FIFA’s Football Agent Regulations and European Competition Law

Abstract

We assess the relationship between professional sport and European Union competition law using the example of the FIFA Football Agent Regulations (FFAR), a set of rules enacted by FIFA, the world football governing body, to regulate the activities of football agents. The FFAR have been challenged under competition law before national courts and in arbitration proceedings before the Court of Arbitration for Sport. The European Court of Justice has been asked to rule on the matter. The FFAR are the result of an anti-competitive decision by an association of undertakings. In particular, there is no exception for such agreements under the so-called Meca-Medina test. This analysis is supported by the European Court of Justice’s 2023 rulings in sports cases, in particular the European Superleague.

1. INTRODUCTION

Over recent months, courts across Europe have been taking a look at the football business and in particular the FIFA Football Agent Regulations (FFAR).¹ This regime, enacted by the world football association FIFA, aims to regulate the activities of football agents. Most courts came to the conclusion that these rules are not compliant with European competition law.² A notable exception was an award rendered by the Court of Arbitration for Sport (CAS).³ At the time of writing, the European Court of Justice (ECJ) is examining the matter.⁴ In December 2023, the ECJ addressed other sport-related competition law issues in three high-profile rulings.⁵

The FFAR case is not the only case where the sports business is under competition law scrutiny—the industry is one of the last in the economy where the enforcement of basic European Union (EU) law is still controversial. The discussion of the FFAR gives us an opportunity to shed more light on the relationship of professional sports and EU competition law. It may not surprise readers with a liking for either sports or antitrust that competition produces the best results when it is free and fair—be it on the football pitch or in the market for sports-related services.

After briefly discussing the relationship between sports, competition law, and the role of agents (Section 2), we will outline the content of the FFAR (Section 3). The central legal question is whether the rules infringe the ban on restrictive agreements stipulated by Article 101 TFEU or qualify for an exception based on the ECJ’s Meca-Medina case law (Section 4). We illustrate the competition law approach with the example of fee caps (Section 5) before we conclude (Section 6).

2. COMPETITION AND SPORTS

The football business is part of the economy and must therefore adhere to the rulebook for businesses. The commercial aspects of entertaining people with sports are obvious: the organizers of sports events commercialize the right to broadcast these events; tickets, merchandise, and equipment are sold; athletes are active advertisers; numerous service providers surround the world of professional sport events. Football agents are part of this, providing services to their clients, representing their interests, advising them, or taking care of everything so that the athlete can concentrate on performing. The players are at the centre of the value chain—it is their performance on the pitch that sets the ball rolling in every sense.

The business is organized around football clubs that bring together the players, meet in tournaments or leagues, and organize the commercialization. The clubs combine their interests in national associations that form a European and an international association (UEFA and FIFA).

Without a doubt, Article 101(1) TFEU is applicable to the activities of football clubs and of their associations, be they the national ones, UEFA, or FIFA. These associations are associations of undertakings. On FIFA, the General Court (GC) explicitly stated in Piau:

‘FIFA’s members are national associations, which are groupings of football clubs for which the practice of football is an economic activity. These football clubs are therefore undertakings within the meaning of Article 81 EC [now Article 101 TFEU] and the national associations grouping them together are associations of undertakings within the meaning of that provision.’⁶

In the same judgment, the GC confirmed that FIFA’s football agent regulations (which are at issue now) are a ‘decision’ by the association of undertakings in the sense of Article 101(1) TFEU.⁷ The ECJ in 2023 confirmed that

FIFA and UEFA both carry on economic activity consisting in the organisation and marketing of international football competitions and the exploitation of the various rights related to those competitions. Thus, in so far as they do so, those associations are both undertakings. They both also hold a dominant position, or even a monopoly, on the relevant market.⁸

There are three aspects, though, that make sport special. First, sport has a social function and enjoys special protection under European law.⁹ It brings people together, is embedded in local communities through volunteer work, contributes to educating young people by teaching rules and values, and it triggers and channels emotions. These features are especially present in amateur sports and worth factoring in when—and if—professionally organized sport promotes them.¹⁰ Article 165(1) TFEU takes this point up by stating that the EU should ‘contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function’. Paragraph 2 names ‘promoting fairness and openness in sporting competitions’ as one of the goals of EU action.¹¹ But Article 165 TFEU is far from giving free rein to sports associations. The ECJ clarified in its European Superleague judgment that the provision is not a ‘special rule exempting sport from all or some of the other provisions of primary law […] or requiring special treatment for sport’.¹² It stated that only EU institutions—and not private associations like FIFA—can invoke the Article.¹³

The second reason that makes professional sports a product special is the fact that competing undertakings need each other to create the product: there is no football match without a rival. Athletes or their clubs need to agree on certain rules for sporting competition, which makes some form of coordination inevitable. The demand for sports entertainment depends, to a certain degree, on a competitive balance between the clubs.¹⁴

Thirdly, in this setting, there needs to be someone organizing the competition. In football, the one-federation-principle (‘Ein-Platz-Prinzip’) is established, meaning that there is only one organization per territory that centrally coordinates the sporting activities in question. On the national level, this organization is the respective national football association with the clubs as its members. Internationally, there is a pyramid with the national associations being members of both their continental association (such as UEFA for Europe) and the single worldwide association, FIFA.¹⁵ This model of organization is by no means a necessity (as other sports such as boxing or chess with competitive structures prove) but we take it as a given. This design has driven the relevant markets into a monopolistic internal structure.¹⁶ On a related note, legal disputes within a sporting organization (or against one) are settled by a system of special tribunals, especially the Court of Arbitration for Sport (CAS) or national arbitrational chambers such as the UK Court of Arbitration for Sport.

The legal recognition of sports in Article 165 TFEU, the need for coordination between competitors and the internal monopolistic design of sports raises the urgent question of how the values of free competition can be upheld such that consumer welfare and the competitive structure bring about efficiency and innovation. As in other sectors of the economy,¹⁷ the characteristics of this specific branch do not mean that the fundamental rules of the Treaties (such as Articles 101 and 102) can be set aside.

Competition law, therefore, is applicable. The ECJ states that even rules that are ‘purely sporting in nature’ are not removed from the scope of competition rules unless they ‘have nothing to do with economic activity’.¹⁸ There is no room and no legal justification for a derogation of competition law regarding the economic activities surrounding sports.¹⁹ To maintain the fans’ enthusiasm for the game—and the economic success of all market participants—competition is upheld as a matter of law for the products and services in the sports sector.

Competition law forms part of the ordre public. This concept is used to identify essential requirements of the law that cannot be set aside (completely).²⁰ Since the protection of competition, as expressed in Articles 101 and 102 TFEU, forms such a fundamental principle of European law, it claims recognition in all settings, including private arbitration. The ECJ and national courts have repeatedly held that competition law must be adhered to in arbitration, where it cannot be set aside by agreement of the parties but has to be examined ex officio by the respective tribunal.²¹

The monopolistic and pyramidal organization of the football business makes competition law scrutiny particularly important. In particular, it must be ensured that monopolists do not leverage their economic power on adjacent markets.²² AG Rantos stresses that

sports federations are exposed to a potential conflict of interests given that, on the one hand, they hold a regulatory power and, on the other hand and at the same time, they perform an economic activity.²³

According to him, the rules that associations set in organizing football competitions ‘must be subject to restrictions, obligations or review’.²⁴ The ECJ ruled in the European Superleague that FIFA’s regulatory power ‘must, in order not to infringe, by its very existence, Article 102 TFEU […], be placed within a framework of substantive criteria which are transparent, clear and precise.’²⁵

In sum, there is no doubt that sport is special. But it is also beyond doubt that competition law is applicable as part of the ordre public that embodies the values and core rules of the EU.

3. THE FIFA AGENT REGULATION

The new FIFA Football Agent Regulations (FFAR) are intended to regulate the economic activities of football agents. The FFAR apply to persons offering ‘football-related services performed for or on behalf of a client […] with the […] intention of concluding a transaction’.²⁶ Clients can be players and coaches as well as clubs.

Clubs need the services of players and coaches. While clubs are experienced in signing players and have a specialist legal and management team, individual players are at a disadvantage when entering into negotiations with clubs. Players only sign a limited number of contracts in their careers, their’ careers end in their mid-thirties, and they often lack life experience and/or higher education, as they start their careers as early as possible. Unions or other representation of clients’ interests play no significant role.

In this setting, it is a question of fairness that players are advised by professional agents. It is also important not to characterize the agents’ activities on the basis of contracts entered into by star players like Mbappé and Haaland, who may have the bargaining power to demand almost any conditions they want. The vast majority of players are in lower leagues with modest income. Taking the very few transactions at the top as representatives would be equivalent to looking into housing markets, starting from the perspective that there is mainly a luxury segment. Advisors, in this setting, help to even out the bargaining power and to develop the careers of athletes. Their services are not restricted to transactions, but they usually perform a large variety of tasks, helping players to focus on sports.

With the FFAR, FIFA unilaterally imposes its provisions upon agents. Most importantly,

• agents must be licensed (Article 11, No 1), which requires passing an exam, paying an annual fee, and meeting other eligibility requirements (Articles 4–8),

• agents can only represent more than one party in a transaction on the basis of prior written consent (Article 12, No. 8), and cannot represent the releasing entity and an individual, or the releasing entity and the engaging entity, or all parties within the same transaction (Article 12, No 9),

• the fee has to be paid by the client who engaged the agent (Article 14, No 2),

• the fee must be calculated depending on the player’s remuneration (if engaged by the player and/or the engaging club) or the transfer fee (if engaged by the releasing club) (Article 15, No 1, 2),

• the fee is capped at 5 per cent of the player’s remuneration for player remuneration below USD 200,000 or 3 per cent for remuneration above this amount (the caps are doubled if the agents can represent more than one party); if the releasing club has engaged the agent, the fee may not be higher than 10 per cent of the transfer compensation (Article 15, No 2),

• all fee payments to agents have to be made through the FIFA Clearing House, a FIFA bank (Article 14, No 13),

• FIFA discloses names and clients of agents as well as transaction details (Article 19).

FIFA justifies the regime with its ‘statutory obligation to regulate all matters relating to the football transfer system’ and names six core and seven secondary objectives the rules allegedly aim at (Article 1). The objectives will be further described and put to a test when applying the EU competition rules (see ‘No anticompetitive nature by object’ and ‘Requirements of the exception are not fulfilled' sections subsequently).

The lawfulness and legitimacy of the new regime is in doubt. Two German courts have requested a ruling of the ECJ pursuant to Article 267(2) TFEU²⁷: while the request of the Regional Court (Landgericht) of Mainz directly concerns the FIFA rules,²⁸ the Federal Court of Justice (Bundesgerichtshof) has posed questions relating to the (similar) legal rules for football agents issued by the German football association DFB in 2015.²⁹ While the ECJ’s judgment is being awaited with some anticipation, without being authoritative,³⁰ the CAS³¹ and the UK Court of Arbitration for Sport have already submitted their opinions on the matter.³²

The FFAR entered into force on 1 October 2023. However, the lack of certainty regarding the rules has taken its toll: courts in Germany,³³ Spain,³⁴ and the UK³⁵ have ordered FIFA to refrain from enacting (parts of) the FFAR. Consequently, FIFA has suspended certain disputed provisions of the FFAR worldwide until the ECJ hands down its judgment.³⁶

From an institutional perspective, it may be of interest to point out some of the circumstances underlying the FFAR and the CAS award.

The FFAR was approved on 16 December 2022, in Qatar, when the football world’s attention was devoted to the World Cup final due to take place 2 days later. While FIFA claims to have conducted a thorough consultation with all relevant stakeholders,³⁷ this is refuted by several influential agents and their representatives, who claim that FIFA knowingly relied on voices that do not speak for the (majority of) agents.³⁸

Regarding the CAS decision, it is noteworthy that the claimant bringing the claim to the CAS is the Professional Football Agents Association (PROFAA). Well-known agents’ representatives have denied that this organization represents the majority of agents and/or serves their interests in the CAS proceedings.³⁹ It was rumoured that the proceedings were initiated to produce a favourable CAS opinion for FIFA.⁴⁰ While the truthfulness of such allegations remains unclear, it is striking how often the CAS has concluded that the claimants had not sufficiently substantiated the claims or failed to meet the burden of proof.⁴¹ This allowed the panel to decide on procedural grounds instead of the merits of the rules for agents. Since the ECJ follows different rules for the burden of proof,⁴² the CAS’s decision can hardly serve as a model.

4. BAN ON RESTRICTIVE AGREEMENTS (ARTICLE 101 TFEU)

The central legal question is whether the FFAR comply with Article 101(1) TFEU.⁴³

The FFAR are the result of a decision by an association of undertakings. The agreement works by placing binding obligations on FIFA-bound football clubs, which are basically all professional football clubs worldwide. They, in turn, are not permitted to work with agents who do not comply with this system. Since—in the monopolistic and pyramidal system—agents do not have the option of turning to other trading partners, the regime—if applied—can be established globally for football agents’ services.

In the following, we will show that the FFAR is in fundamental conflict with a core rule of competition. There is no room for an exception following the ECJ’s ruling in Meca-Medina and as interpreted in the European Superleague. A justification based on Article 101(3) TFEU can be ruled out.

Fundamental breach of the principle of independence

Each provision of the FFAR has to be considered on its own.⁴⁴ However, the regime in general already contradicts the basic principle of independence on the market and can be deemed as restricting competition. As the CAS panel rightly asks, the FFAR mechanism begs one question from the outset:

[C]an FIFA extend its regulatory powers beyond the task of governing the sport of football itself and cover peripheral economic activities, particularly the market of football agent services?⁴⁵

From a competition law perspective, the answer must be no. FIFA imposes the organizing rules on independent undertakings that provide services on a free market and are not FIFA members. In subjecting the global market to its rules, FIFA is arrogating to itself a regulatory competence over third parties, ie, independent market actors. Regulating markets or setting conditions for doing business is—if at all—in the competence of public institutions. Where companies or associations of companies coordinate to regulate the economic activities of the other market side, this may amount to a restrictive business practice, and potentially also an abuse of their dominance.⁴⁶

It is the ECJ’s settled case law that the competition rules are based on the concept ‘that each economic operator must determine independently the policy which he intends to adopt on the common market’.⁴⁷ Thus, the central question in establishing any restriction of competition is whether undertakings are still acting independently on the market. This fundamental requirement of independence (Selbstständigkeitspostulat) holds true across sectors.

The outcome of the rules set by FIFA is that players, clubs, and agents are restricted in their ability to decide independently. A contract between an agent and a club or a player needs to be compliant with the FFAR for fear of triggering sanctions (Article 21 FFAR) and losing future contracts from clubs.⁴⁸ Players and clubs can, for example, only engage agents that are licenced by FIFA and negotiate a fee up to a maximum limit set by FIFA. This restricts the freedom of economic operators to negotiate on their own, thus operating on the market according to the rules of supply and demand. FIFA’s coordination of the clubs amounts to a stifling of competitive advances by agents. They lose their economic freedom due to the regulation of their activities. This regulation contributes to the impression that those setting the rules are strongly biased against agents and are pursuing their own economic interests, for example, by channelling all transactions through their own clearing house.

The CAS comes to a different conclusion, giving FIFA the right to set such rules. It places the burden of proof on the side of the agents to show that FIFA is not ‘a priori’ entitled to set rules for separate entities. The CAS seems to argue that the activities of football agents are not a ‘peripheral economic activity’ but that football agents ‘directly engage in the organization and functioning of the market of players’ services, with respect to their employment and transfer—ie, with respect to one of the core aspects of the entire football system.’⁴⁹ The CAS (without going into any detail or elaborate argument) also suggests that this is what AG Rantos meant in his opinion on the European Superleague when granting sporting associations the right ‘to lay down appropriate rules for the organization of a sporting discipline’.⁵⁰

This is a fundamental misunderstanding on the CAS’s part. The CAS confounds rules for what happens on the pitch such as ‘11 players in one team’ or the rules for yellow and red cards with rules for normal economic activities. Following the CAS’s ideas would mean that anything even remotely connected with professional football might be subjected to the rules of the dominant actor on the market. The relevant market in this case is the market for the provision of agency services.⁵¹ Football clubs and players (and coaches) are active in this market as recipients of the services offered by the agents, especially the brokering of contracts.

The distinction between rules necessary for the sporting discipline on the pitch and rules for economic activities on adjacent markets is a fundamental issue that underlies the dispute. It is noteworthy that the ECJ did not take up the wording of AG Rantos in its European Superleague judgment. In this most recent case, the ECJ clearly stated that all economic activity in the field of sport must adhere to the competition law rules of the Treaty. It held:

Only certain specific rules which were adopted solely on non-economic grounds and which relate to questions of interest solely to sport per se must be regarded as being extraneous to any economic activity.⁵²

The ECJ named ‘the organisation of competitions in their discipline, their proper functioning and the participation of sportspersons therein’ as examples of rules that may be set by associations like FIFA.⁵³ This represents a clear focus on what happens on the pitch, namely the competition in the discipline. This must be read narrowly, as the ECJ states.⁵⁴ Associations must not, in setting such rules for the sports contest, ‘limit the exercise of the rights and freedoms conferred by EU law on individuals’.⁵⁵ One of these rights and freedoms (going beyond the fundamental freedoms) is the right of an individual to determine their behaviour and strategy in the economic sphere autonomously.

In the European Superleague case, the ECJ left no doubt that the rules at issue constituted an economic activity. These rules related to the organization of a football league by clubs that were members of the organizations in question. The regulation of services provided by third parties to individuals and to clubs in adjacent markets is much further away from ‘sport per se’. They constitute an economic activity and fall within the scope of Articles 101 and 102 TFEU.

The so-called Meca-Medina exception

As seen above, the field of sports requires some form of coordination. In the case of Meca-Medina,⁵⁶ the ECJ recognized this and created an exception from Article 101(1) TFEU. The scope of the Meca-Medina exception has been a matter of controversy. In the case itself, the International Olympic Committee had banned two swimming athletes from contests under the Committee’s doping rules. The athletes claimed that the rules violated competition law.

The ECJ introduced the exception with the argument that

not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC [now Article 101(1) TFEU]. For the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives and are proportionate to them.⁵⁷

The Court built on Wouters,⁵⁸ a case where a body representing lawyers used the self-regulatory power Dutch law conferred on it to prohibit a professional partnership of lawyers and auditors. The wording in Meca-Medina, as cited here, is so broad that it would subject all agreements to a test of context. The ECJ clarified that the legitimate objective in the realm of sports is

inherent in the organisation and proper conduct of competitive sport and its very purpose is to ensure healthy rivalry between athletes. (…) It follows that, in order not to be covered by the prohibition laid down in Article 81(1) EC, the restrictions thus imposed by those rules must be limited to what is necessary to ensure the proper conduct of competitive sport (…).⁵⁹

With Meca-Medina, the Court thus drew a line between the economic aspects of sport and the rules necessary for the ‘organisation and proper conduct of competitive sport’ that aim to ensure healthy rivalry.

For the sport associations, there is an incentive to extend the reading of this exception beyond the competition principle. We will now look into the scope of the Meca-Medina exception (i), the burden of proof (ii), and the criteria as applied to the FFAR (iii). This essentially follows the questions the two German courts referred to the ECJ.⁶⁰

Scope and applicability of the exception

The EU is committed to ‘an open market economy with free competition’⁶¹ including ‘a system ensuring that competition is not distorted’⁶². Articles 101 and 102 TFEU stand at the core of the European economic system and are central pillars of European primary law as a whole.⁶³ It is a general rule of European legal methodology that derogations from a principle must be interpreted strictly.⁶⁴ Consequently, AG Rantos emphasizes in his opinion in the European Superleague that the exception must be interpreted restrictively.⁶⁵ The Court, in the European Superleague, seems set to further restrict the so-called Meca-Medina exception. The case itself is cited only six times, mostly in relation to uncontroversial issues. In 2023, the Court introduced the Meca-Medina ruling with the slightly distancing phrase that the Court had been ‘led to observe, in view of the information available to it’, that anti-doping rules were not in the scope of Article 101(1) TFEU.⁶⁶

Much more important than this quantitative and linguistic indicator is the new spin that the Court gives the exception.

First, the Court stresses that the case dealt with the conduct of athletes in the sports contest. The anti-doping rule served to ‘safeguard the fairness, integrity and objectivity of the conduct of competitive sport, ensure equal opportunities for athletes, protect their health and uphold the ethical values at the heart of sport, including merit’.⁶⁷ This statement again focuses on what happens on the pitch. It has nothing to do with the economic considerations of other market actors.

Secondly, the Court holds that the Meca-Medina case law does not apply to conduct that by its nature infringes Article 102 TFEU.⁶⁸

Thirdly, according to the ruling in the European Superleague, Meca-Medina does not in any way apply to conduct that has as its very object the prevention, restriction or distortion of competition.⁶⁹

These are important modifications that we will address in the following sections. The latitude for exempting agreements with the help of Meca-Medina seems to have narrowed considerably after European Superleague.

Rationale of the Meca-Medina exception

To interpret the exception, its rationale needs to be analysed. Three strands of thinking have been put forward in this regard.

The first rationale for Meca-Medina places it in a line of cases, starting with Wouters,⁷⁰ that deal with associations that have the power to regulate their own affairs.⁷¹ Such associations may be well-placed to self-regulate due to experience and insight.⁷² This suggests that the exception is rooted in the freedom of association as guaranteed by Article 12(1) CFR, Article 11 ECHR.⁷³ As a fundamental right, the freedom of association only guarantees the competence to regulate the organization’s own affairs. If such associations are not entrusted (by statute) to fulfil tasks in the public interest, and if they are not bound (by statute) to pursue the public interest, they are acting in their own private interest. This limits their possibility to ‘regulate’ beyond their own competences. For football associations, this means that they may not go beyond their original capacity of regulating the sporting competition for members. Consequently, a set of rules which restricts competition qualifies for an exception only as far as the power to regulate the association’s own affairs goes.

Regarding the material content of this self-regulation, the rules need to concern an organization’s social function. For FIFA, this is the organization of club life or sporting events—‘the proper conduct of competitive sport’, to use the words of Meca-Medina. It does not extend to the economic behaviour of third parties active in markets where members of the association source goods and services.

As regards personal reach, an association’s power to regulate its own affairs applies only to people who have voluntarily submitted to the association’s ambit.⁷⁴ An association lacks the democratic legitimacy to bind people who are not its members and have no vote in its affairs. Rules for outsiders are not eligible for an exemption from the competition rules. As an example, the lawyers’ association in Wouters could not have set a maximum price for law books bought by the members of the lawyers’ association.

AG Rantos, in his opinion in European Superleague, offers a different rationale for the Meca-Medina exception, linking it to the ancillary restraints doctrine.⁷⁵ For this concept, the restriction in question needs to be ‘directly related to and necessary for the implementation of a main transaction, which is not itself anticompetitive in nature’.⁷⁶ Regarding Wouters and Meca-Medina, the non-anticompetitive reference point would not be commercial but rather a regulation by a private body which serves legitimate, non-commercial interests (‘regulatory ancillary restraints’).⁷⁷ This approach leads to the same results: it still needs to be established that the regulation in question would ‘directly relate to and (be) necessary’⁷⁸ (for) the regulation’s legitimate objectives. In other words, the regulatory ancillary restraints doctrine would only be applicable if the anticompetitive conduct can be directly linked to the non-commercial, sports function of the FIFA.

In its European Superleague and ISU judgments, the ECJ did not take up this line of reasoning. Rather, the ECJ saw a common denominator in the fact that the cases involved ‘decisions […] adopted by an association such as a professional association […], with a view to pursuing certain ethical or principled objectives and, more broadly, to regulate the exercise of a professional activity.’⁷⁹ This suggests that the exception can be traced back to an organization’s power to regulate its own affairs.

According to a third reading that separates Wouters and Meca-Medina, the latter can be seen as an exception that is inherent in sports due to the necessity to organize the rules of the game so as to make the ‘product’ work.⁸⁰ In that case, the exception would be considered a singularity, based on the characteristics of sports. This is a common-sense interpretation: all sports spectators will accept that rivals must come to a common understanding in setting rules on doping, on the number of substitutes, on offside, or on yellow cards. Sporting competition would be pointless if doping was allowed and did not entail any consequences.⁸¹ That is also obvious for the necessity to organize tournaments, tables, leagues. In this interpretation, the exception relates to these sport-specific factors and can only justify restrictions with a direct impact on the pitch.

All three theories require a direct link to sporting conduct, that is what happens in the contest of athletes competing for success in sports.

This requirement is in line with European case law: the ECJ stated that ‘it naturally falls to the bodies concerned, such as […] sports federations […] to lay down appropriate rules.’⁸² The ‘rules’ in question concerned who could compete in a judo tournament and thus the elementary conditions of the sporting competition. AG Rantos stated in his opinion in the European Superleague that sports federations have the power ‘to lay down appropriate rules for the organisation of a sporting discipline’.⁸³ In Meca-Medina, the ECJ argued that anti-doping rules are needed ‘to safeguard equal chances for athletes, athletes’ health, the integrity and objectivity of competitive sport and ethical values in sport.’⁸⁴ In the European Superleague and ISU, the ECJ took this up and linked the exception to the protection of ‘the ethical values at the heart of sport’.⁸⁵ These elements derive directly from the social functions of sport which Article 165(1) TFEU is supposed to foster.⁸⁶

The GC relied precisely on the ‘direct link’ in the case of ISU.⁸⁷ In this case, the International Skating Union (ISU), which is organized similarly to FIFA (composed of national associations, ISU being the sole sports federation recognized by the International Olympic Committee in the field), had rules that determined that skaters may only participate in events authorized by the ISU. The Commission held that the eligibility rules did not pursue a legitimate objective directly linked to sports. The GC considered the connection to be sufficient but deemed the rules in question disproportionate.⁸⁸ The ECJ upheld the Commission’s decision in full. According to the Court, the eligibility rules that determine access to the sporting contest cannot be exempted, although it could be argued that they represent a close connection to the sports event per se. The Court stated:

[…] such rules must be regarded […] as having as their object the restriction of competition. They confer on the entity that adopted them and that is empowered to implement them the power to authorise, control and set the conditions of access to the relevant market for any potentially competing undertaking, and to determine both the degree of competition that may exist on that market and the conditions in which that potential competition may be exercised.⁸⁹

This clear-cut statement corresponds exactly to the agents’ case, with the notable difference that in the agents’ case, it is not even eligibility for the main sporting competition that is restricted. Instead, FIFA restricts access to another market for non-members.

No direct link between the FFAR and sports

The FFAR rules are neither directly linked to the organization of the sporting competition in the sense of the Meca-Medina exception, nor can they be considered part of a sport association’s own affairs. Covering only professional football and the transfer system of professional athletes, they do not fall within the social function of sports either.

The CAS claims that agents are closely linked to the organization of football: ‘Agents, in fact, as far as they represent the interests of clubs and players, directly engage in the organization and functioning of the market of players’ services, with respect to their employment and transfer—ie, with respect to one of the core aspects of the entire football system.’⁹⁰

This argument is flawed in two ways.

First, the matter concerned does not have a direct link to the sporting event (the match on the pitch). Agents are involved in the employment and everyday life of players. Many aspects of this professional relationship of agents and players have nothing to do with any FIFA-related matter, for example, when agents work with players on life routines, personal legal matters or similar. It is far-fetched to think that employment and transfer are ‘core aspects of the entire football system’. The core of the system is the match where teams meet to compete. Whom they employ, how they recruit new players, how much they are willing to invest and under what conditions middlemen represent the parties involved in such transactions are at most preparatory economic activities for the sporting competition. From a factual viewpoint, there are a lot of steps from setting the conditions for a football agent’s business to the competition of teams in the football stadium. It is hard to imagine a direct line of impact from the regulation of fees for agents or the channelling of transactions through a FIFA clearing house to the result of competing teams in a sporting event.⁹¹

In the European Superleague, AG Rantos relies on the reasoning that the further an activity is away from the original characteristics of sport, the less it qualifies for a derogation from the prohibition of restrictive business practices.⁹² If the impact of a measure on the functioning of a football match is entered on a scale, the conditions for the activities of the agents are far from the notion of ‘direct impact’. The GC reached the same conclusion in the case of Piau, which concerned a previous FIFA agent regulation. The GC established that rules concerning agents are not entitled to an exception as they are not connected to the ‘specific nature of sport’ but concern ‘an economic activity’.⁹³ It then looked at the written exception of Article 101(3) TFEU.⁹⁴

Secondly, from a legal perspective, extending the idea of direct link to any activity that influences the sporting event, be it ever so remote, widens the exception. A far-reaching exception moves the system to a general rule-of-reason approach. This seems to be what the CAS has in mind when it states that ‘over time the EU Court of Justice has gradually limited the scope of the sporting exception, and instead more broadly recognized the economic character of sports, thus favouring a nuanced proportionality assessment in each case’.⁹⁵

The ECJ ruling cited for this statement (paragraph 26 of the Meca-Medina ruling) does not deal with competition law (but with the fundamental freedoms), it is the starting point of the modern analysis (not the end point of a gradual development), and above all, the relevant section in the ECJ judgment actually points in the opposite direction.

What the CAS is trying to do here is to establish a ‘nuanced proportionality assessment’ as what it itself sees as activities with an ‘economic character’. But such a rule-of-reason approach has never been accepted under European competition law.

Interim conclusion on the Meca-Medina exception

If the Meca-Medina exception is interpreted as granting a private association the competence to regulate its own affairs, this competence is limited to its social function and to the internal affairs of its members. This does not leave room for the FFAR to be exempted from competition rules, since they do not concern the social function of FIFA and are primarily aimed at non-members. In other interpretations of the exception, it is decisive whether there is a ‘direct link’ between the regulated matter and the organization of on-pitch competition. The FFAR lies well beyond this scope: they target a solely economic issue, take effect in a market that has no direct connection to the sporting competition, and are thus not affected by the characteristics of sport.

Burden of substantiation and burden of proof

It is incumbent on FIFA to substantiate and to establish that the regulation qualifies for an exception applying the legal standards described above and to show that the exception’s requirements are met.⁹⁶ In the European Superleague, the ECJ makes this clear by stressing that the exception can only be applied ‘if the association concerned demonstrates that the […] conditions are satisfied’.⁹⁷

There are two reasons for this. Firstly, FIFA requests an exception from a general principle which exists to protect all market participants and competition as such. As derogations must be interpreted strictly⁹⁸ and applied cautiously, their benefits must be made convincingly clear.

Secondly, Article 2 of Regulation 1/2003 addresses the burden of proof for another exception to the ban on restrictive agreements, namely Article 101(3) TFEU. Sentence 2 stipulates that ‘the undertaking or association of undertakings claiming the benefit of Article 81(3) of the Treaty [now Article 101(3)] shall bear the burden of proving that the conditions of that paragraph are fulfilled.’ The ECJ states ‘that a person who relies on that provision must demonstrate, by means of convincing arguments and evidence, that the conditions for obtaining an exemption are satisfied’.⁹⁹ The Commission guidelines illustrate that all (efficiency) claims must be substantiated in such a way that they can be verified by the deciding court or authority.¹⁰⁰

The same holds true for the unwritten Meca-Medina exception: the rules on the burden of proof can be called upon because in both cases the claimant wants the restrictive agreement, which derogates from the general principle in Article 101(1) TFEU, to be exempted. In the case of an unwritten exception limiting the very scope of the general principle, this demands even more substantiation from the claimant and even more scrutiny from the courts.¹⁰¹

The CAS considered that the burden of substantiation and proof lay with the agents’ representation as appellant in the case. On various occasions, the panel came to a decision on the basis that the appellant ‘fails to show’ a certain legal qualification.¹⁰² It argued that as the appellant challenged the agent regulation, it had to substantiate and prove that the regulation indeed infringes EU law. This may be consequential in an arbitration into which both parties enter voluntarily to present the empirical and legal ‘facts’ of the case, the panel deciding on what has been brought to its attention. Even in arbitration, however, the panel has to consider the ordre public ex officio.

Be that as it may, in the European Court of Justice, the roles are completely different: First, the Court decides autonomously on the law (see Article 19 sentence 2 TEU). Secondly, the European system sees unhindered competition as the general rule and generally opposes restrictions.¹⁰³ Anyone who wants to derogate from this general principle needs justification. This means that it is not the agents’ responsibility to argue that they want to keep their competitive freedom. Rather, FIFA needs to justify the restrictions brought about by the FFAR. Where FIFA fails to do so or where doubts are remaining, freedom of competition must prevail and an exception must be denied.

The criteria of the so-called Meca-Medina exception

Even if the Meca-Medina exception, which is not applicable in this case, were to be considered, the FFAR fail to meet the criteria of this exception. According to the ECJ in European Superleague, there are three criteria:

‘first, that they [the decisions by an association of undertakings] are justified by the pursuit of one or more legitimate objectives in the public interest which are not per se anticompetitive in nature;

second, that the specific means used to pursue those objectives are genuinely necessary for that purpose; and,

third, that, even if those means prove to have an inherent effect of, at the very least potentially, restricting or distorting competition, that inherent effect does not go beyond what is necessary, in particular by eliminating all competition.’¹⁰⁴

This is exactly the same wording as in the ISU case, which was decided on the same day.¹⁰⁵ Therefore, it is fair to say that the wording in European Superleague represents the latest view of the Court on this. The wording differs from the original wording in Meca-Medina. The 2023 version is more exact and narrows down the exception. In Meca-Medina, the Court had simply stated that

account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives.

It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives

and are proportionate to them.¹⁰⁶

Three differences stand out:

• Legitimate objectives must be in the public interest;

• they must not be anticompetitive in nature; and

• the proportionality test is set out in more detail.

The test has become tougher,¹⁰⁷ and the Court makes it clear that the public interest must prevail, and that the deviation from competition must be as restricted as possible. It may be better for practice to change the common name of this test to ISU test or European Superleague test instead of Meca-Medina test—which now seems to have been modified.

Legitimate objectives in the public interest

Assuming the FFAR pursued legitimate objectives, it would first be necessary to define what is legitimate.

Standard of legitimacy

If the exception is rooted in the freedom of association (Article 12(1) CFR, Article 11 ECHR), then only goals which fall within the association’s power to regulate its own internal affairs are ‘legitimate’. If the exception refers to sports, then there needs to be a ‘direct link’¹⁰⁸ to the organization of the sporting competition.¹⁰⁹

The ECJ and the Commission also apply these considerations: in Meca-Medina, the ECJ argued that the restriction in question must be ‘inherent in the organization and proper conduct of competitive sport’.¹¹⁰ In ISU, the ECJ relies on ‘objectives linked to the specific nature of sport’.¹¹¹ The Commission formulated in a working document that ‘legitimate objectives of sporting rules will normally relate to the “organisation and proper conduct of competitive sport”’.¹¹²

The CAS errs in its assumption that any ‘public interest objectives recognized by the EU legal order’¹¹³ can be considered legitimate. The EU recognizes and actively pursues a kaleidoscope of goals ranging from social justice to the prevention of crime (cf Article 3 TEU). A private organization cannot justify its anticompetitive conduct by alleging that it pursues the public interest.¹¹⁴ First, a private organization is not a state or public authority that serves all public interests. Secondly, the competence to regulate its own affairs is limited to the association’s own affairs and its members.

Thirdly, such an approach would make Article 101 TFEU unmanageable and weaken the protection of competition beyond compare. The Commission and the courts would have to consider in every case whether undertakings serve the public interest they allegedly pursue and whether this qualifies for an exception. It is a strength of competition law that does not accredit privileges and rarely recognizes derogations. Lastly, the strict requirements of Article 101(3) TFEU would be undermined. In short, the exception would become the general rule.

In his opinion in European Superleague, AG Rantos stresses that ‘it is not enough to rely on ‘vague’ or general objectives in the abstract’.¹¹⁵ The standard of scrutiny is influenced by the degree of legitimacy. Where there is an obvious or specific direct link to the organization of the sporting contest, further criteria of the test can be met more easily.¹¹⁶ Where the link to sports and the association’s social function is weak, the criteria become harder to meet.¹¹⁷

Where there are strong economic incentives for the restricting parties, this cannot be ignored in an assessment of legitimacy. The higher the economic interest in a restrictive measure, the less likely it is that this measure serves social functions or the direct working of the sporting contest. To take the present case as an example: the running of financial transactions through a FIFA bank or the fee cap has such a strong direct economic effect for the restricting parties that they overshadow any faint legitimate objective that the FFAR may carry.

Lastly, the standard of legitimacy is an objective one, there is no margin of appreciation.¹¹⁸ The Commission guidelines on Article 101(3) TFEU state that ‘only objective benefits can be taken into account. This means that efficiencies are not assessed from the subjective point of view of the parties’.¹¹⁹ The ECJ demands ‘quantifiable efficiency gains’¹²⁰ and has not taken up AG Rantos’ stance that UEFA enjoys a certain discretion.¹²¹

It is the task of courts to answer the legal question of whether a goal is legitimate and justifies an exception.¹²² The scope of an exception to the ban on restrictive agreements cannot be determined by the parties addressed by the ban.

Legitimate objectives of the FFAR?

As shown above, the agent regulation’s objectives must be in the public interest, not in FIFA’s private interest. They can only be legitimate if they possess a sufficiently close link to FIFA’s social function as an association, namely the organization of football competitions.

FIFA cites six core and seven secondary objectives (Article 1 FFAR). The core objectives are to protect contractual stability between players and clubs, encourage the training of young players, promote a spirit of solidarity between elite and grassroots football, protect minors, maintain competitive balance, and ensure the regularity of sporting competitions. The secondary objectives are setting minimum ethical standards, ensuring the quality of the service at fair and reasonable service fees that are uniformly applicable, limiting conflicts of interest, improving transparency, protecting players who lack experience, enhancing contractual stability, and preventing abusive, excessive, and speculative practices.

In its request for a ruling pursuant to Article 267 TFEU, the Regional Court of Mainz has expressed severe doubts as to whether these goals can be considered legitimate, as they are largely unconnected to the organization of sporting competitions.¹²³ The court considers contractual stability as the only goal which relates to sporting competition.¹²⁴ Indeed, the regulation of football agents leaves not only the pitch but also the stadium and even the markets directly connected to football (see Scope and applicability of the exception’ section).

While it will be shown that the agent regulation actually promotes none of the goals,¹²⁵ some goals—viewed individually and read literally—have a connection to football and its organization: for example, the protection of football as a solidarity system can be linked to Article 165 TFEU.¹²⁶ The goal of improving the training of young talents stands even closer to football and falls within the clubs’ responsibilities.¹²⁷ (But how does an agent regulation improve the training of young players?) The pursuit of other goals, such as the protection of minors,¹²⁸ does not lie within FIFA’s social function but is a task for public authorities and legislators.

The CAS goes too far in accepting the goals.¹²⁹ Take the goal of contractual stability. It allegedly pursues the improvement of working conditions. First, it is the job of football agents to create employment options for their clients, but they cannot end employment contracts that typically run for a fixed term. All parties involved must agree. If a player sees a better opportunity elsewhere and a club wants to hire a player currently employed by another club, they can negotiate. Players can only transfer during the transfer windows between competitions. If the current club does not agree, nothing will change. Unless a player wishes to discuss a transfer, nothing can happen. This kind of interaction does not even touch upon contractual stability.¹³⁰ Secondly, it is not a given that the working conditions of players or coaches are better if they stay with a club (instead of transferring to another employer with the possibility of earning more). Thirdly, it is the clubs themselves that wish to transfer players during their contract terms in order to generate transfer fees, which are an indispensable source of income for the clubs. Fourthly, it is not FIFA’s responsibility to generally regulate working conditions. In a similar way, this also invalidates FIFA’s submission that agents may act illegally: if a conduct is already considered ‘illegal’, this implies that there are already laws in place, rendering not only FIFA not competent but also the framework redundant. The ECJ explicitly stated that it is for public authorities and not for private undertakings to ensure compliance with the law.¹³¹

FIFA has also alleged that there are market failures¹³²: it has pointed to the ‘hidden information problem’ (implying that agents have superior knowledge); the ‘hold-up problem’ (agents allegedly use the short transfer frame to put pressure on clubs); the ‘gatekeeper problem’ (influential agents use their exclusive access to a player to their advantage); and the general problem that agents could use speculative tactics in pursuing profits.

These alleged but unproven phenomena are far from being market ‘failures’: if an agent enjoys special access to a player, such a position of trust is desired in an agent-client relationship and is most likely the result of strong commitment and service. Information being not publicly available in the market is the prerequisite for competition.¹³³ Using time pressure is not a unique feature in this market but happens everywhere—and here it is in fact the result of FIFA regulations that set the time frames for transfers.¹³⁴ The latter two arguments are particularly strange with regard to the much stronger information and bargaining position of the monopolistic associations and the clubs vis-à-vis the players. It is a question of fairness and a level playing field that players can be counselled by professionals who know the ‘transfer game’.¹³⁵ Lastly, as FIFA may be aware, it is not exactly unusual for market participants to pursue the goal of making profits.¹³⁶

No anticompetitive nature by object

In European Superleague, ISU, Lietuvos notarų rūmai, and Em akaunt BG, the Court made it clear that the exception does not apply where the objectives have an anticompetitive nature by object.¹³⁷ In the latter two cases, a notarial association respectively a lawyers’ association tried to set minimum prices as allowed for by national law. The Court straightforwardly rejected a justification based on Wouters as a restriction by object could not be justified. As has been clear in the jurisprudence, it is not inconsistent that legitimate objectives are being pursued while at the same time, this represents a restriction by object.¹³⁸ Restrictions of competition by object can never be exempted under these criteria. To assess the objectives, it is not FIFA’s statements but their real nature that must be considered.

The ECJ advances two cases for a restriction by object.

The conduct must be ‘particularly harmful to competition, such as horizontal cartels leading to price-fixing, limitations on production capacity or allocation of customers.’¹³⁹

A second case is the one of ‘certain types of horizontal agreements other than cartels, such as those leading to competing undertakings being excluded from the market, or even certain types of decisions by associations of undertakings aimed at coordinating the conduct of their members, in particular in terms of prices.’¹⁴⁰

It is beyond the scope of this article to determine whether the restrictions in the FFAR are restrictions by object,¹⁴¹ but in particular in those cases where key parameters of doing business are affected (eg, the fee cap), we find strong evidence in favour of a restriction by object. Actually, the second case advanced by the ECJ reads as if it were a statement on the FFAR.

Restrictions not inherent in the pursuit of the objectives

If some of the objectives were to be considered legitimate, that is sufficiently linked to sporting competition and to the social function of FIFA, it would have to be further assessed whether the restrictions of competition are ‘genuinely necessary’ to achieve the goals or ‘inherent in the pursuit’ of the goals. This wording implies that the restrictions of competition must be a ‘by-product’ of the regulation—and not one of its purposes; and the regulation must be necessary for attaining the goals.

Regarding the first point, the restriction of competition through maximum prices is not only a by-product but the basic goal of the FFAR. The FIFA itself admits as much when naming fair and reasonable prices as an objective. As the clubs, which are indirectly FIFA’s members, usually pay for the agents’ services, they are the only parties that directly profit from more ‘reasonable’ (which equals lower) prices. To put a number on the potential savings: in 2020, clubs spent USD 500 million in agent fees.¹⁴² This stands in an irresolvable conflict with the rationale of Article 101 TFEU: the objective of an agreement restricting competition cannot be that the cartel members pay less. In a free-market economy driven by competition, prices are determined through market interaction and not by buyer cartels.

It is questionable how the goals can at all be promoted by an agent regulation. How will a regulation with detailed rules for agents affect the training of young talents? Will better players come to weaker clubs if agents are paid less? Is it not as likely that a limit on the fees that an agent can make from one deal leads to the agents pressing for more transfers, thus hampering contractual stability?¹⁴³ These examples may suffice to show that FIFA’s reasoning lacks consistency and logic. Most of all, however, there is no proof of the necessity for these restrictions under the second criterion. As the ECJ stresses for Article 101(3) TFEU, it does not suffice to merely claim ‘laudable’ goals without backing them up with hard facts proving how exactly the restrictive agreements aim to realize them.¹⁴⁴

Proportionality

If the last step of the exception were to be reached—which we consider exceptionally unlikely in the case at hand—the restriction of competition would have to be proven as being proportionate to the legitimate and positive objectives fulfilled. Usually, proportionality itself is examined in three steps: Does the regulation have the capacity to pursue legitimate goals? Are there other, equally effective measures conceivable that are less intrusive on the principle of competition? Is the restriction of competition proportionate to the importance of the pursued goals and to the degree to which they are fulfilled?

The two first questions overlap (in part) with the two first steps of the test.¹⁴⁵ The focus of the proportionality assessment lies specifically on the following elements:

• The majority of objectives the FFAR allegedly serve is not sports-related in nature and not directly linked to the social function of FIFA; therefore, the objectives are not legitimate and must be discarded.

• The restriction of competition is significant, as FIFA leverages its dominant position to impose rules in an adjacent market. The third parties bound by the rules have no direct influence on what happens in the stadium. It is mainly the clubs and FIFA that profit economically from the FFAR. This means that cartel members profit from their own restrictive agreement.

It cannot be established that the regulation actually fulfils any legitimate objectives to the degree which would be required, if at all.

Overall, the objectives FIFA brought forward cannot justify the significant restriction on competition and are therefore disproportionate.

Article 101(3) TFEU

Since the FFAR cannot be justified under the Meca-Medina test, one may turn to the exemption in Article 101(3) TFEU. This is the approach the GC took in Piau.¹⁴⁶ However, the FFAR do not meet the criteria of Article 101(3) TFEU either. The requirements under Article 101(3) are no less strict. It is even harder to substantiate in the necessary form that the (more economically defined) requirements of Article 101(3) are met.¹⁴⁷ In European Superleague, the ECJ emphasized:

‘the existence of such [ie, generally legitimate] objectives, however laudable they may be, do not release the associations that have adopted those rules from their obligation to establish, […] that the pursuit of those objectives translates into genuine, quantifiable efficiency gains, on the one hand, and that they compensate for the disadvantages caused in competition terms by the rules at issue in the main proceedings, on the other.’¹⁴⁸

Similarly, the Court argued in ISU that although some points ‘appear prima facie to be convincing’, the efficiency gains ‘must be proven to be real and concrete’.¹⁴⁹

FIFA has not put forward any empirical or other evidence that the FFAR leads to economic efficiencies¹⁵⁰ or that the consumers receive a share of the benefits.¹⁵¹ The clubs, which pay less for agents’ services, cannot be recognized as beneficiaries of the regulation as they must not profit from their own restrictive agreement.¹⁵²

Conclusion

The FFAR is in fundamental conflict with the principle of independence as a core rule of competition. There is neither room for an exception following the ECJ’s ruling in Meca-Medina and as interpreted in the European Superleague nor for a justification based on Article 101(3) TFEU.

5. EXAMPLE ASSESSMENT OF THE FEE CAP

In the previous section, we sketched out the legal framework Article 101(1) TFEU sets for an agent regulation. In the following, we will assess whether the fee cap for agents, which stands at the heart of the FFAR and is one of the most controversial provisions, constitutes an infringement of Article 101(1) TFEU or qualifies for an exception.

Article 15 FFAR stipulates that

• the agent’s remuneration must be calculated based on the player’s/coach’s annual remuneration (if the agent represents an individual or an engaging club) or on the transfer compensation (if the agent represents the releasing club);

• the fee is capped at 3 per cent of the annual remuneration (if the player’s/coach’s wage is above USD 200,000) or 5 per cent (if the wage is less or equal)¹⁵³ or 10 per cent of the transfer compensation.

Moreover, it stipulates a rebuttable presumption that any services performed by the agent in the 24 months prior to and following a transaction are covered by the fee. In total, this covers a period of four years, which is a very long time span in the fast-moving football business. Other FFAR provisions, such as those concerning double representation (Article 12 No 8), the client-pays principle (Article 14 No 2) and the payment via the FIFA clearing house (Article 14 No 13), have to be considered as well.

Restriction of competition by object or effect (Article 101(1) TFEU)

The FFAR constitute a decision by an association of undertakings that may affect trade between Member States (see Section 2). The fee cap qualifies as a restriction ‘by object’, that is a form of coordination that can be regarded, by its very nature, as being harmful to competition.¹⁵⁴

Agents can no longer negotiate their own remuneration with clubs or players above the set limits and can no longer autonomously determine on what the fee should be based. Their self-determination in the market is reduced to the boundaries set by FIFA’s regulation. In T-Mobile Netherlands, the ECJ held that a coordinated reduction of agents’ commissions by mobile phone providers amounts to a restriction ‘by object’.¹⁵⁵ In ISU and European Superleague, the ECJ regarded rules that ‘confer on the entity that adopted them […] the power to authorise, control and set the conditions of access to the relevant market for any potentially competing undertaking’ as a restriction ‘by object’.¹⁵⁶ The GC held that ‘coordination of purchase prices, with the aim of reducing […] and, ultimately, increasing the cartel participants’ profit margins, reveals a sufficient degree of harm to competition that it may be found that there is no need to examine its effects’.¹⁵⁷ Recently, the ECJ stated that

it is settled that certain collusive conduct, such as that leading to horizontal price-fixing, may be regarded as so likely to have adverse effects on, in particular, the price, quantity or quality of products and services that it may be regarded as unnecessary, for the purposes of applying Article 101(1) TFEU, to demonstrate that it has concrete effects on the market. Experience shows that such conduct leads to reductions in output and increases in prices, resulting in a misallocation of resources to the detriment, in particular, of consumers.¹⁵⁸

As FIFA combines all football clubs worldwide and thus all entities that demand agents’ services and all entities that demand players’ and coaches’ services, who in turn demand agents’ services, there remains no field of activity for agents outside of the FFAR. FIFA takes it upon itself to regulate a market loosely connected to the organization of football competitions, thus leveraging FIFA’s dominant market power. It is FIFA’s declared goal to lower the prices for football agents’ services. The fee cap explicitly aims at restricting competition regarding an agent’s remuneration.¹⁵⁹

Insofar, as the CAS argues that it had not been demonstrated that agents could no longer ‘earn a reasonable living’,¹⁶⁰ the CAS completely misunderstands the principle of competition and misinterprets the applicable standards. It is not for FIFA, as a consortium of buyers of agents’ services, to decide how much a service is ‘worth’. The European economic system, and Articles 101 and 102 TFEU in particular, are based on the idea that prices are determined in the market by supply and demand.¹⁶¹ In its guidelines to Article 81(3), the predecessor to Article 101(3), the Commission unmistakably states:

Any claim that restrictive agreements are justified because they aim at ensuring fair conditions of competition on the market is by nature unfounded and must be discarded. The purpose of Article 81 is to protect effective competition by ensuring that markets remain open and competitive.¹⁶²

The sports exception

As the fee cap qualifies as a restriction ‘by object’, the exception that has been developed in Meca-Medina does not apply. This has been made clear beyond doubt by the ECJ’s judgments in the European Superleague, ISU, Lietuvos notarų rūmai, and Em akaunt BG.¹⁶³

Even if the fee cap did not amount to a restriction of competition by object (quod non),¹⁶⁴ it causes a restriction ‘by effect’ as FIFA itself has conceded in the CAS proceedings.¹⁶⁵ In such a setting, FIFA would bear the burden of substantiating and proving that the exception is applicable and its criteria are fulfilled.¹⁶⁶

Inapplicability of the exception

The cap on fees does not qualify for an exception. As demonstrated, any derogation to the general and indispensable principle of competition must be interpreted strictly.¹⁶⁷ The rationale behind the exception can be traced to the association’s freedom to regulate its own internal affairs and/or to the characteristics of sports and the organization of sporting competitions.¹⁶⁸ In both cases, there needs to be a direct link to the basis of the exception.

First, it lies well beyond FIFA’s freedom of association to regulate the affairs of football agents. Agents are not members of FIFA. FIFA lacks the competence and legitimacy to regulate economic activities that only loosely relate to the social function of the organization (if at all). Secondly, the FFAR have no direct connection to the organization of a football competition. They do not concern the rules of the game nor the rules of a tournament. Rather, they relate to a purely economic activity in a market in which the characteristics of the sport do not take effect.

Requirements of the exception are not fulfilled

The fee cap does not serve legitimate objectives in the public interest within the meaning of the test. A legitimate objective is one that directly relates to the organization of competitive sport.¹⁶⁹ The restricting effects on competition must be ‘genuinely necessary’ or ‘inherent in the pursuit’ of the objectives,¹⁷⁰ meaning that the objectives must actually be served and that there are no less intrusive measures available. Lastly, they must be proportionate.

Even if some of the goals brought forward by FIFA could be considered sports-related or sufficiently closely linked to the organization of a football competition (which is highly questionable), the proposed fee cap does not achieve or even facilitate any legitimate goals, nor does it remedy the alleged market ‘failures’.¹⁷¹ It is not in the public interest to regulate these.

Specifically, the fee cap does not promote ‘contractual stability’. Are players more willing to play for weaker clubs because their agents are paid less? The rule that the agent’s fee depends on the player’s remuneration if the agent represents an individual may indeed help to align the financial interests of the agent and player as both have an interest in achieving a high salary. However, this calculation method also applies when an engaging club hires an agent. In this case, both parties pursue different financial interests. The rules may even contradict the goal of improving the quality of agents’ services, as agents have less incentive to ‘go the extra mile’ for their clients if they cannot expect additional recognition.

The fee cap is per se inadequate to serve most of the other goals: it has no influence on the training of young players or protection of minors, does not promote a spirit of solidarity between elite and grassroots football,¹⁷² and does not set ethical standards or improve transparency.

The provision offers possibilities of circumvention at the expense of the agent putting its proportionality in question. Moreover, the new fee structure makes it more attractive to be the contractual partner of the releasing club than the player’s, as 10 per cent of the transfer fee will often be more than 3–5 per cent of the annual remuneration. This weakens those who are the actual athletes on the pitch.

The only goal which the rule actually and fully serves is to lower the fees for agents’ services—FIFA speaks of ‘reasonable’ prices. The UK Tribunal states: ‘the original (and continuing) purpose was to reduce agents’ fees because it was thought that they were excessive’.¹⁷³ However, this goal is not sports-related in nature and has no relation to the organization of football competitions. The CAS’s reasoning in this regard is astonishing: it states that keeping prices reasonable is a goal recognized in Article 102(a) TFEU.¹⁷⁴ In other words, dominant FIFA¹⁷⁵ may regulate prices binding non-dominant agents, who have no alternative, from which FIFA’s members benefit, and this can be justified with reference to a rule prohibiting dominant undertakings from imposing unfair prices. This is not how Article 102 TFEU was meant to work. It cannot be the objective of a restrictive agreement that the parties restricting competition benefit from their conduct.¹⁷⁶

6. CONCLUSION

The protection of competition is one of the fundamental principles of the EU Treaties. To pay due regard to the special characteristics of sport, the ECJ has recognized an unwritten exception to the competition rules. This exception has been narrowed by the 2023 rulings on matters of sport. In this essay, we have tried to illuminate the rationale behind the exception. The small room for manoeuvre can only be applied where the events on the pitch or the organization of the sporting competition are concerned. The further an issue is away from the pitch, the less the characteristics of the sport take effect, and the more obviously it is an economic activity ‘like any other’. Thus, a derogation is less and less justified.

The FIFA Football Agent Regulations do not qualify for an exception: they concern a purely economic activity that lies outside the social function of FIFA and has no direct link to the sport. Most of the objectives brought forward cannot be considered legitimate as they lack a connection to the sport and FIFA’s competence. Furthermore, the regulation does not actually promote the (few) remaining sports-related goals. In any case, the significant restriction on competition is not outweighed by the degree to which legitimate goals are pursued.

On the contrary: FIFA leverages its monopoly power on an adjacent market. The sole profiteer of the FFAR is the clubs—that is the cartel members—which save on commissions because of a general fee cap.

For these reasons, the imposition of rules on agents through the FFAR also amounts to an abuse of a dominant position by FIFA in the sense of Article 102 TFEU.¹⁷⁷ FIFA holds ‘a dominant position, or even a monopoly’ on the market for the organization of football competitions.¹⁷⁸ By setting rules for agents, FIFA leverages its power to define the rules for entry and competition in an adjacent market, thus restricting the independence of all market participants.¹⁷⁹ As the ECJ stresses, ‘Articles 101 and 102 TFEU must be interpreted consistently’.¹⁸⁰ This entails that a possible exception following the Meca-Medina reasoning will have to be applied or—as is the case here—denied regarding both provisions.

To allow for an exception from Article 101 or 102 TFEU in such a case would set a dangerous precedent insinuating that private associations could take it upon themselves to seize regulatory competence, shape markets to their liking and define the limits of competition law. The CAS award as a solitary decision that came to a different conclusion violates the ordre public by not respecting the very fundamentals of the European economic order. It would not be enforceable in the EU.

7. TRANSPARENCY NOTICE

The authors counselled a law firm representing a football agent in proceedings against FIFA.

Footnotes