The Advocate General’s opinion on FIFA’s Agent Regulations: still all to play for despite an early goal for FIFA

Background to the cases

RRC Sports

The German football agency brought proceedings in Germany to prevent certain provisions of the Agent Regulations coming into force. The German court made a referral to the ECJ in respect of 13 elements of the Agent Regulations, which the AG helpfully summarised into five categories:

1. The remuneration of agents under representation agreements – of most interest and press attention is the proposed ‘fee cap’ on agent fees.
2. The requirement for a licence to provide agency services.
3. The prohibition on agents representing more than one party to a transaction, other than both the player and the new club.
4. The prohibition on prohibiting agents from approaching players retained on an exclusive basis, other than in the final two months of such exclusivity.
5. Rules on the submission and public disclosure of a significant amount of data about agents and the agreements they enter into with clients.

We focus on the competition law angle to this case, although the Opinion also dealt with data protection law and an individual’s fundamental freedom to provide services in the EU. On point (5) above, the AG raised questions as to the amount of personal data being processed and the disclosure of various commercially sensitive parts of that data on a publicly accessibly database. These issues will ultimately be for the national court to grapple with.

ROGON

A similar claim has been brought by two football agencies against the German football association’s implementation of certain provisions of the Agent Regulations. The German court seeks the ECJ’s interpretation of the application of certain EU case law (the Meca-Medina line of cases, which we discuss further below) to sports associations regulating markets ‘upstream’ from the sports association’s core activities (i.e., because the German football association does not operate on the football agent representation market or the player transfer market itself).

CD Tondela & Ors

As with the majority of leagues around the world, Portugal faced the problem of trying to wrap up the 2019/20 season after COVID-19 brought it to an early halt. While discussions around extending the season were ongoing, the majority of clubs in the first and second divisions agreed (with the league’s involvement) not to sign each other’s players whose contracts had been terminated for COVID-related reasons.

This agreement was suspended for 90 days by the Portuguese competition authority, and the majority of the clubs involved challenged this suspension before the Portuguese courts. The issue referred to the ECJ sought guidance on whether the agreement could be construed as having the object of restricting competition, as well as similar issues to ROGON in respect of the Meca-Medina case law.

Below, we give a quick summary of how the key competition law provision in the cases – Article 101 of the Treaty on the Functioning of the European Union (Article 101) – works before providing the key takeaways from the three Opinions below.

Overview of Article 101

Broadly, Article 101 prohibits agreements and concerted practices between entities engaged in economic activity (“undertakings”) and decisions of associations of undertakings which may affect intra-EU trade and have the object or effect of restricting competition in the EU. It is well established that the regulations of FIFA and national sports associations are “decisions of associations of undertakings”. [1]

At its simplest, some practices (known as “by object” restrictions) are considered to be inherently anti-competitive. Where a “by object” restriction is established, the harm to competition is considered so obvious that no further analysis is required to determine its actual effect on competition. The most common example is an agreement between competitors to fix their prices. If not anti-competitive by object, a restriction will still be unlawful if it has an appreciable anti-competitive effect.

A series of cases, including Meca-Medina, have established that rules of sporting bodies which limit freedom of action will fall outside Article 101 if they pursue a legitimate objective in the public interest, in a manner which is genuinely necessary and proportionate in achieving that objective.

The AG re-affirmed the ECJ’s determination in Superleague that the Meca-Medina doctrine doesn’t apply to agreements or decisions which are restrictive by object (so it only applies to those which have an anti-competitive effect).

If the rules are anti-competitive by object or effect, there is also an exemption under article 101(3) to consider (where, broadly, the efficiency gains of the agreement/decision outweigh the anti-competitive effect). This is considered further below.

Analysis of the cases – the key questions considered

• Do the relevant matters fall within the scope of EU competition law?

It is well established in EU case law that sports governing bodies like FIFA and national football associations fall within the scope of EU competition law. [2]

There is a so-called ‘sporting exception’ in EU case law, whereby rules adopted solely on non-economic grounds on matters of sporting interest are not caught by EU competition law (EU competition law is concerned with trade between EU states and therefore has no business with non-economic matters of pure sporting concern).

The AG considered that this ‘exception’ must be interpreted narrowly, covering only the basic rules of the game and the non-economic organisation of it (for example, the structure of a tournament). This makes the ‘exception’ irrelevant to the vast majority of a sports association’s rules which, in the AG’s view, includes the regulation of agents.

• Do the relevant matters have the object of restricting competition or, if not, do they have the effect of doing so?

The AG made a number of remarks as to the object and/or effect of the matters in issue. In summary of those of most interest:

Agent fees

The AG considered it unlikely that the ‘fee cap’ has the object of restricting competition for the following primary reasons:

• The ‘cap’ does not impose a minimum or fixed price for agency services (practices which are more likely to be anti-competitive by object). Instead, it sets a maximum that can be charged – by definition, that still allows agents to compete by undercutting each other.
• The cap is also ‘dynamic’ in the sense that it is set at a percentage of transfer fees or salary. As such, there is no fixed figure above which agents cannot go.

However, the national court will still have to consider the effect on competition, which will include analysis of, among other things:

• the fact the cap only applies to one type of service (namely, football representation agreements – agents can still set fees as they see fit in, for example, the commercial ventures of their clients);
• whether agents may limit their services (e.g., avoid representation agreements with less profitable fees, thereby reducing competition in respect of cheaper players) or decrease investment in research and innovation (which would be to the detriment of consumers)?

Interestingly, the tribunal in the English Rule K arbitration proceedings was emphatic in its view that the fee cap is an agreement or decision to fix prices and a by object restriction. It rejected that leaving room for agents to undercut each other changes that analysis.

Licensing regime

Previous case law has already considered the licensing of football agents, in which it was held to be anti-competitive by effect but exempt under article 101(3). [3] The AG opined that similar considerations may apply here. Meca Medina may also be of assistance, which is more recent case law.

Multi-representation

The provisions are unlikely to be anti-competitive by object, as the purpose seems to be to avoid conflicts of interest which may harm the represented parties. To the extent it does have the effect of restricting competition, the AG considered that it may be justifiable under Meca-Medina or article 101(3), although consideration will need to be given to whether less intrusive measures could achieve the aim of avoiding conflicts (such as obtaining informed consent from the parties to be represented by the same agent, which is broadly the position the new English regulations take). In this regard, FIFA will have to justify why it considers it necessary to ban, say, acting for the player and both the selling and buying club but not just acting for the player and the buying club (which remains permissible).

Approaching exclusively retained players and clubs

The AG was firm in his view that this is anti-competitive by object and effect and seems incapable of justification under Meca-Medina (if applicable) or article 101(3). This provision is in force in England and wasn’t one of the provisions in dispute in the English Rule K proceedings.

CD Tondela

While a no-poach agreement would generally be a ‘by object’ restriction, the AG considered that the specific facts would appear to point away from such analysis. For example, the primary objective appeared to be to maintain the integrity and fairness of the competition in the face of the season run-in atypically colliding with the transfer window.

• If they have the effect of restricting competition, can they be justified on the Meca-Medina case law?

As above, the AG opined that Meca-Medina applies to cases with an anti-competitive effect only.

As touched on above, a key question raised in this trio of cases is whether the Meca-Medina case law applies to decisions of sports associations which regulate markets outside their core activities – here, the markets on which agents operate in providing player and club services and on which clubs operate on the transfer market.

The AG was of the strong view that the Meca-Medina case law can apply in such cases, although the objective pursued must broadly fall within the ‘mission’ of the association and the degree of connection between the core activities of the association and the activities being regulated will be relevant to the assessment of necessity and proportionality.

Importantly, the AG remarked that genuine and meaningful consultation with those affected (e.g., agents, players, clubs) will assist the association in making that case, and that secrecy in decision-making would be fatal to any justification under Meca-Medina. This follows the general trend of EU case law compelling sports associations to take a more transparent and collaborative approach to rule-making.

Sports associations will be pleased with the AG’s reiteration that such associations should be afforded a margin of appreciation in determining the necessity and proportionality of the means through which they seek public interest objectives.

However, the AG was critical of certain of the “vague” public interests cited by FIFA in pursuit of a Meca-Medina justification, for example, “ensuring the quality of the services which players” agents provide to their clients and “improving financial and administrative transparency”, suggesting that FIFA would need to do more to persuade the referring court that such objectives are in the public interest.

• If they would otherwise be unlawful by reason of their anti-competitive object or effect, are they exempt under article 101(3)?

While not part of the referrals made to the ECJ in these cases, the final limb for the referring court to consider will be whether an agreement/decision which restricts competition is nevertheless permissible under article 101(3) because it improves the production or distribution of goods or promotes technical or economic progress, while allowing ‘consumers’ a fair share of the resulting benefit (along with certain further conditions).

Unlike Meca-Medina, this exemption can be used to justify private and economic objectives, as well as agreements/decisions which are anti-competitive by object. However, the hurdles are therefore understandably much higher than Meca-Medina.

Helpfully for sports associations, while ‘consumers’ must obtain a fair share of the efficiency gains for the purposes of article 101(3), the AG referred to the ECJ’s broad interpretation of this definition in Superleague, which is taken to (non-exhaustively) include national football associations, clubs, players, spectators and television viewers.

The factual application of EU law is ultimately a matter for the national referring court to determine in each case and, particularly with regards to FIFA’s Agent Regulations, the AG was keen to emphasise that there was insufficient detail with regards to the legal and factual landscape in which the Agent Regulations operate to enable him to give a strong opinion.

However, the AG’s Opinions provide further guidance on the interaction between competition law and sport, which has become increasingly prevalent over recent years and will continue to be a channel through which disgruntled stakeholders challenge the decisions of sports associations and agreements between clubs. We advise on these sorts of issues as well as the full spectrum of competition issues which clubs may face.

[1] The English implementation of FIFA’s Football Agent Regulations has already been successfully challenged on competition law grounds in respect of the ‘fee cap’ (which is discussed in this article) and rules governing agent fee structure (See CAA Base Limited & Ors v The Football Association Limited, judgment published on The FA’s website on 14 December 2023).

[1] See, for example, European Superleague Company SL v FIFA & UEFA, paragraphs 58 and 59.

[2] See, for example, European Superleague Company SL v FIFA & UEFA, paragraph 87 et seq.

[3] Piau v Commission