Analysis of the legal arguments in FIFPro’s challenge to FIFA's football transfer system
Published 10 March 2016 By: Angelique Bret
FIFPro has filed a competition law complaint1 against FIFA, the world governing body for football, before the European Commission. It has claimed that the player transfer market system, which is governed by FIFA regulations, is "anti-competitive, unjustified and illegal".
The Commission is not obliged to investigate FIFPro's complaint but, should it do so, previous rulings by the EU's highest court and research commissioned by the trading bloc's main competition authority may offer clues as to how the challenge might develop. That potential is examined below.
The details of FIFPro's complaint
FIFPro has specifically argued that "the transfer regulations prevent clubs from fairly competing on the market to acquire sporting talent, harming the interests of players, small and medium sized professional teams and their supporters".2
Their complaint alleges that FIFA's Regulations on the Status and Transfer of Players (RSTP)3 "fuels and sustains increasing competitive and financial disparity, invites commercial abuse by third party owners and agents and fails to protect players against abuses of their labour contracts via systematic non-payment".
In the executive summary to the complaint, FIFPro explains that Articles 13 to 17 of the transfer rules are designed to establish and reinforce 'contractual stability' among clubs and players. In particular, Article 17 (1) states that where a club or a player unilaterally terminates their playing contract without just cause prior to the contract's expiration date, compensation shall be payable in all cases.
This has been further supported by a report commissioned by FIFPro and produced by the economist, Professor Szymanski,4 who argues that FIFA's transfer regulations are "weighted against the players", allowing clubs to exert pressure on them to achieve their own objectives. His study concludes that the transfer system, as it currently operates, "sustains the dominance of the elite clubs by ensuring that they are the only ones with the financial muscle to afford the transfer fees for the very best players".5
FIFPro has taken issue with clubs asking for "highly-inflated transfer fees" and argue that the money generated largely circulates between the biggest clubs and does not "trickle down" to others. The regime, as the FIFPro argument goes, is to the benefit of the few, such as major clubs, agents and third party owners, and disadvantages the many in a way which breaches EU competition law.6
In addition to questioning whether the transfer system abides by EU competition laws, FIFPro has challenged whether the FIFA regulations respect the EU principle that provides forthe free movement of people. It has argued that there is an "equally restrictive transfer market" now in place as there was in 1995 when footballer Jean-Marc Bosman successfully challenged the transfer system that was in place then.
FIFPro claim that the issues above stem from "a severe imbalance in the [RSTP] regulations ... which allows clubs to exploit players who are under contract".
EU competition law and comparisons with the Bosman case
There are some major differences between the case brought by FIFPro and the Bosman case.7
- First, the Bosman case started life in the Belgian courts as a claim brought by an individual player and resulted in a reference to the Court of Justice for the EU (CJEU) for a preliminary ruling on the application of EU law to the transfer regime in operation at the time. In contrast, FIFPro has made a complaint to the European Commission, which has no obligation to open a formal investigation (explained below).
- Secondly, FIFPro has stated that the complaint to the Commission focuses on competition law and, although competition law arguments were raised in the Bosman case, the CJEU's ruling in that case focused on the infringement of EU principles that protect the freedom of movement of workers.
The Treaty on the functioning of the European Union (TFEU) also contains overarching “competition” laws that underpin the competitive functioning of the economic market within the Union; prohibiting anti-competitive agreements or decisions by associations of undertakings, which have an appreciable anti-competitive object or effect on a market, as well as the abuse of monopoly power.8
The Commission will open a formal investigation into the FIFPro complaint only if it considers that there are reasonable grounds for suspecting an infringement.9 FIFPro would need to demonstrate that the current transfer rules have a restrictive object or effect on the football/players market and that they should not benefit from the particular way in which the competition law rules are applied in the sporting context taking into account the 'specificity of sport'.
Rules of sporting bodies which are of a purely sporting interest and have nothing to do with economic activity can fall outside the scope of the competition rules altogether. This is subject to a proportionality test; any restrictions imposed must be "limited to what is necessary to ensure the proper conduct of competitive sport", according to CJEU case law.10
In the Bosman case, the CJEU acknowledged that the need to maintain a financial and competitive balance between clubs and support the search for talent and training of young players was a legitimate objective of football rules. However, the CJEU considered that the transfer rules, as they were then, did not help to achieve a competitive balance and determined that the richest clubs would still secure the best players under the pre-Bosman system.
Prior to the Bosman case, clubs were entitled to receive transfer fees for players when they transferred to another club at the end of their contracts once they had expired. The CJEU, in considering Bosman's case, was sceptical that the prospect of receiving transfer fees would be a decisive factor in encouraging recruitment and training of young players by smaller clubs.
However, in 2000, in acase that concerned a challenge brought by Finnish basketballplayer, Jyri Lehtonen, against rules that prevented his participation in Belgium national championship matches, the CJEU found that those rules relating to the regulation of transfer periods in basketball had a legitimate sporting objective, aimed at protecting "the proper functioning of the championship as a whole".11
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- Tags: Anti-Trust | Competition Law | Employment Law | Europe | European Commission | European Court of Justice | FIFA | FIFA Regulations on the Status and Transfer of Players | FIFPro | Football | Treaty on the Functioning of the European Union (TFEU) | UEFA
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Angelique Bret is a partner in the EU and Competition Law Group at Pinsent Masons.
Angelique specialises in advising clients on the application of the competition rules in the sports sector. She has acted for governing bodies, clubs and major brands across sport and in particular in relation to football, horseracing, rugby and cricket. She has been involved in the seminal cases involving the collective sale of the FA Premier League's TV rights and the defence of the Racecourse Association's sale of media rights to Attheraces. More recently, Angelique has been advising on Ofcom's investigation into the sale of the FA Premier League rights, the UEFA financial fair play rules and the State aid regime for investment in sports infrastructure.