Dutch speed skating duo files EU antitrust complaint against the International Skating Union
Published 19 November 2014 By: Ben Van Rompuy
This article details the antitrust complaint lodged by two Dutch speed skaters and analysis the monopoly power of international sports federations’ over the organisation of sports events.
In June 2014, two prominent Dutch speed skaters, Mark Tuitert (Olympic Champion 1500m) and Niels Kerstholt (World Champion short track), filed a competition law complaint against the International Skating Union (ISU) with the European Commission. They allege that the ISU is acting in violation of Article 101 TFEU (prohibiting anti-competitive agreements)1 and Article 102 TFEU (prohibiting the abuse of a dominant position)2 by prohibiting skaters from participating in events competing with those organized and promoted by ISU.
The issues addressed in their complaint are not unique to speed skating. In various other sports, international federations similarly restrict the economic opportunities of athletes to participate in so-called “unsanctioned” events (see below). In the absence of sufficient procedural safeguards, this evidently raises concerns about a conflict of interest between a federations’ power to authorise the organisation of events and the federation’s commercial interests in promoting its own events.
Perhaps surprisingly, this is the first time that athletes – the ultimate sufferers from unfair competition on the market for the organization of sporting events – are challenging restrictions on their participation in unsanctioned events at the EU level. This case gives the European Commission, who is currently conducting a preliminary investigation, the opportunity to set an important precedent across Europe that may positively affect the lives of thousands of professional athletes.
Events leading to the complaint
In December 2011, a private entity, Icederby International, informed the ISU of its intentions to start organising international speed skating events with an innovative competition format, combining both long track and short track skating. At that time, Icerderby International was considering hosting betting activities on the races alongside the tracks.
In January 2012, the ISU issued a revised Code of Ethics3 stipulating that persons subjected to the Code ought “to refrain from participating in all forms of betting or support betting or gambling related to any event/activity under the jurisdiction of the ISU”.
In November 2013, Dubai was awarded the organisation of the World Expo 2020. Icederby International secured a contract to organise an annual speed skating event in Dubai as part of the programme leading up to the World Expo. The first Dubai Icederby Grand Prix Exhibition 2014 would take place in October 2014. The organisers clarified that there would be no on-site betting activities during the planned Icederby events in Dubai since betting activities are strictly prohibited in Dubai.
In March 2014, the ISU nonetheless issued a statement (Communication No. 18534) saying that, because the competitions organised by Icederby International are “possibly being closely connected to betting”, they would not sanction them. Furthermore, the ISU threatened that anyone participating in events organised by Icederby International would become persona non grata within the ISU. Also in a more general fashion, the ISU found it opportune to remind all its members “that participation in any international ice skating competition not sanctioned by the ISU will result in the loss of eligibility of the participants”.
According to the ISU Eligibility rules,5 a person skating or officiating in an event not sanctioned by the ISU and/or its Members (i.e. the individual national associations) becomes ineligible to participate in ISU activities and competitions (Rule 102, para. 2 (ii)). This sanction applies not only to the skaters, but also to coaches, trainers, doctors, team attendants, team officials, judges, referees, volunteers and anyone else engaging in a relation with the ISU. A person who is or has been ineligible may be reinstated as an eligible person (Rule 103, para. 1). However, this does not apply to a skater who participated in a non-sanctioned event (Rule 103, para. 2). In other words, once a skater participates in a non-sanctioned event, he or she is banned for life from participating in the Winter Olympic Games or any of the ISU events such as the World and European Championships. In practice this would put an end to their sporting careers.
While the ISU’s decision not to sanction the Icederby International Competitions is an important contextual element, the complainants have clearly stated that they are not asking the European Commission to denounce that decision. Rather, their complaint focuses entirely on the disproportionate sanction prescribed by Rule 102(2) of the ISU General Regulations. Because Icederby International is the first major organisation that wishes to organize international speed skating events without the ISU’s approval, the radical anti-competitive nature of the ISU Eligibility Rules has only now manifested itself. Any other (future) initiative to organize a non-sanctioned international speed skating event would likewise face the disproportionate restrictions imposed by the ISU Eligibility Rules.
The alleged infringement of the EU competition rules
The complainants contend that the ISU Eligibility Rules, in particular Rule 102, as well as its enforcement by the ISU in the case at hand, constitutes a violation of Articles 101 and 102 TFEU. The main premise of the complaint is that the sanction of a lifelong ban cannot be considered inherent and proportionate to the pursuit of any legitimate objective.
Potential restriction of competition
The ISU Eligibility Rules are laid down in the ISU General Regulations, which the Members of the ISU have adopted. This is a decision taken by an association of associations of undertakings, within the meaning of Article 101(1) TFEU. By their very nature, the restrictions imposed by the Eligibility Rules have the potential to restrict competition because they raise virtually insurmountable barriers to entry and expansion on the market for the organisation of international speed skating events (i.e. the organisation of such events require access to the human resources controlled by the ISU). This directly and manifestly affects the interests of the skaters (and ultimately has the potential to harm the welfare of sports fans).
Operating a monopoly
Additionally, the ISU and its Members enjoy a position of collective dominance, which amounts to a near-total monopoly, on the market for the organisation of international speed skating events. The ISU Eligibility Rules enable the ISU (and its Members) to prevent or impede effective competition on the market for international speed skating events. In short, the complainants argue that the ISU effectively abuses its powers to foreclose competitors on the markets. The ISU Eligibility Rules are not simply there “on the books” but are actively invoked by the ISU to deter skaters (and officials etc.) from breaching these rules by participating/officiating in non-sanctioned events.
The initiative to launch the Icederby International Competitions exemplifies that there is a demand for more international speed skating events in addition to those that the ISU administers, both in terms of new competition formats and competing events. This need is also evident from the limited prize money that is available for long track and short track skaters in ISU sanctioned international speed skating events. The prize money available for individual skaters in a typical season with 21 international speed skating competitions (13 long track / 8 short track) is a minimum of $ 0 and maximum of $109,000 (long track) / $31,900 (short track). If speed skaters would be able to participate in the Dubai Icederby Grand Prix, which is but one out-of-season single event, they would earn individually a minimum of $37.650 and a maximum of $130,000. In other words, a short track skater could earn more by simply participating in the Icederby event than he/she would be able to earn by winning all of the ISU sanctioned international competitions during an entire season.
It is undisputed that an international sports federation, such as the ISU, may legitimately assert the interests of the sport it administers. In that sense, the ISU may in principle invoke the protection of the integrity and objectivity of competitions to substantiate its decision not to sanction competitions organized by Icederby International (albeit it must be reiterated that on-site betting is unlawful in Dubai so the alleged integrity risks would not appear to arise). That said, it is doubtful that the ISU could rely on its Code of Ethics (that only applies to events and activities “under the jurisdiction of the ISU”) to render ineligible any person skating or officiating in these events in compliance with national laws. Sole participation in a non-sanctioned speed skating event should not constitute a threat to the integrity of speed skating that would justify a total ban.
What is the remedial scope of EU competition law?
The ISU Eligibility rules and the ISU’s conduct deprive speed skaters from the benefits that a situation of fair and open competition on the market for the organisation of international speed skating events would offer them. The scope for intervention on the basis of EU competition law is evident from previous decisional practice.
The settlement of the FIA case
In the FIA case6, the European Commission was confronted with similar rules contained in several regulations notified by the Fédération International de l’Automobile (FIA). The International Sporting Code of the FIA provided that no licence holder could participate in an international event that is not entered on the FIA calendar. The FIA had an interest in the commercial rights in the FIA Formula One World Championship, of which its promoters' contracts prevented circuits used for Formula 1® racing from being used for races which could compete with Formula 1 for a period of 10 years; the Concorde Agreement prevented the teams from racing in any other series comparable to Formula 1® racing; the agreements with broadcasters placed a financial penalty on them if they showed motor sports that competed with the FIA Formula One World Championship. Anyone breaching this provision would have their licence withdrawn and thus would be excluded from any event authorized by FIA.
This and other restrictive rules led the Commission to make, in its Statement of Objections, the preliminary assessment that FIA “was using its regulatory powers to block the organization of races which competed with the events promoted or organized by FIA (i.e. events from which FIA derived a commercial benefit”.7 The Commission eventually closed the case after having reached a settlement with FIA, which provided inter alia that FIA no longer would prevent teams and circuit owners participating in and/or organising other races provided that they met the requisite safety standards and did not conflict with existing events on the international sporting calendar.8
Successful national challenges
More recently, National Competition Authorities (NCAs) have also intervened on the basis of national
and EU competition law. For example:
- In Sweden, the Market Court confirmed that two clauses in the Swedish Automobile Sports Federation (SBF)’s Common rules, according to which its members were forbidden from participating as drivers and event staff in races not sanctioned by the SBF, violated Article 101 TFEU.9 The Court therefore upheld the decision of the Swedish NCA, which obliged the SBF to amend its Common rules so that they no longer prevent licence holders from applying for, participating in or being functionaries at unsanctioned motor races.10 In 2014, the Swedish NCA also closed an investigation into a loyalty clause applied by the Swedish Bodybuilding Association (SKKF) after the SKFF committed no longer to suspend or fine athletes, coaches, officials or judges for participating in non-sanctioned competitions.11
- In Italy, the NCA launched antitrust investigations into the regulations and conduct of the national motor sports federation (ACI) and equestrian sports federation (FISE) under Articles 101 and 102 TFEU. The FISE investigation focused on clauses forbidding FISE members from participating in equestrian events and activities organized by other entities (subject to exclusion from the federation). The investigation was closed after FISE committed to remove the anti-competitive clauses from its statutes. FISE also committed to allow the use of its affiliated clubs’ facilities by independent event organizers.12 The ACI investigation focused on several regulatory and statutory provisions intended to limit access to the market for the organization of motor sport events for competitors. In 2009, the NCA adopted a commitment decision after the ACI undertook to inter alia allow its members to participate in events not organized by the federation.13
- In Ireland, the NCA opened an investigation into a rule of Show Jumping Ireland (SJI) that prevented members of the SJI to compete at unaffiliated show jumping events. The case was closed after the SJI committed to amend the rule to address the competition concerns. Since then, members of SJI who enter into unaffiliated show can only be penalized if the show has not signed up to the specified Health and Safety Standards and has not provided the SJI with evidence of adequate insurance.14
It is important to stress, however, that all these national cases dealt with rules of national federations. In the Swedish bodybuilding case (2014), the contested rule was the national equivalent of a clause contained in the Constitution of the International Bodybuilding Federation. Yet the remedial action was purely national in scope.15 The SKKF committed no longer to apply the restriction in Sweden, but the rule continues to be enforced by the IFBB and all other European member federations. The much wider scope of the parties affected by a rule from an international sports federation make it necessary to tackle the restriction at the EU level.
Why is the ISU case so important?
Needless to say, the stakes are significant and could extend well beyond the sport of speed skating.
Only a handful of international sport federations have truly experienced the “Bosman effect” and faced scrutiny of their regulatory overreach under the European competition rules.16 The fact that most international sports federations are based in Switzerland, outside the EU, may further explain a lack of awareness about the need to comply with EU competition law. Of course, this does not mean they are immune: anti-competitive practices that appreciably affect the EU market are drawn into the net of EU competition law.
While the compliance of sporting rules with EU competition law needs to be assessed on a case-by-case basis, the European Commission did present an indicative list of sporting rules that are likely to infringe Articles 101 and 102 TFEU in its 2007 White Paper on Sport. Rules shielding sports associations from competition are mentioned. Other than in the area of revenue generating activities related to sport (in particular the sale of sports media rights), however, the body of competition case law at the EU level dealing with organisational sporting rules is limited. Even though sports associations usually have practical monopolies in a given sport, the remedial potential of EU competition law to influence their regulatory actions (that often have significant economic consequences) remains underexplored.
A potentially important precedent
The Commission’s decision to pursue this case would therefore have important precedent-setting value. In various other sports, the international sports federations’ rules also disproportionally restrict athlete participation in unsanctioned events with penalties ranging from fines, periods of ineligibility, and lifetime bans. For instance:
- International Federation of Volleyball (FIVB): since 2009, all athletes that take part in unauthorized beach volleyball events will have their membership withdrawn for all FIVB competitions (period of ineligibility up to a life ban).17 Surprisingly, different sanctions apply to participation in volleyball competitions of non-FIVB recognized organizations (e.g. a fine on the club involved of CHF 30.000 and suspension of the club, teams, players, and officials involved for a period up to two years).18
- International Swimming Federation (FINA): any affiliated member having any kind of relationship with non-affiliated bodies shall be suspended for a minimum period of one year up to a maximum period of two years.19
- International Gymnastics Federation (FIG): gymnasts taking part in unsanctioned competitions or exhibitions may not claim to be eligible to participate in the Olympic Games.20
- International Cricket Council (ICC): other than in exceptional circumstances, a person participating in unofficial cricket events shall not be selected or permitted to participate in official events for a minimum of one year thereafter.21
- International Hockey Federation (FIH): any athlete or other individual participating in an unsanctioned event is automatically ineligible for one year to participate in any FIH event.22
The mere threat of drastic sanctions, combined with the general lack of objective, transparent, and non-discriminatory rules governing the sanctioning of international sports events, enables federations to de facto block events that could compete with the events they organise and promote.
The ISU case will hopefully function as a much-needed reminder to sports federations that without valid justifications they cannot use their regulatory power to foreclose competitors or hinder the freedom of EU athletes and sports personnel to exercise economic activities.
Disclaimer: the author represents and advises the complainants in their antitrust proceedings.
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- Tags: Competition Law | Europe | European Commission | Governance | Motorsport | Netherlands | Regulation | Winter Sports
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Prof. Dr. Ben Van Rompuy is a senior researcher and consultant at the T.M.C. Asser Instituut (The Hague), where he heads the ASSER International Sports Law Center. His research focuses primarily on the application of EU (competition) law in the sports and media sectors. He has, however, published widely on a broad range of topics relating to competition/antitrust law, media law, and sports law, and regularly acts as a legal expert for media companies, sports associations, athletes, and public authorities.