Luxembourg football regulations survive following rejection by European Court of challenge by club

Published 16 July 2012 By: Benoît Keane

Luxembourg football regulations survive following rejection by European Court of challenge by club

The General Court of the European Union recently rejected an appeal by the Luxembourg football club F91 Diddeleng against the decision of the European Commission to close an investigation concerning the player regulations of the Fédération luxembourgeoise de football (FLF).  In an order of 16 April in Case T-341/10 F91 Diddeleng v. Commission, the General Court considered the appeal to be manifestly inadmissible.  

The case is important as it demonstrates the limited procedural rights of complainants which bring free movement complaints to the Commission.  In addition, it clarified that there is no requirement on the part of the Commission to investigate a matter under European competition law if this has not been properly raised by the complainant.  

Background 

The case concerned an investigation by the Commission into the compatibility of the FLF’s regulations on the licensing of players which originally provided for player quotas based on nationality.  The investigation was launched on the basis of a complaint submitted by the Luxembourg football club F91 Diddeleng in 2003.  While the complaint mostly concerned the compatibility of the FLF regulations with EU rules on the free movement of workers and services, it included a very short section on the application of European competition law.  

The Commission opened its investigation on the basis of the free movement rules.  However, it does not have the power to investigate private undertakings, such as the FLF, for alleged breaches  of free movement law (in contrast to its powers under competition law).  Instead, the Commission opened infringement proceedings against Luxembourg on the basis that it was responsible as an EU Member State for the effective implementation of EU free movement law in its territory.  

As a result of this “indirect” investigation, the FLF decided to remove the quota on the basis of nationality.  However, the FLF left in place an obligation which did not discriminate on the basis of nationality but required clubs to field at least seven players who obtained their first player licence with a Luxembourg football club.  The Commission, satisfied with this, closed its case against Luxembourg (i.e. not the FLF) in a decision of 2010 the details of which are summarised in Commission press release IP/665/10.  

F91 Diddeleng brought an appeal in 2010 against the contested decision of the Commission before the General Court in which it sought: (i) the annulment of the contested decision; (ii) the annulment of the FLF’s regulations as being contrary to free movement and competition law; (iii) the imposition of any “appropriate sanction”.  The Commission raised an objection to the admissibility of the case.  The FLF was granted leave to intervene in support of the Commission in March 2011.

No right to challenge closure of free movement case 

The General Court first looked at the claims under free movement law.  It held that, according to established caselaw, private parties do not have standing to challenge the decision of the Commission not to institute proceedings against an EU Member State for failure to fulfil its obligations.   

The General Court noted that Article 263 of the Treaty on the Functioning of the European Union (TFEU) allows a natural or legal person to institute proceedings against an act addressed to that person or which is of “direct and individual concern” to that person.  An act must alter the legal position of the natural or legal person in order to be admissible.  

However, a decision by the Commission not to bring infringement proceedings against an EU Member State is addressed to EU Member States.  Furthermore, the procedural steps by which the Commission can bring an action against an EU Member State are not acts which are of “direct concern” to private parties.  The General Court considered that it would be exceeding its powers under the Treaty if it allowed such an action by private parties to be brought.  

This established position was not put into question by the right to a fair trial enshrined in Article 6 of the European Convention on Human Rights (ECHR).  The General Court noted it would still be possible for F91 Diddeleng to bring its own case against the FLF before the Luxembourg courts and, if necessary, for the matter to be referred to the European Court of Justice.

On this basis, the General Court concluded that the grounds in the application concerning free movement were inadmissible..

Inadequate competition law complaint 

The General Court then considered F91 Diddeleng’s claim that the Commission failed to address the EU competition law element of its original complaint.  The rules on free movement of workers and services involve quite different legal issues and procedures to those relating to competition law.  The General Court noted that the original complaint only consisted of two pages on competition law which was “largely theoretical.  Nonetheless, the classification of the complaint was discussed internally within the Commission and it was agreed that the Commission’s Directorate General (DG) Employment would take the lead under free movement rules rather than DG Competition under competition law.  

It was subsequently clear from all the correspondence between the Commission and F91 Diddeleng that DG Employment was exclusively concerned with the case.  The General Court observed that F91 Diddeleng never once contested or even criticised the Commission’s classification of the case as a free movement matter.  Further, it was possible for F91 Diddeleng to file a formal competition complaint with DG Competition at any stage of the procedure.  The General Court recalled that a competition law investigation is a quite different procedure to the procedure brought against Member States relating to freedom of movement and pursues a different purpose.  

According to the General Court, its view was confirmed by a letter dated 11 October 2011 (i.e. after the case commenced) from DG Competition to F91 Diddeleng indicating that the original complaint would not meet the standards required for a formal competition complaint.  Moreover, the Commission did not take a formal position on the actual legality of the FLF’s regulations under competition law and, as such, there was no act which altered the legal position of F91 Diddeleng in this regard.    

The General Court therefore concluded that the grounds brought under competition law were inadmissible as there was no formal change to the legal position of F91 Diddeleng.

No grounds for sanctions or declaration concerning FLF’s Regulations 

The General Court held that Article 263 of the Treaty (the basis of the appeal) only allows for appeals against decisions of the European Commission and other EU institutions.  The General Court has no power to rule on the legality of acts adopted by a national authority or an organ of the State (in this case imputed to be the FLF). As such, this ground of the appeal was declared to be inadmissible.  

The appeal also called on the General Court to take any “appropriate sanctions”.  However, the General Court noted that it had no competence to impose such sanctions.  Consequently, the appeal on this ground was declared inadmissible.  

Commentary 

It is not perhaps surprising that the General Court declared the case inadmissible on the basis that private parties have no right to appeal against decisions by the Commission to close an investigation against an EU Member State.  This case shows that once the Commission has reached what it considers to be a satisfactory legal position that there are no means for the complainant to dispute this compromise decision directly with the Commission.  The only means for the measure to be challenged is through the national courts – though the position of the Commission is likely to be highly influential in any such case.   

The General Court has also confirmed that a party cannot complain that its competition law arguments have been ignored if it never raised those arguments other than in a cursory manner.  This is a welcome development and follows a number of other recent cases clarifying that the Commission need only investigate competition law complaints which are coherent and of significant importance to the EU market as a whole.  

The General Court’s statements also serve as a reminder that competition law arguments involve complex legal and economic assessments. As such, competition law arguments in sports cases must be supported by thorough and robust analysis in order to be considered.

Benoît Keane acted in this case.  However, all views expressed in this article are personal.  

 

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Benoît Keane

Benoît Keane

Benoît Keane specialises in European sports law. Based in Brussels, he acts in cases before the European Commission and European Court of Justice as well as in cases before national courts where there is an EU law dimension. He has participated in many of the leading European sports law cases of recent years, including the competition law cases relating to financial fair play, third party ownership and sports eligibility rules. He has also appeared as a legal expert on EU law before the Court of Arbitration for Sport.