Competition & Company Law: What could be the legal fallout from the European Super League?
The Union of European Football Associations and the Football Association have been very vocal about their disapproval of the recently proposed European Super League (the ‘ESL) along with hundreds of thousands of football fans all around the world.
The ESL eventually did not go ahead. However, with wealth between £310 – £89 million per club promised for joining the ESL and an annual prize of £2.66 billion, it is thought that any future attempts to restart and subsequently block an ESL style movement would end in litigation.
It is likely the main argument that both parties will make is a breach of competition law, such as:
- it is an abuse of the associations’ dominance as regulators to attempt to prevent rival leagues/competitions entering the market;
- it could also be asserted that the members of those associations are collaborating to boycott clubs and/or their players by refusing them access to the associations and competitions;
- the clubs will argue that preventing their players from participating in rival competitions, such as preventing players from English clubs playing in the premier league, is a restraint of trade; and
- furthermore, the associations could argue that the rebel clubs are creating a cartel.
Is there any case law that could be applied to this scenario?
The ESL may look to two previous cases: –
- The International Skating Union (the ‘ISU’) lost its bid to overturn an EU antitrust order. Europe’s second-highest court backed that it stops penalising speed skaters who joined a new lucrative competition. Judges concluded that “ISU enforcing severe penalties for athletes taking part in speed skating events not recognised by it are contrary to EU competition law,”.
- On 28 April 2016, the Brussels Court of Appeal confirmed the decision of the Belgian Competition Authority which ruled against the Fédération Equestre Internationale (the ‘FEI’) which was preventing horse riders from participating in show-jumping competitions which were not FEI approved. The ruling has since allowed the launch of a new Global Champions League.
There are obligations on directors to act “in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole “. Football is a business, and its clubs are merely companies, most of which are PLCs. Ultimately, fan pressure won the battle over the ESL, with their displeasure causing clubs to back out.
If the ESL had proceeded, would the Directors of those clubs have failed to adhere to their duties and obligations, by ignoring their fans wishes? There are two lines of argument:-
- Yes: Suppressing competition amongst clubs, restricting fan access to games, and keeping wealth amongst the select few, if the ESL had progressed it would have had a devastating impact on the football community by clearly going against their fans, some of whom are members, wishes.
- No: Members are shareholders looking for profits. A club is merely a company that directors have a duty to serve. By not entering the ESL, and passing on huge profits, members could argue that the board has disregarded their duty and not acted for the success of the company.
This is not the last we will see about a potential elite club breakaway as the financial awards are so significant, it will be interesting to see how long fan pressure counters that temptation for the directors of clubs.
If you need any assistance with competition or company law, please do not hesitate to contact us.