Antitrust and football: When competition meets competition law
Antitrust and professional football do not often appear in the same lineup, but it is worth considering a formation that includes both.
In recent years, litigation and enforcement developments across the globe have placed the spotlight on antitrust and competition issues in football. From FIFA to national leagues, South America to Europe, and even in the US, these developments all demonstrate that antitrust and competition law is on the pitch, and it is here to stay.
Antitrust and football governance
Football’s international governance structure resembles a pyramid. At the top is FIFA, the international governing body, which serves as the sport’s ultimate administrative authority. Those authorities apply to the member national federations before reaching leagues and their constituent clubs. The continental confederations also play a role in the process. Generally, FIFA and the regional governing bodies under it operate as the sole authorities in matters of organizing and regulating professional football competition across the world. While this structure benefits athletic competition, enhances spectacle, and promotes economic rewards, it also has led to allegations of anti-competitive conduct.
Recent litigation over the proposed European Super League (ESL), a short-lived 2021 attempt led by 12 of the most prominent and profitable European club teams to establish a new league and tournament, illustrates the tension between the sport’s governance and competition laws.
The ESL intended to organize matches and tournaments that would have competed with those organized by FIFA and UEFA, the confederation governing European football. While the ESL faced immediate and fierce backlash and was abandoned days after the concept was announced, litigation related to it has lived on.
Clubs and players faced expulsion from FIFA and UEFA competitions, including the World Cup and national leagues, for their association with the breakaway league. In anticipation of these sanctions, the ESL filed a lawsuit in Spain seeking to enjoin these potential sanctions and alleging that FIFA and UEFA had abused their dominance and made agreements that were anti-competitive and in violation of EU law. That case currently is before the European Court of Justice (ECJ).
On December 15, 2022, FIFA and UEFA won a victory in the litigation when the EU Advocate General issued a non-binding opinion finding that FIFA/UEFA rules requiring prior approval of new competition and use of sanctions were compatible with EU competition law. The Advocate General disagreed with the ESL, writing that, although “FIFA and UEFA hold a monopoly as regards the authorisation and the organisation of international professional football competitions in Europe,” their rules and sanctions did not unduly deny ESL access to the market since they could be regarded as “inherent in the pursuit of legitimate objectives and proportionate to [their] objectives.”
Though a final ruling from the ECJ in the matter is expected sometime in 2023, and despite the Advocate General’s opinion, a court in Madrid nonetheless reinstated its injunction on FIFA and UEFA in late January 2023, noting that the governing bodies could not justify their restrictive conduct under the guise of protecting the interests of European football. The injunction prevents FIFA and UEFA from taking disciplinary action against clubs until the ECJ rules on six additional questions referred to it by the Madrid court.
Thus, while the ESL may have failed in its bid to change the football world, it continues to potentially change the application of antitrust law to the sport, with more yet to come.
These most recent developments came months after another antitrust challenge to FIFA governance, reported in October 2022, when a group of player agents threatened legal action against FIFA based on its plans to regulate agents by introducing caps on commissions, a licensing system, and various other transparency initiatives. A letter signed by several player agents alleged that FIFA’s intention was to establish a cartel, and the letter argued that the planned regulations would drive agents out of the market and harm the ability of players to bargain with clubs. The agents also alleged that the initiative would violate competition laws in the EU, US, and UK.
Global enforcement trends
In addition to challenges to the governance structure of football from private complainants, the sport also has come under the scrutiny of competition enforcers around the world, particularly with regard to player pay and mobility.
Enforcement of antitrust and competition laws in labor markets has been a priority for numerous competition agencies around the world, many of which (including the US Department of Justice) have pursued “no poach” and “wage-fixing” agreements as antitrust violations. Several jurisdictions have already reached these issues with regard to professional football.
In Mexico, a 2018 investigation of Liga MX teams by the Federal Economic Competition Commission (COFECE) culminated in fines totaling 177.6 million pesos ($8.9 million) for the Mexican Football Federation, 17 clubs, and eight individuals. The clubs were accused of violating Mexican cartel laws by imposing salary caps on female players and entering into illegal no-poach agreements, preventing players from freely negotiating and contracting with clubs.
Similarly, Colombia’s Superintendence of Industry and Commerce (SIC) announced a probe in December 2021 of various parties, including the Major Division of Colombian Professional Soccer (DIMAYOR), 16 clubs, and 20 individuals in connection with an alleged no-poach agreement. The investigation arose from a complaint by the Colombian Soccer Association (ACOLFUTPRO) accusing clubs of seeking to prevent contract negotiations with 16 players.
No-poach in football was also the subject of scrutiny across the Atlantic, where the Portuguese Competition Authority (AdC) obtained €11.3 million in fines against 31 clubs and the Liga Portugal in June 2022 for entering into agreements not to hire players who terminated their contracts with clubs due to COVID-19.
US developments
While there has not been a significant government enforcement action relating to soccer (football’s domestic alter ego) in the US, global antitrust trends with regard to the sport also can be seen Stateside.
In 2020, antitrust concerns drew the scrutiny of the Department of Justice’s (DOJ) Antitrust Division after US soccer promoter Relevent Sports (Relevant) challenged a 2018 FIFA rule preventing teams from playing official league matches outside of their home territories, alleging a violation of Section 1 of the Sherman Act. In a letter that became public when it was included as an exhibit to an amended complaint in Relevent Sports, LLC v. United States Soccer Federation, Inc., 1:19-cv-08359-VEC, the Antitrust Division’s former assistant attorney general warned both FIFA and the United States Soccer Federation that “[s]ports organizations are not categorically immune from liability under the rules.” The letter noted that market allocation was a per se violation of US antitrust laws and detailed DOJ’s concern that FIFA’s proposed rule “could violate US antitrust laws by restricting the territory in which teams can play league games.”
In July 2021, the Southern District of New York dismissed Relevent’s suit against the US Soccer Federation (USSF) and FIFA, holding that it had not adequately alleged “an agreement prior to the 2018 policy between FIFA and USSF to restrain the market for soccer games” under the Sherman Act.
Relevent appealed the district court’s decision. On March 7, 2023, the Second Circuit vacated the district court’s decision, holding that that the Sherman Act did not require the plaintiff to allege or prove an “agreement to agree” (a point made by the DOJ in an amicus brief it filed in the case). The Court held that the “allegations, corroborated by the fact that the 2018 Policy does not on its face relate to ‘things like how many players may be on the field or the time allotted for play,’ but rather relates to a geographic limitation on where various leagues can compete for ticket sales, plausibly allege that in adopting the 2018 Policy, FIFA and its member associations adopted an anticompetitive geographic market division.”
The case was remanded back to the Southern District of New York for further litigation that could impact FIFA’s rules governing home soil match play and further develop the application of antitrust laws to the sport’s governance. On April 4, FIFA and USSF petitioned for an en banc rehearing of the Second Circuit decision.
Antitrust claims also formed the basis of a 2021 lawsuit brought on behalf of football phenom Olivia Moultrie against the National Women’s Soccer League (NWSL). The lawsuit challenged NWSL’s minimum age rule for players, which prevented Moultrie from signing a professional contract at age 15. The lawsuit alleged that the rule constituted an unlawful group boycott in violation of Section 1 of the Sherman Act.
Moultrie won both a temporary restraining order against and preliminary injunction of enforcement of the age-limiting rule. The court rejected NWSL’s argument that it was a “single entity” for antitrust purposes, citing a number of ways in which its ten member clubs competed, and found that the league’s minimum age rule was a concerted action that restricted the market for players (in which the teams competed) and was without a procompetitive rationale. NWSL initially appealed the court’s ruling, but the parties settled the matter and dismissed the appeal. Moultrie then signed a three-year deal with the Portland Thorns and became the youngest player ever to score in the NWSL in August 2021.
Conclusion
With the sport’s growth and increased presence in the US (which will host with Canada and Mexico the 2026 World Cup) and abroad, stakeholders would be well advised to keep a watchful eye on antitrust trends and how competition issues might arise elsewhere in the world’s most popular sport.