It’s all kicking off: how antitrust is shaping the future of sport

Traditionally, the regulation of sport has largely been left to governing bodies and in some instances (e.g., Major League Baseball), even enjoyed an exemption from the application of the antitrust rules altogether. 

However, the intersection between sport and antitrust was firmly back in the spotlight in July when the European Court of Justice (“ECJ”) heard two cases that raise the question of where to draw the line between legitimate governance of sport, the preservation of its social function, and the misuse of power.

First up was the International Skating Union’s (“ISU”) appeal against a European Commission decision which found that the ISU had restricted competition by preventing ISU athletes from competing in rival events (punishable by a lifetime ban from all ISU competitions, including the Olympics), in pursuit of its own commercial interests. The ISU claimed in defence that its eligibility criteria are the only way to ensure that competitions are held according to the same sporting rules and standards throughout the world. 

Next, the ECJ heard the much-anticipated case regarding the European Super League (“ESL”), a breakaway European football competition created to rival UEFA’s Champions League tournament. Unlike the Champions League where qualification is meritocratic, the proposed ESL would be a closed competition, with the 15 founders acting as permanent members and an additional 5 clubs joining annually on an invitation-only basis.  In response to this rival competition, UEFA threatened to ban any clubs and players taking part in the ESL.  

ESL claims that the proposed ban limits competition. The ESL notes that in any other market, an agreement between operators to exclude a competitor would be considered a boycott and so UEFA should articulate why sports should be treated any differently. UEFA has countered describing ESL’s move as “bearing all the hallmarks of a cartel”. 

UEFA pointed to its role as a “guardian of football”, balancing the interests of major clubs, grass roots football and other stakeholders for the wider benefit of the game. It claims that Article 165 TFEU requires the European Commission to promote sporting values and consider sport’s “specific nature”, including its “social and educational function”. 

If accepted by the ECJ, this could create a novel exemption to Article 101(1) TFEU that goes beyond the “standard” Article 101(3) exemptions and create a new justification for prima facie anticompetitive conduct. 

Judgments are expected to be handed down in December and the sporting world will be watching. In particular, the world of basketball where the Union of European Leagues of Basketball (“ULEB”) has filed a complaint to the European Commission in September 2021, alleging that the basketball clubs of the EuroLeague have colluded to exclude rivals, retaining most media rights and revenues for themselves. Much like the ESL proposal, extra slots are reserved for other clubs to qualify and play in the breakaway league, but the outcome is that the founder clubs can entrench their positions without the risk of relegation. 

On the other side of the Atlantic, the PGA Tour recently suspended and fined 17 players for choosing to compete in the start-up Saudi-backed LIV Golf tournament in June. The Department of Justice (“DOJ”) is investigating whether the PGA Tour’s actions breached the antitrust rules. 

No-Poach and Wage Fixing

Sport is also at the forefront of the current wave of no-poach and wage-fixing investigations.  The Mexican antitrust watchdog, COFECE’s, first ever no-poach probe was sport-related, as 17 clubs in Mexico’s top professional league and the league itself received fines in 2017 for maintaining informal rights to retain female players across a 10-year period.  Any club looking to sign a player from a rival team during this period would require authorisation from their competitor, invariably including a compensation payment. COFECE considered that this both capped player wages and worsened the gender pay gap with male counterparts. 

The Portuguese competition authority has also considered a no-poach agreement concerning the Portuguese League of Professional Football (“PLPF”) and 31 football clubs and sports companies. The parties had agreed not to recruit football players who unilaterally terminated their employment contracts with any of the relevant clubs as part of the measures adopted in response to the COVID-19 pandemic. 

More recently, in May 2022, Poland’s Office of Competition and Consumer Protection (“UOKiK”) began antitrust proceedings against the Polish Automobile and Motorcycle Federation and the Poland’s top speedway league (Speedway Ekstraliga) for breaching EU non-poach and wage fixing regulations.  UOKiK claim that the two organisations have had a league-wide rider salary cap in place since 2014, preventing the teams from both the Polish league and other EU speedway leagues from competing effectively for drivers. 

UOKiK opened a separate investigation in July 2021, following reports that the country’s top basketball league and its teams colluded to collectively include termination clauses in player contracts during the pandemic. In the economic aftermath of the pandemic, more of these investigations can be expected.  

Sports Broadcasting and Antitrust

Sports broadcasters have also been increasingly subject to antitrust investigations, with 21 finalised cases into anticompetitive conduct taking place between 2012 and 2022. 

In 2012, consumers sued the National Hockey League in the US for conspiring to require that consumers purchased bundles of out-market-games from broadcasters with their core products. In 2016, Swisscom was fined CHF 71.8 million for restricting the licensing of football and ice hockey broadcasting to their rivals. In 2019, the Italian Competition Authority fined four global media agencies over €67 million in 2019 for coordinating their bids to lower prices for the rights to Italian domestic competitions. Similarly, the Brazilian antitrust watchdog launched a formal investigation into eight media agencies and broadcasters in February 2022 over alleged bid-rigging and exchanging confidential information. 

On 13 July, 2022, the UK’s Competition and Markets Authority (“CMA”) opened an investigation into sports broadcasters BT Group, IMG Media, ITV and Sky UK. The investigation relates to potential cartel conduct in connection with the purchase by these companies of freelance services, which support the production and broadcasting of sports content in the UK.  

What next? 

The intersection of sport and antitrust will continue to feature high on the regulators’ agenda both here in Europe and on the other side of the Atlantic (where interested stakeholders are actively discussing whether the MLB antitrust exemption remains appropriate). It’s all to play for.