Image source: The Star
THE ISU COMPLAINT
In
2015, Dutch Skaters Mark Tuitert and Niels Kerstholt, filed a complaint against
the International Skating Union (ISU) in relation to lifetime bans imposed for
participation in unauthorised skating competitions (out with the ISU schedule). The skaters argued that
such severe sanctions were unreasonable and prevented them from pursuing their
careers as well as placing unreasonable obstacles for other organisations
looking to promote events and invite participants.
The
skaters argued that ISU eligibility rules, in particular Rule 102 of the ISU
General Regulations, were in direct violation of Article 101 of the Treaty of
the Functioning of the European Union (TFEU) which prohibits restrictive
business practices:
“The following shall be prohibited as
incompatible with the internal market: All agreements between undertakings,
decisions by associations of undertakings and concerted practices which may
affect trade by Member States and which have as their object or effect the
prevention, restriction or distortion of competition within the internal
market.”
Generally
speaking, sporting rules are subject to EU competition law when the
organisation imposing the rules, or the companies and persons affected by the
rules, are engaged in an economic activity. Sporting rules are generally found
to be compatible with EU law if they pursue a legitimate objective and if
restrictions imposed are inherent and proportionate to the aim of the
objective.
THE ISU RESPONSE
The
ISU is the sole organisation recognised by the International Olympic Committee
to administer the sports of figure skating and speed skating. Its members are
national ice skating associations. The ISU and its members organise and
generate revenues from speed skating competitions, including from major
international competitions such as the Olympic Games.
The
ISU unsurprisingly defended the complaint arguing that their rules pursued a
legitimate aim and any sanctions were necessary and proportionate in pursuing
and meeting that aim. They argued that their rules protected sport organisers,
athletes and spectators and were drafted with the aim of protecting the
integrity, safety and health of the sport of skating. The ISU stressed that, in
their opinion, to adopt a neo-liberal and de-regulated approach would be to
destroy the Olympic values.
EC DECISION
The
EC first opened proceedings in relation to the ISU’s eligibility rules on 05
October 2015 and issued its final decision on 08 December 2017.
The
EC considered that although International Sporting Federations play an
important role in an athlete’s career, the penalties imposed by the ISU served
to protect its own commercial interests and prevent others from organising
their own events.
The
key findings from the EC investigation were as follows:-
- Under the ISU eligibility rules, in place since 1998, speed skaters participating in competitions that are not approved by the ISU face severe penalties up to a lifetime ban from all major international speed skating events. The ISU can impose these penalties at its own discretion, even if the independent competitions pose no risk to legitimate sports objectives, such as the protection of the integrity and proper conduct of sport, or the health and safety of athletes.
- By imposing such restrictions, the ISU eligibility rules restrict competition and enable the ISU to pursue its own commercial interests to the detriment of athletes and organisers of competing events. In particular, the Commission considers that the ISU eligibility rules restrict the commercial freedom of athletes who are prevented from participating in independent skating events. As a result of the ISU eligibility rules, athletes are not allowed to offer their services to organisers of competing skating events and may be deprived of additional sources of income during their relatively short speed skating careers.
- The ISU eligibility rules prevent independent organisers from putting together their own speed skating competitions because they are unable to attract top athletes. This has limited the development of alternative and innovative speed skating competitions, and deprived ice-skating fans from following other events.
The
EC, thus, found that the ISU’s eligibility rules were disproportionately
punitive and prevented the emergence of independent international speed skating
competitions. The rules were thus anti-competitive and in direct violation of
Article 101 TFEU.
OTHER CASES
The
ISU is not the first governing body to fall foul of competition laws and there
have been a number of judicial decisions, across the globe, similar to the ISU
case.
FIA
Formula One Championship [2001]
OJ C169/5
The
EC may have had a feeling of deja-vu
when determining the ISU case as in 2001, it heard a complaint concerning the
International Sporting Code of the Federation
International de Automobile (FIA) which stated that no license holder could
participate in a motor-racing event not sanctioned by the FIA. Any licensee who
breached that rule would have their license revoked and be excluded from FIA
events.
The
EC held that the FIA had abused its position in order to block the organisation
of competing events. Again, the rule was seen to be serving the FIA's own
commercial interests.
Hendry
v World Professional Billiards and Snooker Association [2001] All ER (D) 71
Hendry
brought an action against the WPBSA (the ISF for snooker) in relation to a
number of rules. Hendry was associated with a rival company that sought to
promote tournaments in competition with the WPBSA. Hendry lodged an action when
the WPBSA amended its rules so that its members (which included Hendry and
other leading players) were prevented from joining the unauthorised tournament
and asked its members to notify their acceptance of the new rules within a ten
day period. Hendry argued that the WPBSA enjoyed a dominant market position for
the promotion of snooker tournaments, their sponsorship and broadcasting, and
for players to compete and earn money from snooker. Hendry contended that the
WPBSA had abused that position by restricting members from participating in
other competitions. Hendry argued that this was in direct violation of
competition law.
The
case was heard by a UK Court and the Judge held that a rule which restricted
the tournaments in which players could participate infringed UK competition law
and probably Articles 101 and 102 TFEU, under EU law – The Judge agreed that
the rule was indeed an abuse of the WPBSA's dominant position.
Greig
v Insole [1978]
1 WLR 302
The
International Cricket Conference (ICC) and the Test and County Cricket Board
(TCCB) fell foul of competition laws back in the 1970s when they imposed
restrictions on cricketers playing in “private” matches.
The
ICC arranges test matches and controls what players are eligible to play in
those. In 1977, a number of leading players (including three of the cricketers
who brought this case) entered into a contract with an Australian promoter to
participate in matches (unconnected to the ICC or TCCB) known as the “Packer
Circus”. When the ICC got knowledge of this, they announced that any cricketers
who remained contracted to participate in private matches would not be eligible
to compete in test matches. The TCCB extended this ban to include county
matches, a sanction which would run for a two year period, starting from the
last “private” match.
The
Judge held that the imposition of such a rule was not only a restraint of trade
but also acted to induce breach of contract with the Australian promoter. The
Judge held that neither the ICC or the TCCB had showed that there was a
reasonable and legitimate aim for restricting such participation.
Pilkadaris
v Asian Tour (Tournaments Players Division) Pte Ltd [2012] SGHC 236
Asian
Tour Limited (ATL) is a sports association who organizes golf competitions
across the Asian region. The members of the association were professional
golfers. The association had a rule that if members wished to participate in
“competing” or “conflicting” events, they had to first seek the permission of
the association, otherwise they would find themselves sanctioned with a fine or
a suspension.
The
Pursuers had applied to participate in “competing” events but were repeatedly
rejected by the association. When the pursuers competed in the events, they
found themselves faced with a fine and threatened with suspension, if they were
to ignore the rules again. As such, they lodged proceedings against the
association on the basis that the rule was an unjustified restraint of trade.
The
Singapore High Court agreed with the Pursuers and ruled that the ATL was a
trade organisation and although they may have an objective to govern the
actions of its members in relation to their professional lives and earnings, it
was operating in an area in which the doctrine of restraint of trade applied.
As the rule prevented members from playing in any golf tournament considered to
be “competing” or “conflicting”, this was a restraint of trade. The Pursuer
were professional golfers who needed to be able to take part in as many
tournaments as possible to improve their chances of making a living. The
restriction and sanctions were considered too wide in scope and punitive in
nature.
PROTECTING OFFICIAL COMPETITIONS IN LIGHT OF THE ISU DECISION
Various
types of sport run a “pyramid structure” not only in relation to key stakeholders
(ISF, NGB, Clubs, Athletes etc) but also with regards to competitions. The
pyramid governs what competitions fall under the responsibility of the various
governing bodies. For example, in a football context, at the top of the pyramid
is FIFA who has responsibility for the World Cup, next are the Confederations
who have responsibility for continental competitions such as UEFA’s Champions
League and then you have the domestic associations who are responsible for
their own domestic competitions – The FA for example has responsibility for the
Premier League and the FA Cup.
The
pyramid structure of competitions can be seen from grassroots to elite level
and encourages solidarity amongst the various levels of the pyramid. It also
serves to discourage rival competitions unauthorised by the governing bodies which
may cause consumer confusion. A significant number of governing bodies
therefore have a rule, in one form or another, which prohibits athletes/clubs
from participating in unauthorised competitions without the prior consent of
the relevant governing body. The sanctions for such a breach often result in
exclusion from official competitions, as well as the Olympics.
It
is clear from recent decisions that unless governing bodies are able to show
that the restriction is reasonable, validly justified and proportionate, it is
likely they will fall foul of competition law. National Courts and the European
Commission have made the position clear - the overriding interest, behind such
restrictive rules cannot be the governing body’s own commercial interests. Thus,
it is inevitable that governing bodies will require to amend their rules to
permit participation in alternative competitions, subject to proportionate
conditions – this may, for example, be in relation to health and safety
policies such as the event having to pass a particular standard of safety inspection
or the organiser carrying adequate insurance.
The
key reasons that breakaway competitions occur in sport usually have a common
theme centering on commercial interests. It may be the disproportionate
distribution of commercial opportunities to athletes or clubs, or the need for
participants to generate increased revenue. The pyramid structure of sport
carries with it a number of benefits such as certainty, a guaranteed consumer
following, increased potential to exploit commercial opportunities and a
governance structure set-up to protect sporting values. Breakaway competitions,
on the other hand, can dilute fan engagement, raise integrity concerns and in a
bid to secure commercial investment sacrifice sporting values and solidarity
amongst stakeholders. Stepping away from the restriction rule, another possible
solution to avoid breakaway competitions (or deter participation) is to build
and improve upon the very pillars that make the pyramid structure attractive
and beneficial. Further, governing bodies could explore new innovative
strategies to increase fan engagement and commercial opportunities for athletes
and clubs whilst taking steps to implement increased distribution of revenues, as
well as promoting equality across sport.
The
implementation of meaningful measures that attempt to negate and solve the
issues that lead to breakaway leagues, rather than imposing disproportionate punitive
restrictions/sanctions that lead to rebellion, may be the key to the future
protection of official competitions and the commercial interests of governing
bodies.
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