The European Super League: Competition and Controversy
In the latest piece for The Legal Pitch, all three founders and LPC student George Ottewell discuss the emergence of the European Super League (ESL) and the legal ramifications of EU competition law for both ESL founding clubs and UEFA. The article then assesses the keynote issue of the Premier League ‘Big Six’, and whether, under UK law, said clubs will face any legal sanctions.
The emergence of the European Super League (ESL) has caused much controversy in the past week, with many of Europe's ‘elite’ football teams joining (and rather hastily, leaving) the largely closed league. Florentino Perez has painted the ESL as being the saviour of the supposedly dying sport of football, whereas fans, players, managers and certain vocal pundits see it as a reflection of the greed in the modern game.
The ESL is a legally interesting case, as it sparks poignant questions as to the application of the principles of EU competition law to the footballing world. The objective of competition law in the EU, especially in the context of this article and the ESL, is to create an economic system which prevents those in a dominant market position from abusing their power and essentially eradicating competition for their own interests.
The authority for competition law in the EU stems from the Treaty on the Functioning of the European Union (TFEU), which despite Brexit, still applies to England and Wales by virtue of s.60 of the Competition Act 1998.
The main article prohibiting the prevention, restriction or distortion of competition within the EU is Article 101(1) TFEU. To breach said article, there must be two or more undertakings (professional football clubs fit under the definition of an undertaking), who enter into an agreement for the purposes described above, namely, to limit competition. Article 101(2) states that where such an agreement exists, it will be automatically void.
The second notable article is Article 102 which provides that any abuse by one or more undertaking of a dominant market position within the internal market is prohibited so far as it may affect trade between Member States. This provision essentially prevents services being monopolised by those who exert considerable influence over the market.
What does this mean for the ESL?
The interesting thing about the ESL is that competition law has the potential to adversely affect both sides. One line of argument is that UEFA, in attempting to block the ESL from happening, are potentially misusing their monopoly and thus breaching Article 102. On the other hand, the ESL in itself, by being a largely closed league, are limiting competition by only allowing the so-called ‘elite’ clubs to compete, thus breaching Article 101(1) TFEU. Furthermore, the likes of Real Madrid, Barcelona, Manchester City etc. can be seen as having a dominant market position given their considerable wealth, and by creating a league not based on merit, but on power and money, are abusing this position and therefore breaching article 102 TFEU.
The purpose of this section is not to provide a definitive legal answer, but to invoke thought into the structure of the modern game from a legal perspective, and to assess how principles of competition law may be applied to the unique business of football.
Is UEFA misusing its monopoly?
On the face of it, preventing a breakaway league that would be in direct competition with UEFA seems to be an abuse of a dominant market position, and in any other business context it is likely that this would not be permitted under Article 102 TFEU.
However, football is not like any other business. The uniqueness of the industry of football is that the core of the business stems directly from the fans, who have a vested, non-financial interest in their team. Football was built by the fans, for the fans, and operates on a pyramid model centered around meritocracy and the excitement of the uncertain.
Some have therefore argued that competition law should be applied in a different manner in this context, in recognition of the poignant role the fans and heritage plays in football. Widespread protests from fans, managers and players alike has led to the majority of teams pulling out of the ESL, which is truly a reflection of the significance of meritocracy as opposed to elitism in football.
Accordingly, by presenting active opposition to a breakaway Super League, UEFA may have misused its monopoly, but for what most would argue, good reason; to protect the heritage and identity of the beautiful game.
Is the ESL in breach of EU Competition Law?
Firstly, for there to be a breach of Article 101(1) TFEU, there must be an agreement between two or more undertakings with the object of limiting competition. It follows that Europe’s largest clubs entering an agreement to join the ESL would satisfy this.
To assess the impact of the ESL on competition, the most obvious analysis is to look at the national leagues. It has been reported that each of the founding clubs would have (and may still, if Perez gets his way) a share of €3.5 billion initially, plus €10 billion for an initial commitment period. This is where the disparity is highlighted, and the cracks begin to show.
The ESL, despite Perez’s strong defence of the deservedness of the clubs joining, would be formed by clubs who have the most economic power, many of whom are at the highest level of the game, and some who fall foul of that (a couple of North London clubs come to mind). The point is that these clubs, by joining this league, only further their economic advantage over smaller clubs who are not given the same opportunity. This will therefore decrease economic competition within the national markets and would be incompatible with Article 101(1) TFEU.
Secondly, by decreasing economic competition within the national market, thereby harming smaller clubs, the ESL teams could be seen as abusing their dominant market position, therefore breaching Article 102.
The European Court of Justice in Case 85/76 Hoffman-La Roche & Co AG v EC Commission  held that a monopoly does not preclude some competition but enables an undertaking who profits by it to have an appreciable influence on the conditions under which that competition will develop. The ESL clearly fits into this test, as it is a league created by the owners of Europe’s elite, the exclusivity of which is based on economic strength of the associated clubs, who are unable to be relegated and thus continue to reap its benefits indefinitely. Therefore, it can be said that the creation of the ESL breaches Article 102 TFEU, and should not be legally permitted.
What Next for the English Clubs?
With the ESL seemingly disbanded for the time being, the focus has shifted to how the six clubs should be punished. UEFA chairman Aleksander Ceferin has applauded the English club’s U-turn, stating that ‘it is admirable to admit a mistake’ and that it is now important to ‘move on and rebuild unity’. However, the hierarchy at the Premier League are likely to be less amicable. Indeed, Sky Sports reported that a senior club official has condemned the breakaway as patently violating Premier League rules. In particular, Premier league Rule 9 outlines that for a club to enter or play in a new competition during the season, they require written approval from the Premier League board. With the other fourteen Premier League clubs blindsided by the ‘Big-six’s’ breakaway it is clear that no approval was received. Therefore, the question turns to whether the clubs ‘entered’ or ‘played’ in the new competition. The answer to the latter is clearly no. However, the issue of whether the clubs entered into a new competition is more nuanced and without having access to ESL contracts it is difficult to assess with any certainty. However, if Florentino Perez is correct that the clubs entered into binding contracts, with the intention of starting the league as soon as possible, then Rule L9 may provide a successful avenue for the Premier League to punish the six clubs.
Nevertheless, even if Rule 9 is unsuccessful, Rule B16 prevents clubs from ‘committing any act that may bring the league into dispute’. The ESL would have resulted in huge ramifications for Premier League funding, with the potential of broadcasters cutting their Premier League TV rights without the draw of the ‘big six’. This would have caused devastating financial losses for the remaining fourteen clubs and ultimately jeopardized the Premier League's existence. Thus, if the other fourteen clubs want to punish the breakaway six, Premier League Rule B16 appears to provide a robust and legally sound framework through which to achieve this. However, any punishment must be appropriate. In the midst of all the condemnation and uproar of the last week, it cannot be forgotten that this ESL was formulated in the boardrooms of Boston and Tampa Bay and not in the streets of Liverpool or Manchester. Thus, whilst point deductions and even relegations may provide the most effective deterrence for a future breakaway, they would hurt players, managers and fans the most. Such punishments seem unfair on the players and managers who bravely opposed their employers and above all the fans who protested and prevented the ESL from going ahead.
Having said this, smaller clubs such as Sheffield Wednesday, Bolton and Leeds have suffered huge points deductions as a result of board and owner incompetency’s, and it is again ruling the ‘Big Six’ to have more economic power if they are not sanctioned with points deductions and or fines.
The future of the ESL
The future of the ESL is uncertain, with the majority of clubs pulling out it seems to be rather dead in the water. However, there are likely to be numerous legal cases in the coming months, and with Perez standing his ground, stating the twelve ‘founder’ clubs to be locked in a contractual deal, we have certainly not seen the end of it.
It will be interesting to see how the future of the ESL unfolds and whether or not the question of competition law comes to light in the way described, or whether Perez can enforce some legally binding clause that will commit said clubs to the ESL.