Introduction
Even though it is well established under Art.81 E.C. that all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their objective or effect the prevention, restriction or distortion of competition within the common market are prohibited as incompatible with the common market. Despite this, the ‘Union des Associations Europènnes de Football’s’ (UEFA) recently approved plans to limit the number of foreign players a club can register for Champions league and UEFA cup competitions (UEFA competitions). It will implement rules by 2006 that four out of the 25 players that a club is able to register, for UEFA competitions will have to be ‘home grown players’. This quota would rise to eight home grown players for the 2008 / 09 season.
This inevitably raises the question whether it will satisfy the demands of European Community law.
UEFA’s rule changes
The rule changes that UEFA will be implementing are as follows:
- The number of players that teams will be able to register on the ‘A’ list will stay at 25 players.
- From the 2006 / 2007 season two members of the playing squad will have to been trained by the club’s own academy and another two players will have to been trained by a fellow association member club.
- In the following two seasons, one additional place for a club trained and one additional place for an association trained player will be reserved on the ‘A’ list, so that by the 2008/2009 season, each club will have in its 25 man squad four club trained and four association trained players.
A club trained player is defined as a player who has been registered for a minimum of three seasons with the club between the age of 15 and 21, whereas an association trained player is a player who has been registered for at least three seasons by the club or by other clubs affiliated to the same association of the said club between the age of 15 and 21.
A short History of the relationship between sport and the EU.
The Rome Treaty of 1957 established what is now known as the European Community. The Treaty and much of EC law is concerned with the elimination of obstacles to the free movement of goods, services, persons and capital. Sport seemed to have escaped the scope of the EC for a number of years and there are relatively few cases which are sports related. However, in the 1990’s it became apparent that many aspects of Community law (and in particular competition law) were in need of modernisation, and it is no surprise that the same period saw the infamous Bosman case. Before looking at case law pre and post Bosman, it will be important to set the scene in which they where played out. Thus, the Lariv report and the Pack report will be an important starting point.
The reports
There have been a number of reports into sport in Europe, but the two important reports published by the European Union (EU) that are of interest have become know as the Lariv report and the Pack report. Not only are they interesting because the EU makes several comments on the regulation of sport and in how far sports rules are contra to EU law, but also because one was produced pre-Bosman (The Lariv report, 1994) and one post-Bosman (The Pack report, 1997). Thus, it will give us a good indication of whether the EU’s policy to sport has changed, and if so, how much.
The Lariv report was a result of the resolution by Mrs Ewing on the protection of popular sporting traditions in
Europe. The report was charged with looking at; inter alia, the reappraisal of the EC’s policy towards sport.
Even though neither the Treaty of Rome nor the Maastricht Treaty mentioned sport, the EC became increasingly concerned by the refusal of sports governing bodies (SGB) to change their rules so to come in line with the EEC treaty. As far back as 1989 it was decided by Mr Janssen van Raay that clubs and SGB are to be considered as undertakings and their restrictions on foreign players was contra to the EEC treaty. It becomes clear from the Lariv report that the lack of respect shown by clubs and SGB, especially to Art. 39, 81 and 82, are major concerns to the EC. The tone of the report is extremely strong with little indication that compromises are to be negotiated. In regards to bringing sport in line with the Treaty it states that [t]he rule of law must prevail not only in the stands but also on the pitch. Sports clubs and national and international sports associations continue to show no respect for the EEC Treaty in general and for Articles [39], [81] and [82] in particular. …These restrictions are often, if not always, blatant and unacceptable.
In regards to the transfer system it states that [t]hese restrictions are so obviously in conflict with the operation of the European Communities competition system that the adverse consequences they have must be eliminated immediately. Furthermore, it states that [t]hese obstacles to the freedom of movement [transfer fees] to join sports clubs and federations are incompatible with the Treaty of
Rome and must be systematically removed.
It is clear then that the stance towards the abuse of sports federations and clubs towards the Treaty of Rome is one that will not be tolerated by the EC and that it will do everything in its power to bring them in line with other industries. It must be noted that this report was written in an environment where the construction of a Single Market was seen as paramount and therefore the ECJ’s jurisprudence paid less attention to the socio-cultural significance of sport.
However, following the Bosman case, this approach somewhat softened. The Pack report has a much softer tone and in several paragraphs acknowledges the positive influence of sport on culture, society and education. It even goes as far as saying that ‘…the European Union must recognize the specific nature of sport and the autonomy of the sports movement’. It is also much more open for discussions between the various parties and states the need for the EC and the sport community to work together. Furthermore, it suggests ‘to draw up, after consulting the entire sports movement, a Green Paper with a view to the elaboration of a full-scale action plan in the field of sport’.
Interestingly and in support of the UEFA proposed rule changes, it also re-emphasise the importance of clubs to train young players and states that the EC should give active support in this field.
However, the most powerful acknowledgement of the autonym of sport, in as far as sporting matters and regulations are concerned (rather then activities which are of a purely economic nature) is made in part B; Explanatory Statement. In part B the rapporteur talks about the effects of the Bosman case and states that ‘it showed, unintentionally, that sports was not merely an economic activity and that its specific nature and, within the aforementioned limits, its independence must be duly acknowledged’.
The softening of attitude by the EC could be due to the fact that the EC, in retrospect, felt that the effect of the Bosman case might have had a too far reaching effect and did not take into account the very nature of sports, and indeed football. Furthermore, there is evidence of more positive communication between the various parties, mainly the EC and UEFA and / or FIFA.
Case Law
The question then arises whether case law has reflected the softening of the EC post Bosman and the Pack report. When looking at early case law, the two most important cases are those of Walrave and Koch v Association Union Cycliste Internationale and Donà v Montero. Walrave and Koch challenged a rule change by their SGB that for the forthcoming paced cycling ‘World Championship’, pacemakers had to be the same nationality as the cyclist. They sought to challenge the ‘Union Cycliste Internationale’ (UCI) rule change on the grounds of Art.5, 39 and 48. The ECJ held, inter alia, that sports falls within the scoop of EC law only in as far as it constitutes an economic activity. It is clear, and similar to the Lariv report, the ECJ took a strict economic biased approach rather then considering the socio –cultural benefits of sport. It did, however, acknowledge sports ‘special nature’ in as far as national teams are concerned and their being no economic interest. Furthermore, the ECJ made it clear that SGB fall within the scope of the Treaty by ensuring that Art. 39 had direct (and vertical) affect. These findings, when referred back to the domestic court, but where never given the chance to be executed as Walrave and Koch did not pursue their case. It is widely believe that this was due to a threat by the UCI to remove paced cycling form the World Championship.
In Donà v Mantero, there is again an appreciation for the ‘special nature’ of sport. It is believed that this case was somewhat contrived for the sole purpose of opening up Italian football to foreign players, and concerned a claim by an agent for the cost of an advertisement for foreign players in a
Belgium sports magazine. To briefly summarise, the domestic courts asked the ECJ whether restrictions on nationality in football matches may be justified. The Advocate General, Mr Trabucchi, felt that even the rules of sporting organisations run as an economic concern may be exempt from the application of non-discriminatory Treaty provisions. Thus, sport may be a business, but it may still also be simultaneously practised as an activity of purely sporting interest. Even more interestingly for UEFA was the ruling by the ECJ when it stated that ‘rules…which limit the right to take part in football matches …solely to nationals of the State in question, are incompatible with Art. 12 and …Art.39 to 42 or 49 to 55 of the Treaty, unless such rules …exclude foreign players from participation in certain matches for reasons which are not of an economic nature, which relate to the particular nature and context of such matches and are thus of sporting interest only.
Thus, in both cases it is made clear that insofar as sport constitutes an economic activity, it falls within the scope of application of Community law. It is also clear that the courts, however, struggled with accommodating sport’s peculiarities within the orthodox framework of EC law. Therefore, in Walrave and Koch, in order to allow the practice of discrimination against athletes based on their nationality when selecting national teams, the court concocted a category of practices which it described as of ‘purely sporting interest’ and having ‘nothing to do with economic activity’. It therefore acknowledged that ‘sport is special’ and the EC Treaty would cause major problems to international selection procedures and their competitions if applied strictly. However, as will be seen later, Advocate General Lenz would not be quite so generous in Bosman.
It is clear then, that the ECJ was trying to set the boundaries for EU’s intervention in sport. However, the lack of enforcement from the Commission limited the scoop of the rulings in Walrave and Koch and in Dona. However, Bosman was to readdress this issue, and this time, the Commission was more determined in enforcing the ruling.
It will be assumed that the facts of the Bosman case are known and thus their will be no great in-depth analysis of the case. It suffices to say, that Jean-Marc Bosman challenged the legality of the then transfer system. In particular, he questioned two aspects; the (none) release of players after the conclusion of their contracts and the limitations imposed on the number of foreign players that where eligible to participate in any given match (the so called 3+2 rule). Unlike Cooke v The Football Association this was one case that FIFA / UEFA was not able to ignore. It is believed that the EC was waiting for an opportunity to finally assert their authority on football, and Bosman gave them their chance. The hard law interference from the EU primarily focused on the removal of the ‘3+2 rule’ and the release of players once there contract was finished. However, in regards to the ongoing investigation into the transfer system, the Commission gave football the option to either regulate or be regulated. Thus, FIFA / UEFA had to bring the transfer system in line with the Treaty, albeit leaving the concept of transfer fees intact. The biggest change was the so called ‘Bosman free’; which simply means a player is able to negotiate a new contract with another club six months prior the expiry of his current one and then is able to leave for free at the end of his contract. The other major change (interestingly for this paper) was the abolition of restrictions on foreign players (the 3+2 rule).
In regards to restricting the number of foreign players, it was held that it was contra to Art.39(2). The Commission also rejected the argument from UEFA and URBSFA that they were non-economic sporting rules. One argument was that restricting the number of foreign players maintained a link between club and country. However, it is argued that this reasoning should be rejected today as it was in Bosman. If there is no link between club and the actual town it plays in, then UEFA cannot argue that it is legitimate to artificially create a nexus between club and country. There is evidence that if restrictions were implemented that were to limit a club to only signing players from its own region, that a much better nexus would be established between the supporters and the club / player. However, as restrictions are not in place to guarantee a minimum amount of players to play for their local clubs, nationality restrictions cannot be justified on these grounds. In line with the above, UEFA has not argued this point this time around. However, one aspect that was rejected in Bosman which is being argued again today is the idea of creating players for the national team. In Bosman it was ruled that as there are no limitations set on Football Associations calling up players that play their club football in another country, this argument would not be accepted. However, the globalisation and indeed commercialisation of football might have swayed the Commission to now accept this as a legitimate argument. At the time of the Bosman case, there where still a high percentage of players signed to clubs that were eligible to play for the national team to which the club was affiliated.. This is not the case today and this might be what has changed the Commissions mind. The footballing world also argued that the restrictions placed on foreigners maintain a competitive balance between ‘rich’ and ‘poorer’ clubs. This was again rejected by the Commission as clubs can purchase the best nationals despite these restrictions. However, this has been argued again today, and it seems that the Commission is more sympathetic to this argument. UEFA has put a positive ‘spin’ on this argument this time around, stating that a competitive balance needs to be encouraged as well as the incentives to train young local players. However, the ‘footballing reality’ is that the rules changes will not have much affect on the clubs with the highest spending power. It could actually have the opposite effect, with clubs merely purchasing the best players at a younger age (even foreigners) and then training them long enough (i.e. from the age of 15 up-wards) so to make them eligible. Thus, the reasoning might seem sound, but the ‘footballing’ reality will be quite different.
When looking at case law post-Bosman, the two cases that are important to us are Deliège v Ligue Francophone de Judo et Disciplines Associées ASBL (hereafter Deliège), and Jyri Lehtonen & Castores
Canada Dry Namur-Braine v Fédération Royale Belge des Sociétés de Basketball ASBL (herafter Lehtonen).
Lehtonen concerned a professional Finish basketball player who sought to move to a
Belgium club. However, transfer rules imposed by the Belgian Basketball Federation (BBF) did not permit him to participate in the remaining games of the season as he registered after the official transfer deadline. Lehtonen brought a case against the BBF arguing, inter alia, that the rules where contra to Art.39; freedom of movement. Even though the courts rejected the idea of self autonym on the SGB part, it did accept that there where sufficient sporting reasons to justify these restrictions. These where, inter alia, that rules would need to be in place to minimise distortional effects on the league and stop players competing in one league, and once that league has finished, offering their services to another league that might still be in progress.
Deliège also brought a case with ‘freedom of movement’ elements against her SGB. Deliège, who was at the time a fairly successful judokas, argued that her non-selection for her national team was contra to Art.39. As in the Lehtonen case, the SGB had to prove that their restrictions were of a sporting and not of an economic nature. This it did duly by arguing that it was a necessity, even pro-competitive, to restrict the number of athletes competing in a major competition from one national association otherwise the quantity of athletes would make it impossible to host the tournament.
It can be seen from the subsequent case law following Bosman, that the Commission has again set certain criteria’s for when they will intervene in the regulation of sport, and when they will give sport self-autonym.
Deliège is a good indicator of when this is the case. It is made clear in Deliège that rules which are of a sporting nature will be exempt from the scope of the ECJ, even if they have an adverse economic affect on certain participants. If the SGB can show that the rules are reasonable and justifiable (and no more then needed for the purpose), in terms of preserving the sport, or it is for the greater good of the sport or indeed society, then they will be exempt. Furthermore, if the SGB can show that certain rules are there to promote solidarity in sport, such as rewarding smaller football clubs for developing and training players, then again, they are likely to be exempt, in this case from Art.81(1).
Treaty’s
It is of interest to note that recent Treaty’s, such as the Treaty of Amsterdam and the Treaty of Nice, have acknowledged the special significance and nature of sport. However, this will again, only be of help to UEFA if their rule changes are deemed to be of a purely sporting reason and social-cultural benefits outweigh the economic effects they will have.
Reasons given by UEFA
Thus, it beggars the question, if one of the biggest changes FIFA / UEFA had to implement after Bosman was not to place any restrictions on the number of foreign players a club can field, as this is contra to Art. 39 and 81(1) of the Treaty, why is UEFA again introducing this very concept?
The reasons given by UEFA for introducing these rules can be split into two different headings; footballing and training reasons.
In terms of footballing reasons, it states that there is increasingly a link between spending power in the transfer market and success within its competitions, which they claim is anti-competitive. This in turn reduces the desire for clubs to play fewer locally train players. UEFA argues that by implementing the rules it will provide more incentive for clubs to train their own players and thus restore a competitive balance. UEFA’s President, Lennart Johansson, has also stated that the current trend (of purchasing foreign players rather then developing home grown players) is dangerous for the development of football.
If young people in Bologna see three Yugoslavs sitting on the bench, and in addition all the players in the team are foreigners, that can have a negative effect on their will to dedicate themselves to football, when there are so many other alternatives for them.
UEFA has also stated that the rules would have positive effects on the various national teams as more home grown players would get the chance to develop within their clubs and have more ‘playing time’.
However, in order to have any chance of convince the EC that these rules should be exempt from the ‘normal’ application of EU laws, it will have to show deeper socio-cultural reasoning. Therefore, it is no wonder that the training reasons outweigh the footballing reasons given.
When Johansson was recently interview by the BBC, he stated that the rules will mean that clubs will pay more attention to educational use, and to bring people up through the clubs youth structure. This has been echoed by his chief executive, Lars-Christer Olsson, who stated:
It is not so much the top clubs but it is those in the middle range who are importing cheap players instead of developing them. In Austria for example, even in the semi-professional leagues they are importing players from Slovakia, Hungary and
Nigeria.
Gianni Infantino, UEFA’s director of legal services, regards the proposal as ‘…a system whereby somebody with less money but a serious training programme has a better chance than today to compete at the top level. This project is not about quotas or foreigners or nationality or reversing Bosman.
It is also interesting to see UEFA mentioning several other reasons which closely correlate with possible challenges by the EC. This includes stating that these restrictions are not a restriction but a sporting rule (which would therefore not be contra to Article 48 and Art 82; abuse of a dominant position within the common market). UEFA also commissioned a study that showed that the current system is anti-competitive and the new rules would address this (evidence which would potentially clear them of a breach of Art. 81). UEFA have also reiterated the fact that they are a non-profit organisation and that money earned is re-invested into football and football development (therefore not an economic undertaking as per Art. 2 of the EEC treaty). Thus, UEFA have been very quick in trying to show that these rule changes are of a purely sporting nature and thus have no economic elements.
Will the rule changes satisfy the demands of European Community law?
The question is whether sport rules constitute ‘agreements’? The difficulty for the Commission and indeed the ECJ is in distinguishing between rules that are of a purely sporting nature (such as the off-side rule in football) and rules that have an economic or commercial nature or effect. The Commission will often examine the effect of the rule rather then the object in determining whether it is an agreement. However, as seems likely, the Commission will deem these rule changes as of a sporting nature and will accept that the socio-cultural benefits out-weight the restrictions it will place of foreign players. It seems likely that the Commission has meet with UEFA to discuss the rule changes and this would be in line with the common stance taken by the Commission. Due to the political and administrative pressure the Commission faces, its preferred route of policing is through informal channels. UEFA, like any other undertaking which seeks a negative clearance or exemption from Art.81, had to notify the Commission of its intentions so that informal discussions could take place. Once aspects that the Commission does not agree with are removed, a ‘comfort letter’ will be given to the undertaking stating that they are exempt from Art.81. It should be noted that these ‘comfort letters’ hold no legal effect, but the cumulative impact of them in establishing de facto precedents is however considerable.. However, the evidence suggests that the informal discussion route was chosen by UEFA and the Commission.
If the new rules changes are accepted as they are by the Commission, it will be a major move on from Bosman. However, subsequence case law has shown that certain rules or restrictions might be deemed acceptable should they actually benefit competition. Thus, restrictions which will benefit competition within UEFA competitions (i.e. give smaller clubs a chance of success within UEFA competitions) might be deemed acceptable. However, it could be argued that this will only be truly successful if the rules are implemented into domestic leagues as well. For ‘smaller clubs’ to reach UEFA competitions in the first place, they have to be successful within the domestic leagues. Thus, it could be argued, in order for UEFA to meet its full objective, (greater competition) it has to implement its rules changes to domestic football also.
As the ECJ scored an own goal?
It seems ironic that the ECJ forced FIFA / UEFA to change its transfers rules after Bosman for it not to have to minimise FIFA / UEFA’s self autonomy at regulating football. These rule changes have, however, allowed the biggest clubs to spend even more money on the best players by paying higher wages and made the in-balance between ‘poorer’ and ‘richer clubs even greater. The Commission is now allowing UEFA to re-address this balance, but the feeling within football is that it has come too late. The ECJ did not accept the truly ‘special and fragile’ nature of football at the time of the Bosman case, and now that it has, it is too late. The rich clubs will simply keep buying the best player, at an even younger age, and the ‘poorer clubs will be left behind.
By Nicholas MacGowan von Holstein, 30.12.2006
Union Royale Belge des Soéitiés de Football ASBL v Bosman [1995] ECR I-4921
Union Royale Belge des Soéitiés de Football ASBL
Telling it as it is 