Why the International Skating Union was found in breach of EU competition law

Published 17 January 2018 | Authored by: Alex Haffner

In one of its final decisions before the 2017/18 Christmas break, the European Commission (Commission) announced1 its finding that the International Skating Union (ISU)’s eligibility rules2 breached EU competition law. It has given ISU 90 days to put an end to those rules.

This blog briefly reviews the decision and its wider implications for sports governing bodies.

Background

Increasingly, competition authorities at EU and national Member State level are becoming involved and asked to determine whether sports governing bodies are in compliance with the competition law rules in the application of their rules on sanctioning events. The ISU decision is the latest in a line of similar disputes between sports governing bodies and the organisers of challenger/rival competitions, which arguably started with the infamous Fédération Internationale de l’Automobile (FIA) case, in which the FIA settled a Commission investigation by agreeing to sanction races organised by other bodies that met appropriate safety standards.3

At the heart of these disputes is the question of how sports governing bodies should exercise their sole (and exclusive) right to determine which competitions professional athletes can participate in (given their wish to dictate the annual “sporting calendar”). It is also, as importantly, about the commercial consequences for participants and prospective event organisers alike.

Given sport’s ever increasing economic importance, the number of challenger organisations seeking to disrupt the status quo continues to increase. As such, the Commission’s investigation into the ISU will have been closely watched by governing bodies and potential events’ organisers across the sporting spectrum.

 

It even made it to Twitter…

In December 2011, Icederby International announced it wish to shake up the world of speed skating by organising international events with an innovative new format combining long and short track events.4 The original concept included the operation of track-side betting activities at the events. Perhaps not entirely coincidentally, in January 2012 the ISU issued a new Code of Ethics which stated that professional skaters “ought to” refrain from participating in all forms of betting or gambling relating to any event under the “ISU’s jurisdiction”.5

Matters came to a head following the award to Dubai of the 2020 World Expo in November 2013. Icederby contracted with the Expo2020 organisers to organise an annual speed skating event as from October 2014. Icederby confirmed that there would be no on-site betting activities at the event as they were prohibited in Dubai. Nonetheless, ISU reacted by issuing an official statement that competition organisations by Icederby could not be officially sanctioned because they were “possibly closely connected with betting”.6

Under the ISU’s eligibility rules anyone taking part in unsanctioned events (i.e. those not sanctioned by ISU or one of its member organisations) will, at ISU’s sole discretion, be ineligible to participate in any future ISU activities or competitions. As such, any skater, coach, doctor, official etc. taking part in such an event would be disqualifying themselves from participating in all events under the ISU’s auspices, including World Championships and the Winter Olympics.

Shortly after the ISU’s statement was issued, two professional Dutch speed skaters (Mark Tuitert and Niels Kerstholt), who between them had won Olympic and World Championship titles, issued a competition law complaint to the EU Commission against the ISU. In a sign of the times, the complaint was publicised on Tuitert’s Twitter feed in which he directly reached out to the EU Competition Commissioner, Margrethe Vestager, to support the complaint. She tweeted back the same day assuring Mr Tuitert that she would look into the matter.7 As ever with such matters, it took a while for the EU Commission to carry out its initial assessment, but on 5 October 2015 it confirmed the opening of a formal investigation into the matter.

 

The EU Commission’s decision

From a purely financial perspective, the ISU’s treatment of Icederby was significant for any skaters affected: the organisers of the prospective competition were offering a minimum of US$37,650 and up to US$130,000 – the comparative figures at ISU sanctioned events at the time the complaint was made were US$0 to US$109,000 per season. Nevertheless, the focus of the complaint to the EU Commission was on the ISU’s sanctioning powers as set out in the eligibility rules. Those rules had never previously been tested in the context of speed skating – Icederby being the first major organisation to seek ISU approval for a new event.

In announcing the final decision, the Commission observed that, through the application of the eligibility rules, skaters were effectively precluded from taking part in any non-sanctioned events. The Commission appears in particular to have been influenced in reaching its decision by the discretion afforded to ISU through its eligibility rules (as outlined above). A professional skater could not take the risk of receiving a suspension lasting several years or even a life ban (as was within ISU’s sanctioning powers). These were unnecessarily punitive penalties to be able to impose in such circumstances.

Throughout the investigation (and in its press release which followed the Commission decision), ISU insisted that it needed to maintain certain standards in the staging of sanctioned skating events. In connection with Icederby it felt that the prospective organiser’s links to betting in other territories (especially Asia) were sufficient to prevent it being sanctioned. Whilst sports governing bodies cannot act with impunity in sanctioning new events and competitions, the FIA case mentioned above and others, most notably the seminal judgment by the European Court of Justice in Meca-Medina8, have recognised the principle that such sanctioning decisions can (and should) be based on “legitimate sporting objectives”. However, as the Commission has made clear again in the ISU case, those objectives cannot be trumped by a governing body’s own commercial interests.

To this end, the Commission has noted that ISU is entitled to amend its rules to take into account matters such as protecting athletes’ health or preventing doping (or other such legitimate concerns). Intriguingly, ISU has claimed that it offered certain concessions to the Commission during the investigation to seek a closure of the case against ISU, but evidently these did not go far enough for the Commission to do so.

 

Lessons learned?

ISU has taken a robust stance in its public statements since the Commission decision was announced, arguing in particular that it acted responsibly throughout the case, including in the lead-up to its announcement regarding the Dubai event by warning skaters about the risks involved.9

With respect, however, this misses the point: the Commission (as other competition authorities have noted already) is emphasising that organisers of new competitions and the potential participants require an appropriate measure of certainty in their dealings with the relevant sanctioning authorities. More specifically, those authorities must have in place a legally robust and transparent process for dealing with any sanctioning requests which seeks to properly balance the competing interests involved and, most importantly, takes into account only legitimate sporting concerns in making any decisions, including as to sanctions.

The ISU case should serve as a wake-up call to sports governing bodies that the issues around new competitions and events organised by third parties are not going away any time soon. On the contrary, opportunist promoters will continue to look for such opportunities, particularly in sports where (as was the case with speed skating) they believe they can attract the best talent by offering lucrative financial rewards. Particularly where they face counterparties with deep pockets and, most importantly, the stomach for the legal fight, governing bodies should expect to face continued and ever-increasing scrutiny of their decisions in this area. As such, those bodies would be well advised to review (and if necessary re-consider) their eligibility rules and the process(es) by which they sanction events to ensure they can withstand any critical scrutiny.

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About the Author

Alex Haffner

Alex Haffner

Alex is a Partner in the Commercial, Sports and IP Team at Fladgate LLP, specialising in the sports, technology and media sectors.

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