The Impact of European Union Law on the World of Sport in the Context of Sports Regulation - Essay Example

Discuss the impact of European Union Law on the world of sport in the context of sport regulation and restraint of trade since the Bosman decision. Introduction Under European Union law, Article 81 of the EC Treaty provides that all agreements between undertakings, decisions 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 market1. Notwithstanding, the Union des Associations Europennes de Football’s (UEFA) recently approved plans to limit the number of foreign players a club can register for Champions league and the UEFA cup competitions. The current position is that six out of the 25 players a club can register at UEFA competitions will have to be home grown players2with eight home grown players for the 2008/09 season3. This clearly raises competition issues under Article 81 of the Treaty and this analysis will critically evaluate the impact of European Union law on sport regulation and restraint of trade, specifically in the wake of the infamous ruling in the Bosman case on the transfer of footballers within Europe. Furthermore, I will undertake a comparative analysis with the position under EU law prior to the Bosman decision with an evaluation of the implications for the evolving transfer culture prevalent in the global nature of the game. Bosman Ruling The leading case of Bosman4 impacted the ability of clubs to limit use foreign players in their leagues. In this case, Bosman played for the Belgian first division team FC Liefe. However, in 1990 at the end of the season, Bosman wanted to move to French side Dunkirk and FC Liege tried to stop the move from taking place, by using the cross border transfer ruling at the time, which meant that clubs had to agree to a fee before a player was allowed to transfer, however Bosman protested against this arguing that the football regulations on payment of transfer fees stopped EU citizens from having the human right of freedom of movement in employment. In 1995 the European Court of Justice rule in favour of Jean Marc Bosman deciding that the existing football transfer rules were in breach of the European Union Law on the free movement of workers between members states. As a result, “the European Union demanded that regulations concerning players’ transfers and limitations on foreign players be amended almost immediately.5” This ruling led to the free movement of footballers between clubs within EU countries. Moreover, the Bosman ruling imposes freedom of movement for players leading some to argue that this results in an influx of foreign footballers6. In 2000, Sepp Blatter put forward the view that the European Union is a special case and as such, should not have to abide by European employment law, which was emphatically rejected7. As such, the Bosman ruling changed football to the extent that limits on EU foreign players no longer existed in the EU game8. Nevertheless, whilst the Bosman case held that quota systems were illegal and club sides could play as many foreigners from other EU states as they wished, limits on players outside the EU can imposed9. Background to the relationship between sport regulation and the EU The Treaty of Rome 1957 officially created the European Union (EU), with the promotion of social and economic harmony as its primary objective. The Treaty of Rome has been revised three times and the 1992 Maastricht Treaty created a new European Union radicalising the notion of European Economic Community and the European Single Market into European Community law10. This was subsequently ratified by the Treaty of Amsterdam (the Treaty) which updated and amended the provisions on free movement of goods11. Additionally, 11 EU member states entered into the third stage of the Economic and Monetary Union in 199912. Furthermore, the free movement of persons is a fundamental cornerstone of the EU defined under the Treaty as an important pillar of the internal market in Article 14: “The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty”. Article 14 provides the legal foundations for the creation of the EU internal market and the UK entered the EU in 197313. Notwithstanding, the regulation of sport appeared to remain outside the realm of EC regulation until the Bosman ruling placed the spotlight on the ability of clubs to limit use of foreign players in their leagues14. However, fundamental to the evaluation of the EU regulation on sports post Bosman is a review of the Lariv15 and Pack reports16 which highlights the background in which these decisions were made. The Lariv and Pack Reports The Lariv Report and the Pack Report have been cited as important EU reports in relation to the EU position on regulation of sport and compliance with EU competition law17. Moreover, the fact that the Lariv Report was implemented prior to Bosman (1994) and the Pack Report published post-Bosman (1997), further enables via comparative analysis a better understanding of the EU regulatory role in sport. The Lariv Report was fuelled by the EU objective to preserve sporting specific traditions within the EU18. The fundamental basis of the report was to re-assess the EC regulatory role vis-à-vis sport, which had ultimately remained outside the parameters of EC enforcement powers19. Whilst the Treaty provisions are unequivocal in prohibiting restrictions on the movement of persons within the EU, the lack of express provisions targeted towards the regulation of sport enabled manipulation and exploitation by sporting authorities20. Indeed, notwithstanding the Commission opinion that clubs and sports governing bodies (SGBs) were to be considered undertakings for the purpose of Articles 81 and 8221; the Lariv report highlighted the consistent refusal of SGBs to ensure compliance with the EEC Treaty22. Moreover, the report’s findings asserted that “the 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”23. Additionally, the Lariv report highlighted the central conflict between EU competition law and SGBs in the context of the transfer system and asserted that “these 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…….. these 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 removed24”. The strong tone of the Lariv Report clearly reflected the primary objective of establishing a cohesive single market, which was considered at the forefront of the EU regulatory role25. As such, the backdrop provided by the report clearly influenced the European Court of Justice’s rationale in the Bosman case26. Conversely, it has been propounded that the post-Bosman Pack report indicated a shift in approach moving towards an understanding of the special considerations specific to the nature of sport27. For example, in stark contrast to the sentiment of the Lariv Report, the Pack report28 asserted that “The European Union must recognise the specific nature of sport and the autonomy of the sports movement.29” Moreover, it makes recommendations for official discussion and consultation through a “Green Paper with a view to the elaboration of a full-scale action plan in the field of sport30”. However, arguably the most obvious statement of the softening of EU competition regulatory regime in context of sport is evidenced by the Explanatory Statement in the Pack report, which discusses the impact of the Bosman ruling31. In referring to Bosman, the Explanatory Statement observes that the decision “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.32” The sentiment of the Pack report has been referred to by commentators arguing that EU competition policy is moving towards a specific set of rules targeted towards sport regulation, thereby negating the far reaching implications of the Bosman decision33. This is further demonstrated by the increased flow of recent communication between the EC, UEFA and FIFA34. Case Law Pre-Bosman In considering whether the ECJ jurisprudence post-Bosman has reflected the changing tide indicated in the Pack Report, it is vital to undertake a comparative analysis of the case law pre and post Bosman. Two important decisions pre-Bosman are the case of Walrave and Koch v Association Union Cycliste Internationale (UCL)35 and Dona v Mantero36. In the case of Walrave and Koch v Association Union Cycliste Internationale (UCL)37 the applicant sought to challenge the rules of the UCI, and the ECJ held that sport fell within the scope of EC law only insofar as it constitutes economic activity, acknowledging that sports is of a “special nature38” insofar as national teams are concerned and there being no economic interest. Moreover, the ECJ asserted that SGBs fell within the scope of the Treaty. In the case of Dona v Mantero39, the ECJ further reiterated the special nature of sport and addressed whether restrictions on nationality in football matches were justifiable. However, the ECJ asserted that “rules…. Which limit the right to take part in football matches solely to nationals of the State in question, are incompatible with article 12 and Art.39-to42 or 49 to 55 of the Treaty40, 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”41. Therefore, both decisions indicated that if the relevant sporting activity constituted an economic activity it would fall within the scope of EU law. However, the judicial rationale clearly demonstrates a flawed approach in attempting to regulate sport within the confines of the narrow EU legal framework42. For example, in both cases, in addressing the practice of discrimination against foreign athletes, the ECJ effectively created a new set of categories to determine activities which fell under being activities of “purely sporting interest” and “having nothing to do with economic activity43”. However, this in itself highlights the different status accorded to sport under EU competition law, which arguably facilitated the lack of compliance amongst clubs and SGBs coupled with lack of Commission enforcement action44. The facts and decision in the Bosman case were discussed above. The essential issues raised were as follows: 1) the release of players after expiry or termination of their contracts; and 2) the limitations imposed on the transfer and selection of foreign players. The Bosman prohibition on quotas signalled a hard law interference approach from the EU, removing the “3+2 rule” and release of players once the contract has ended45. With regard to the transfer system however, the Commission gave the football industry the option to implement regulatory measures or face regulation46. This resulted in FIFA and UEFA having a positive obligation to ensure that the transfer system complied with the Treaty provisions, leading to the creation of the “Bosman free”47, where a player was entitled to negotiate a new contract with a rival club six months prior to the termination of his current contract or alternatively, be free to leave the club at the end of his contract48. With regard to the selection of foreign players, this was held to infringe EU law and the ECJ emphatically rejected the non-economic benefit arguments put forward by UEFA49. Furthermore, in the Bosman case it was asserted that if there was no link between the club and the actual town it plays in; it could not then be argued that it was legitimate to create a nexus between club and country. Moreover, another argument propounded was that limitations on foreign players guaranteed a minimum number of players for selection for the national team. Whilst this was rejected at the time of Bosman, it is arguable that the increasing global transfer nature of the game may now render this argument valid in light of the Pack report50. Alternatively, it was propounded that the restrictions on selection of foreign players maintained a balance between rich and poorer clubs51. Again, whilst this was rejected by the ECJ, the Commission appears to be accepted the validity of this argument today in light of UEFA’s assertion that competitive balance should be encouraged through incentives to train under-18 local players52. Notwithstanding this rhetoric, it is questionable how far this will impact football clubs with big pockets and spending budgets53. Conversely, it could result in the larger clubs securing players at a younger age, thereby exploiting the gap between rich and poor clubs54. Case Law Post-Bosman Two important cases post-Bosman are the decisions in Deliege v Ligue Francophone de Judo et Disciplines Associees ASBL 55and Juyri Lehtonen & Castores Canada Dry Namur-Braine v Federation Royale Belge des Societes de Basketball ASBL. 56 In the Lehtonen case, the transfer rules imposed by the Belgian Basketball Association prevented Lehtonen (a Finnish national) from playing in the season due to his failure to register prior to the official transfer deadline. Lehtonen brought a claim against the association alleging contravention of the Treaty provisions on freedom of movement. The ECJ acknowledged that sporting rules imposed to minimise disruption and distortional effects on the overall objectives of the league could justify such restrictions. In Deliege, another freedom of movement case, Deliege argued that her non-selection for the national team as a judokas was contrary to Article 39. The ECJ held that rules restricting the number of athletes in a national competition were simply sporting rules and therefore not in contravention of the freedom of movement obligations. Accordingly, the post-Bosman rulings on the one hand indicate an increased willingness of the EU to acknowledge that sporting rules are exempt from the regulatory regime of the EU, which is undoubtedly necessary to ensure a pragmatic approach to the interpretation of sporting rules. Conversely, the new restrictions implemented by UEFA are prima facie clearly difficult to reconcile with the Bosman ruling or the sporting rules principle. Nevertheless, UEFA’s rationale is that their new rules are in fact sporting rules justified on the basis of the game and in the interest of the game57. For example, previous UEFA president Lennart Johansson argues that “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 them58”. Moreover, legal director Gianni Infantino argued that the new rules implement a “system whereby somebody with less money but a serious training programme has a better change than today to compete at the top level. This project is not about quotas or foreigners or nationality or reversing Bosman59”. As such, UEFA argues that the new “restrictions” are in fact sporting rules, which is not therefore contrary to Article 82. UEFA further bolsters its claims by relying on the results of its commissioned study, which demonstrated that the current system is in fact anti-competitive and that the UEFA home grown rules address the balance60. UEFA have also sought to shake off any suggestions of economic commercial benefit by relying on the premise that it is a not for profit organisation and re-invests monies into football development61. From an EU competition law perspective the other stumbling block is determining whether sporting rules constitute agreements, which is further compounded by the difficulty in distinguishing between rules of a purely sporting nature and rules which have commercial benefit62. Moreover, notwithstanding the intention of the Bosman decision to ensure that the sporting industry comply with EU competition law, it is arguable that the practical impact of the Bosman ruling in fact facilitated the big clubs to widen the gap between the rich and poor clubs63. Whilst the UEFA rules prima facie attempt to address the imbalance, it remains to be seen whether this is a move too little too late as the ECJ clearly missed an opportunity to address the “special nature” of football in the Bosman ruling. As such, the shifting approach of the EU moving away from hard law intervention begs the question as to whether the Bosman ruling was a false dawn in the regulation of sport by the EU competition regime and whether in fact the ECJ effectively scored an own goal. Bibliography BBCi Sport, (2005) Johansson presses for import restrictions. Available at ww.news.bbc.co.uk 21/10/2004. Blanpain R and Inston R., (1996). The Bosman Case, Sweet & Maxwell. London Michael J. Beloff., Tim Kerr and Marie Demetriou (2003).Sports Law. Hart Publishing. Damian Chambers, Christos Hadjiemmanuil, Giorgio Monti & Adam Tomkins (2006). European Union Law. Cambridge University Press. Chaplin, M., (2005). Homegrown player plans revealed. Available at www.uefa.com 3/02/2005. M El-Agraa (2007). The European Union: Economics and Policies. Cambridge University Press. Trevor Hartley., (2004) European Law in a Global Context: Text Cases and Materials. Cambridge University Press. See European Communities Act 1972. Hart, S., (2004). Create level playing field. Available at www.uefa.com Simon Gardner (2006) Sports Law. 3rd Edition. Routledge Cavendish. Caigner and Gardiner (2000). Professional Sport in the European Union: Regulation and Re-regulation. TMC Asser: The Hague David McArdle (2000). From Boot Money to Bosman: Football, Society and the Law. Routledge Cavendish Crollet, L, Levermore R, and Pearson, G (2002). For Business or Pleasure? A discussion of the Impact of the European Union Law on the Economic and Socio Cultural Aspects of the Football’s European Sports Management Quarterly Volume 2 No: 4 276 Richard Parrish (2003). Sports Law and Policy in the European Union. Manchester University Press. Norbert Reich (2003) Understanding EU Law: Objectives, Principles and Methods of Community Law. Intersentia. Whish, R., (2003). Competition Law. 5th Edition Butterworths. Report of the Committee on Culture, Youth, Education and the Media on the European Community and Sport, 27 and 29 April 1994. Report on the role of the European Union in the field of sport 28 May 1997. www.bbc.co.uk www.eurotreaties.com www.europa.eu www.europarl.europa.eu www.eucaselaw.info www.uefa.com Read More