ISU: EU Competition Law Investigation

By Tom Serby

Anglia University Law School Cambridge United Kingdom

 

Competition law currently is the vogue issue in sports law (see GSLTR website reports on 30 September 2015).

Last week, the European Commission announced it was commencing a formal investigation into the International Skating Union (ISU) on the grounds of a suspected infringement of Article 102 (abuse of a dominant position) of TFEU. The case concerns the extent to which sports governing bodies can separate their commercial from their regulatory functions.

The European Court of Justice clarified the application of EU competition law to sporting rules in the MOTOE case (C-49/07), confirming that the commercial exploitation of sporting events is covered by EU competition rules. In that case, the Greek National Motorcycling Federation was forced to climb down from its attempt to prevent rival organisers staging motorcycling events.

It was a requirement under Greek law that, without MOTOE’s approval, the rival events would be unlawful under national law. MOTOE withheld permission from certain events, but under European competition law, such behaviour is unacceptable, unless based upon genuine concerns in relation to, for example, the health and safety of participants. A dominant body cannot use that dominance simply to suppress free competition.

Under the established pyramid structure of sports governance, international federations generally hold a monopoly, boxing being the obvious exception where, famously, rival international boards of control administer separate title competitions. Seeking to use that monopoly power to prevent rival commercial organisations making money from their sport is inherently an abuse of a monopolistic position.

In the ISU case, the federation has sought to impose life bans if competitors take part in certain events not endorsed by them, such as an event in Dubai organised by a private entity, Icederby International (Icederby). Competitors were particularly interested in participating in that event, because they would be very well paid in doing so.

Initially, the ISU had argued that it would not licence participation in events organised by Icederby, because of on-site betting activities. Such a ban could escape competition law censure based on there being a legitimate objective (to save the sport from exposure to the risk of betting-related manipulation). However, it became clear that the basis for the refusal to sanction participation in Icederby’s events was not betting- related when it became clear that no on site betting activities were planned.

The European Commissioner for Competition, Margrethe Vestager, stated that the Commission “will investigate if such rules are being abused to enforce a monopoly over the organisation of sporting events or otherwise restrict competition. Athletes can only compete at the highest level for a limited number of years, so there must be good reasons for preventing them to take part in events.”

It will be interesting to see what happens in this particular case and whether the ISU is able to justify its opposition to these competitive events on legitimate sporting grounds!