting predefined standards for governance and competition to prevent disputes before they arise.
2. Sports own legislation: Giving sports a legislative base could ensure SGBs follow good governance procedures.
3. Enhanced Stakeholder Representation: Involving players, fans, and other stakeholders in decision-making processes to ensure diverse perspectives.

Conclusion

The ESL case has reshaped how competition law applies to sports, forcing SGBs to operate more transparently and fairly. Whether broader reforms are implemented remains uncertain, though the EU has hinted at increasing oversight.

While the outcome of the ESL case is still unfolding, its implications are clear: the case has changed how competition law applies to sport, making it harder for governing bodies to simply prevent competitors from entering the market. Any conduct now including resulting penalties must be transparent, objective, and non-discriminatory, as well as proportionate and subject to review.

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