Use & Abuse of the Ancillary Restraints Doctrine

reflects the intention of the legislature not to oblige the Commission to assess and individually address ancillary restraints. The treatment of ancillary restraints under the EC Merger Regulation is further explained in recital 21 in the preamble to the EC Merger Regulation, which states that ‘Commission decisions declaring concentrations compatible with the common market in application of this Regulation should automatically cover such restrictions, without the Commission having to assess such restrictions in individual cases’. While the Recital envisages that the Commission will exercise a residual function with regard to specific novel or unresolved issues giving rise to genuine uncertainty, it is in all other scenarios the task of the undertakings concerned to assess for themselves whether and to what extent their agreements can be regarded as ancillary to a transaction. Disputes as to whether restrictions are directly related and necessary to the implementation of the concentration, and thus automatically covered by the Commission’s clearance decision, may be resolved before national courts. (ibid., pt. 2)

If it is established that a restriction is directly related and necessary to achieving a main operation, the compatibility of that restriction with the competition rules must be examined with that of the main operation. (M6 et al., T-112/99, pt. 115)

Thus, if the main operation does not fall within the scope of the prohibition laid down in Article 85(1) of the Treaty, the same holds for the restrictions directly related and necessary for that operation (see, to that effect, Remia v Commission, cited in paragraph 87 above, paragraph 20). If, on the other hand, the main operation is a restriction within the meaning of Article 85(1) but benefits from an exemption under Article 85(3) of the Treaty, that exemption also covers those ancillary restrictions. (ibid., pt. 116)

17. Several basic conditions for the application of the doctrine appear, in our view, to emerge from the relevant case law (including the rulings cited in the Opinion) and EU legislation (including the Commission’s Guidelines):

(i) Anti-competitive Restraint: this condition requires that the restraint distort competition on the relevant market;

Normally the matter would fall within the scope of application of article 101(1) TFEU or similar legislation, though there are some exceptional cases where the restraint – albeit anticompetitive – falls outside this scope for reasons of public interest (pt. 20 et seq.).

We note that some authors, including AG Rantos in the Opinion (e.g. Op., pt. 85), use “scope” to cover both the conceptual sphere of applicability of an article (its “champ d’application”) and the situation when something falls within that sphere and actually triggers the application of the article (its “mise en oeuvre”); to our mind these terms should be clearly separated, and here we refer to the conceptual sphere of applicability.

(ii) Stratification: this – to our mind – essential condition assumes that there are two sets of clearly separate distinctive restrictive practices, one integral to the main objective and one that “is subordinate to the implementation of” that objective and which does “not form an integral part of the” main objective;

Because the two sets of practices are inextricably linked, it may be hard to tell the difference between them at first glance. However, if we consider each set individually, we realize that one set (the primary set) can, in and of itself, constitute the core of the target operation, even if that would be extremely difficult without the second set. By analogy, this would be similar to the essential obligations typifying a contract (e.g. sales, rental, loan) and that could form the basis for a binding agreement even in the absence of other obligations practically necessary to their implementation. On the other hand, considered by itself, the secondary set of restrictions would be insufficient to establish the target operation or sometimes even a normal business transaction.

(iii) Direct Link: this condition assumes that the secondary set of restrictive practices is directly and “inseparably” linked to the primary set;

Although the first set may exist independently (cf. supra), the ancillary set would not make sense by itself without the first set.

(iv) Necessity: this condition implies that the ancillary set is objectively necessary (i.e., practically required) for the proper existence of the primary set, as determined by a “significant barrier” test which checks, for example, if “without the restriction, the main operation is difficult… to implement”;

Normally this condition and the condition of “Proportionality” (cf. infra) are used together as part of a “two-fold examination” of the practical link between the restraint and the objective (e.g., T-112/99, pt. 105); however, given the differences in the underlying tests that would determine if either condition is satisfied, we suggest to enumerate them separately.

(v) Proportionality: this conditions supposes that the ancillary set is proportionate to the achievement of the primary set, as established by examining the limitations in its scope (e.g. geographic, temporal) and the existence of alternative solutions;

(vi) Pre-existing Validity: this condition implies that the primary set of restrictive practices is accepted as valid from a competition point of view, before considering the secondary ancillary set.

We will use this last condition to organize the rest of the present section and divide the examples based on whether the primary set of practices is validated in the course of a formal competition analysis (1), by the mechanism of a block exemption (2), or exceptionally, through public interest concepts (3).

The… condition… requires that the primary object of the agreement is not the assignment or licensing of IPRs [(intellectual property rights)]. The primary object must be the purchase, sale or resale of goods or services, and the IPR provisions must serve the implementation of the vertical agreement. (Commission Notice “Guidelines on vertical restraints” (2022/C 248/01), hereinafter “GLVR”, pt. 76)

The… condition… requires that the IPR provisions facilitate the use, sale or resale of goods or services by the buyer or its customers… The IPR provisions will generally concern the marketing of goods or services. An example would be a franchise agreement where the franchisor sells to the franchisee goods for resale and licenses the franchisee to use its trademark and know-how to market the goods, or where the supplier of a concentrated extract licenses the buyer to dilute and bottle the extract before selling it as a drink. (ibid., pt. 77)

The third category of ancillary restraints is more germane to the case at hand, as it is this type that seems to have inspired AG Rantos’ analysis.

The CJEU does not specifically refer to any restraints being ancillary to any primary set of practices but it seems that the main group would be the general rules organizing the legal profession and the ancillary restraints would correspond specifically to the 1993 regulation on professional partnerships.

Although the equally important Bosman ruling (C-415/93) concerned fundamental freedoms and not restrictions impacting the business market, it is interesting to compare the ruling at Wouters et al. to the similar approach and wording in Bosman and the cases cited therein:

Consequently, the transfer rules constitute an obstacle to freedom of movement for workers prohibited in principle by Article 48 of the Treaty. It could only be otherwise if those rules pursued a legitimate aim compatible with the Treaty and were justified by pressing reasons of public interest. But even if that were so, application of those rules would still have to be such as to ensure achievement of the aim in question and not go beyond what is necessary for that purpose (see, inter alia, the judgment in Kraus, cited above, paragraph 32, and Case C-55/94 Gebhard [1995] ECR I-0000, paragraph 37). (C-415/93, pt. 104)

25. The CNG case (C-136/12) concerned another set of restrictive rules governing a profession, specifically a code of conduct established by the Italian Consiglio nazionale dei geologi that, amongst other measures, attempted to encourage the adoption of a fixed fee scale by geologists (this profession is legally regulated in Italy). For reasons similar to those in Wouters et al., the Court found that the CNC’s regulations fell within the scope of application of article 101(1) and were likely to restrict competition on the relevant market (C-136/12, pts. 42-52). The Court then proceeds to quote Wouters almost verbatim to arrive at a similar conclusion with respect to the ancillary restraints. Given that the objective of the primary set of restrictions (in this case the regulation of the profession of geologist) is “ensuring that the ultimate consumers of the services in question are provided with the necessary guarantees” (ibid., pt. 53), which is in the public interest, it follows that restraints ancillary to these – such as those imposing minimum fees –  would not fall afoul of article 101(1). The ancillary restrictions need to be inherent and necessary (i.e. proportional) to attaining these beneficial objectives for them to be cleared.

That is the theoretical lesson in this ruling; however, in practice, and unlike in Wouters, the Court considered that the specific situation and localized effects of the imposed fee scale were not sufficiently clear, and that it was not in a position to decide the matter itself. It was for the local court to decide (i) whether or not there was a restriction by effect, and if yes, whether (ii) the ancillary restraints were proportionate in their implementation of the primary set of rules governing the profession and attaining the validated objectives.

[R]ules such as those laid down by the Code of Conduct that establish as criteria for determining the remuneration of geologists…. the dignity of the profession, constitute a decision by an association of undertakings within the meaning of Article 101(1) TFEU which may have the effect of restricting competition within the internal market. It is for the referring court to assess, in the light of the overall context in which the Code of Conduct produces its effects, including the national legal framework in its entirety and the manner in which that code is applied in practice by the National Association of Geologists, whether that effect is produced in the present case. That court must also verify whether, in the light of all the relevant material before it, the rules of that code, in particular in so far as they apply the criterion based on the dignity of the profession, may be regarded as necessary for the implementation of the legitimate objective of providing guarantees to consumers of geologists’ services. (C-136/12, pt. 57)

26. Another case involving setting prices in Italy (API et al., joined cases C-184/13 to C-187/13, C-194/13, C-195/13 and C-208/13) concerned the legally imposed minimum operating costs for road transport as determined by a professional body representing the industry and officially delegated by the relevant government ministry. An interesting feature of the case was the reasoning that the Court used to bring this body’s regulations within the scope of article 101(1):

[I]n the light of the composition and the method of operation of the Osservatorio, on the one hand, and of the absence both of any public-interest criteria laid down by law in a manner sufficiently precise to ensure that carriers’ and customers’ representatives in fact operate in compliance with the general public interest that the law seeks to achieve and of actual review and of the power to adopt decisions in the last resort by the State, on the other, the Osservatorio must be regarded as an association of undertakings within the meaning of Article 101 TFEU when it adopts decisions fixing minimum operating costs for road transport such as those at issue in the main proceedings. (ibid., pt. 41)

Once within the scope of article 101(1), the Court cites its previous case law on practices ancillary to public interest restrictions (Wouters et al. and CNG) but states that this would not be applicable in any event in the present case because

the legislation at issue in the main proceedings cannot, in any event, be justified by a legitimate objective.

According to Article 83a(4) of amended Decree-Law No 112/2008, the fixing of minimum operating costs is intended to protect, in particular, road safety.

Although it cannot be ruled out that the protection of road safety may constitute a legitimate objective, the fixing of minimum operating costs does not appear appropriate, either directly or indirectly, for ensuring that that objective is attained.

In that regard, the Court would point out that the legislation at issue in the main proceedings merely refers, in a general manner, to the protection of road safety, without establishing any link whatsoever between the minimum operating costs and the improvement of road safety. (ibid., pts. 49-52)

In any event, the measures in question go beyond what is necessary… [T]here are a number of rules, including the rules of EU law… which constitute more effective and less restrictive measures… Rigorous compliance with those rules can indeed ensure an appropriate level of road safety. It follows that the fixing of minimum operating costs cannot be justified by a legitimate objective. (ibid., pts. 55-57)

Article 101 TFEU, read in conjunction with Article 4(3) TEU, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, pursuant to which the price of haulage services for hire and reward may not be lower than minimum operating costs, which are fixed by a body composed mainly of representatives of the economic operators concerned. (ibid., pt. 58)

In other words, the ancillary restraint of price fixing is not inherent in the realization of the public interest objective of road safety, nor is it a necessary means of achieving that goal.

27. Another ruling cited by AG Rantos concerned both the legal profession and setting minimum fees. As in the cases analysed above (but for slightly different reasons), the Court establishes that this type of regulation by the Bulgarian “Supreme Council of the Legal Profession” falls within the scope of article 101 and may restrict competition on the relevant market (CHEZ Elektro Bulgaria and FrontEx International, joined cases C-427/16 & C-428/16, pt. 49 et seq.). The Court reminds us that when examining restraints ancillary to a legitimate objective, one must “verify whether the restrictions thus imposed by the rules at issue in the main proceedings are limited to what is necessary to ensure the implementation of legitimate objectives” (ibid., pt. 55). As in CNG, the Court defers examination to the referring jurisdiction, however, instead of affirming that “[o]n the basis of the file submitted to it, the Court is not able to assess”, it goes one step further stating – seemingly categorically – that it may not make this examination:

having regard to the file before it, the Court is not entitled to assess [emphasis added] whether legislation, such as that at issue in the main proceedings, which does not allow a lawyer and client to agree remuneration in an amount less than the minimum amount laid down in a regulation issued by a lawyers’ professional organisation, such as the Supreme Council of the Legal Profession, can be deemed necessary for the implementation of a legitimate objective.

It is for the referring court to assess, in the light of the overall context in which the regulation issued by the Supreme Council of the Legal Profession was taken or applies, whether, in the light of all the relevant material before it, the rules imposing the restrictions at issue in the main proceedings may be regarded as necessary for the implementation of that objective. (ibid., pts. 56-57)

One wonders in what circumstances the Court would defer entirely to the referring court as here, or when it would examine the context superficially, as it did in API et al. or as in the case we will examine now.

28. The Meca-Medina et al. ruling (C-519/04) concerned the application of the IOC’s (International Olympic Committee’s) anti-doping rules by FINA (Fédération internationale de natation) to professional athletes (long-distance swimmers). According to the applicants, these rules went beyond what was necessary and proportional to achieving a proper implementation of anti-doping objectives, were “scientifically unfounded”, and possibly lead “to the exclusion of innocent or merely negligent athletes [because the positive test] could have been the result of the consumption of a dish containing boar meat” (C-519/04, pt. 16).

As in the decisions analysed above, though with some digression into the economic impact that even “purely” sporting activities may have, the Court found that the rules entered into the scope of article 101(1) (ibid., pts. 22-31). The Court, citing Wouters et al., then reminds us that

[n]ot every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC. For the purposes of application of that provision to a particular case, account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (Wouters and Others, paragraph 97) and are proportionate to them. (C-519/04, pt. 42)

This classical restatement of the ancillary restraints doctrine (though without using that term) is followed by a statement of the objectives at play:

the general objective of the rules was, as none of the parties disputes, to combat doping in order for competitive sport to be conducted fairly and that it included the need to safeguard equal chances for athletes, athletes’ health, the integrity and objectivity of competitive sport and ethical values in sport. (C-519/04, pt. 43)

Possibly because the validity of this objective is undisputed, the Court (unlike in CHEZ Electro) does not defer to the referring jurisdiction, and instead enters into the analysis of the relationship of the ancillary restraint to the principal set of restraints (which in this case would likely be the general anti-doping rules):

In addition, given that penalties are necessary to ensure enforcement of the doping ban, their effect on athletes’ freedom of action must be considered to be, in principle, inherent itself in the anti-doping rules.

Therefore, even if the anti-doping rules at issue are to be regarded as a decision of an association of undertakings limiting the appellants’ freedom of action, they do not, for all that, necessarily constitute a restriction of competition incompatible with the common market, within the meaning of Article 81 EC, since they are justified by a legitimate objective. Such a limitation is inherent in the organisation and proper conduct of competitive sport and its very purpose is to ensure healthy rivalry between athletes. (C-519/04, pts. 44-45)

Though the anti-doping rules are inherent in achieving the validated objective, they may be disproportionate to attaining that goal, especially given that there are other objectives likely at play:

While the appellants do not dispute the truth of this objective, they nevertheless contend that the anti-doping rules at issue are also intended to protect the IOC’s own economic interests and that it is in order to safeguard this objective that excessive rules, such as those contested in the present case, are adopted. The latter cannot therefore, in their submission, be regarded as inherent in the proper conduct of competitive sport and fall outside the prohibitions in Article 81 EC.

It must be acknowledged that the penal nature of the anti-doping rules at issue and the magnitude of the penalties applicable if they are breached are capable of producing adverse effects on competition because they could, if penalties were ultimately to prove unjustified, result in an athlete’s unwarranted exclusion from sporting events, and thus in impairment of the conditions under which the activity at issue is engaged in. It follows that, in order not to be covered by the prohibition laid down in Article 81(1) EC, the restrictions thus imposed by those rules must be limited to what is necessary to ensure the proper conduct of competitive sport (see, to this effect, DLG, paragraph 35).

Rules of that kind could indeed prove excessive by virtue of, first, the conditions laid down for establishing the dividing line between circumstances which amount to doping in respect of which penalties may be imposed and those which do not, and second, the severity of those penalties. (C-519/04, pts. 46-48)

The Court enters into technical discussions on the precise threshold for an anabolic substance at the heart of the appellant’s case (ibid., pts. 49-54), and concludes that “it does not appear that the restrictions which that threshold imposes on professional sportsmen go beyond what is necessary in order to ensure that sporting events take place and function properly” (ibid., pt. 54), thereby validating the ancillary restraints in questions.

The details of this technical examination are not relevant to the current commentary beyond noting the extent to which the CJEU is willing to enter into the examination of the proportionality of the ancillary restraint. As we have seen in the Commission’s guidelines (pt. 16) and in the Court’s own jurisprudence (e.g., C-427/16 & C-428/16, C-136/12), this analysis would normally fall to the referring jurisdiction.

Although the FIFA restrictions did not concern anti-doping, it is the Meca-Medina et al. ruling that seems to inspire AG Rantos’ position. After having examined the above decisions which constitute the natural sphere of application of the ancillary restraints doctrine, we turn now to his extension of this concept to FIFA’s rules, which would be, in our view, somewhat artificial.

[T]he theory of ancillary restraints may prove particularly relevant in the case of rules issued by sports federations, in so far as the conditions for exemption under Article 101(3) TFEU appear to be more difficult to satisfy than those referred to in the judgment in Meca-Medina. (Op. in C-124/21, pt. 42)

[T]he fact that a measure does not fulfil the criteria of the test laid down by the judgment in Meca-Medina means only that that measure must be (or remain) subject to the ‘traditional analysis’ under Article 101 TFEU, including an examination of a possible exemption under Article 101(3) TFEU (ibid., pt. 96)

The Commission offers a clear explanation of this procedural distinction, while emphasizing again the key stratification requirement for a proper application of the ancillary restraints doctrine:

The application of the ancillary restraint concept must be distinguished from the application of the defence under Article 81(3) which relates to certain economic benefits produced by restrictive agreements and which are balanced against the restrictive effects of the agreements. The application of the ancillary restraint concept does not involve any weighing of pro-competitive and anti-competitive effects. Such balancing is reserved for Article 81(3).

The assessment of ancillary restraints is limited to determining whether, in the specific context of the main non-restrictive transaction or activity, a particular restriction is necessary for the implementation of that transaction or activity and proportionate to it. If on the basis of objective factors it can be concluded that without the restriction the main non-restrictive transaction would be difficult or impossible to implement, the restriction may be regarded as objectively necessary for its implementation and proportionate to it. If, for example, the main object of a franchise agreement does not restrict competition, then restrictions, which are necessary for the proper functioning of the agreement, such as obligations aimed at protecting the uniformity and reputation of the franchise system, also fall outside Article 81(1)… (GLVR, pts. 30-31)

The Court of First Instance added further procedural details in its M6 et al. ruling, underlining that the test of inherency remains abstract in comparison with a full analysis under article 101(3):

[A] restriction ‘directly related’ to implementation of a main operation must be understood to be any restriction which is subordinate to the implementation of that operation and which has an evident link with it…

The condition that a restriction be necessary implies a two-fold examination. It is necessary to establish, first, whether the restriction is objectively necessary for the implementation of the main operation and, second, whether it is proportionate to it…

As regards the objective necessity of a restriction, it must be observed that inasmuch as… the existence of a rule of reason in Community competition law cannot be upheld, it would be wrong, when classifying ancillary restrictions, to interpret the requirement for objective necessity as implying a need to weigh the pro and anti-competitive effects of an agreement. Such an analysis can take place only in the specific framework of Article 85(3) of the Treaty.

That approach is justified not merely so as to preserve the effectiveness of Article 85(3) of the Treaty, but also on grounds of consistency. As Article 85(1) of the Treaty does not require an analysis of the positive and negative effects on competition of a principal restriction, the same finding is necessary with regard to the analysis of accompanying restrictions. [emphasis added]

Consequently, as the Commission has correctly asserted, examination of the objective necessity of a restriction in relation to the main operation cannot but be relatively abstract. [emphasis added] It is not a question of analysing whether, in the light of the competitive situation on the relevant market, the restriction is indispensable to the commercial success of the main operation but of determining whether, in the specific context of the main operation, the restriction is necessary to implement that operation. If, without the restriction, the main operation is difficult or even impossible to implement, the restriction may be regarded as objectively necessary for its implementation. (T-112/99, pts. 105-109)

Yet another reason why it is risky to apply the ancillary restraints doctrine incorrectly to what is arguably the primary set of practices is because it may bypass classical competition analysis in cases where the underlying objectives themselves are open to debate, either because they are not clearly in the public interest or because there are other economic interests involved.

The Commission attempts to sketch some form of distinction between certain types of sports restrictions that would lend themselves to a “general guideline” or block exemption (“organisational sporting rule”) and other sports-related restrictions (on the “regulatory aspects of sports”) that would require a case-by-case analysis. However, this distinction becomes hazy as in both cases the Commission mentions the tests of inherency and proportionality, and also gives anti-doping rules as an example of both types of rules (in the second instance through the Meca-Medina et al. ruling).

36. To our mind, in order to increase legal certainty and precision, instead of relying on either the Commission’s or AG Rantos’ views which seem to require further development, the Court could affirm the existence of a distinction between situations where the ancillary restraints are dependant on a primary set validated because of (i) public interest objectives serving either the general market of goods & services or (ii) public interest goals related to the special markets for professional services (pts. 20 et seq.). More importantly, the Court should emphasize that in order to apply the ancillary restraints doctrine in a sporting environment – or any environment – we would need to firstly identify the objectives that would validate the restraints (a) before determining whether or not those restraints are indeed necessary and proportional to implementing those objectives (b). One may not rely on general exemptions as the European Parliament underlined more clearly:

[F]ootball must ensure the interdependence of competitors and the need to guarantee the uncertainty of results of competitions, which could serve as a justification for sports organisations to implement a specific framework on the market for the production and the sale of sport events; however, considers that such specific features do not warrant an automatic exemption from the Community competition rules for any economic activities generated by professional football, owing to the increasing economic weight of such activities[.] (Resolution “on the future of professional football in Europe”, pt. 54)

38. AG Rantos suggests that the Court apply the ancillary restraints doctrine in a situation where the objectives are legitimized by “Article 165 TFEU and the ‘European Sports Model’”.

Article 165 TFEU states:

1. …/…. The Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.

2. Union action shall be aimed at: … developing the European dimension in sport, by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports, and by protecting the physical and moral integrity of sportsmen and sportswomen, especially the youngest sportsmen and sportswomen.

These are all laudable, public interest goals, in particular “promoting…. openness in sporting competitions and cooperation between bodies responsible for sports”, which seems to oppose restrictions on the organisation of sporting competitions and exclusions of organisations responsible for sports.

39. AG Rantos proceeds to describe the European Sports Model, which does not appear expressly in the text of article 165 itself, but is based rather on the various legislative initiatives that lead up to it:

Article 165 TFEU gives expression, moreover, to the ‘constitutional’ recognition of the ‘European Sports Model’, which is characterised by a series of elements applicable to a number of sporting disciplines on the European continent, including football. That model is based, first, on a pyramid structure with, at its base, amateur sport and, at its summit, professional sport. Secondly, its primary objectives include the promotion of open competitions, which are accessible to all by virtue of a transparent system in which promotion and relegation maintain a competitive balance and give priority to sporting merit, which is also a key feature of the model. That model is, lastly, based on a financial solidarity regime, which allows the revenue generated through events and activities at the elite level to be redistributed and reinvested at the lower levels of the sport. (Op., pt. 30)

Refocusing on the matter at hand concerning FIFA’s national federation structure, he highlights the most traditional and most common federative model within the EU:

Sports federations play a key role in the ‘European Sports Model’, in particular from an organisational perspective, with a view to ensuring compliance with, and the uniform application of, the rules governing the sporting disciplines in question… Historically organised in accordance with the ‘one-place’ principle (Ein-Platz-Prinzip), under which the federations exercise, within their geographical jurisdiction, a monopoly over the governance and the organisation of the sport, that model is now being called into question. (Op., pt. 31)

40. It is important to highlight that, however popular or grounded in tradition the “Ein Platz” model is, there are alternatives that have emerged within the EU for different – but equally legitimate – reasons (which he mentions only in passing within a footnote):

It should also be observed that the ‘European Sports Model’ is not static. European sports structures and their mode of governance often evolve under the influence of other models established outside Europe. Given the diversity of European sports structures, it would thus be difficult to define in detail a single and unified model for the organisation of sport in Europe. There are other models of governance for individual and team sports which differ in certain respects, in view of their technical characteristics and their organisation, from the model upon which European football is currently based.

[(footnote 18) It should be stated, in this regard, that the creation of closed (or ‘semi-open’) leagues within certain sporting disciplines in Europe appears to be justified by the fact that their popularity varies significantly between the various Member States, with the result that, both from a sports perspective (in particular with a view to striking a competitive balance between the various clubs) and from a commercial point of view (since the commercial interest in such events is more limited), a competition format that limits the participation of clubs appears to be the most appropriate.]

However, the emergence of various sports models in Europe cannot call into question the principles set out in Article 165 TFEU or require the adoption of reciprocal arrangements intended to ‘standardise’ the various models that coexist, let alone to remove ‘structures based on voluntary activity’. (Op., pt. 32)

The Attorney General then provides important and relevant details on the principal alternative systems that pose a “challenge to the ‘European Sports Model’”, again consigning a key detail (the fact that the alternative system involves some of the world’s most successful sports franchises) to a footnote:

As stated in point 30 of this Opinion, the ‘European Sports Model’ is characterised in particular by the openness of its competitions, participation in which is based on ‘sporting merit’ through a promotion and relegation system. It thus differs from the North American model, which is primarily based on ‘closed’ competitions or leagues, in which the participation of clubs, which are franchised businesses, is guaranteed, pre-determined and based on an entrance fee.

[Footnote (19) This is the case with the national leagues of the main American sports: the National Basketball Association (NBA) for basketball, the National Football League (NFL) for American football, Major League Baseball (MLB) for baseball and the National Hockey League (NHL) for ice hockey.] (Op., pt. 33)

This seems to be a rather narrow view of the American model in that it clearly implies that there is no real openness in competitions or real regard for sporting merit and that the participation of clubs in the major tournaments (the primary question in ESL) is a given. This is rather inaccurate and would be deemed quite offensive to the parties involved; it also contradicts AG Rantos’ own assertion in the previous footnote that this model may be “justified” in certain circumstances and that “competition format that limits the participation of clubs appears to be the most appropriate”.

Firstly, just as in the European Sport Model and as precisely demonstrated in the present case involving FIFA’s restrictions, “open competition” does not mean any random athlete or club can participate. In both systems there are mechanisms to ensure that the club is playing against another club in its “weight category”, though we would venture (without precise statistics) that the American system allows even more exhibition games, “wild card” teams, and generally more homogeneous levels of competition between clubs within a league when compared, for example, to Spain’s La Liga, where either one of two teams have won almost all recent championships.

Secondly, to imply that the American system is not fundamentally based on “sporting merit” is quite offensive, and equally inaccurate. Although the clubs are not promoted or relegated in the same way as in the European model, the athletes themselves are signed to clubs based on their sporting skill through the draft system, leading to an arguably more democratic and granular approach to sporting merit. Furthermore, the salary caps in the American leagues help prevent club owners from “buying” championships by injecting huge sums to recruit the best players, as happens systematically in FIFA’s system.

Lastly, although the participation of clubs in the American franchise system is contractually guaranteed, that is not the same as their participation in the major competitions. If they are not able to qualify based on their level of play, then they do not participate, just as in the European model.

The last section of point 33 in the Opinion seems to be even more inaccurate:

It could be observed that it is precisely in response to the other models which exist that the EU legislature decided to incorporate the concept of the ‘European Sports Model’ into the Treaty in order to draw a clear distinction between it and those other models and to guarantee its protection through the adoption of Article 165 TFEU. (Op., pt. 33)

Regardless of what the intentions of the various contributors were, the final text of Article 165 remains extremely high level (cf. supra, pt. 38) and does not mention anything that would clearly exclude one sporting model or another. On the contrary, it seems to specifically exclude this “by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports”.

41. After some digression (cf. Op., pts. 34-35) AG Rantos seems to assert that it is primarily the likelihood of profit that motivates other sports models beyond the European one:

In that regard, I note that the influence of the ‘alternative models’ referred to in point 33 of this Opinion and the liberalisation of the sports economy have led to the rise of movements challenging the monopoly exercised by some European sports federations, in particular in relation to the organisation and the commercial exploitation of the most lucrative competitions. From an economic perspective, the main objective of those ‘separatist’ movements, which are often initiated by the clubs affiliated to those sports federations, has been to maximise the financial revenue from the commercial exploitation of those competitions – which were hitherto placed under the aegis of those federations – through changes to their structure and their organisational model. In European football, there is nothing new about the desire to create a closed (or ‘semi-open’) league or competition, as is clear from the attempts to establish rival competitions to those organised by UEFA made in the 1990s and 2000s, without any concrete outcomes. (Op., pt. 36)

It is interesting to note that AG Rantos presents the fact that the “liberalisation of the sports economy ha[s] led to the rise of movements challenging the monopoly exercised by some European sports federations” as something problematic; this is in stark contrast with the words of article 165 TFEU “promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports”.

Next, one notes the circular logic in affirming that “[f]rom an economic perspective, the main objective of those ‘separatist’ movements… has been to maximise the financial revenue from the commercial exploitation of those competitions”. One would argue that “from an economic perspective”, every high level European club also seeks “to maximise the financial revenue from [its] competitions”.

Lastly, although it is true that “the attempts to establish rival competitions” did not lead to lasting “concrete outcomes”, this should not be implied as a legal justification of that model. Indeed, if one were to call history as a witness in these matters, it would be damning against FIFA and UEFA who were forced to change their anticompetitive model several times. This is even mentioned specifically in several of the EU legislative documents preceding article 165 and referenced by AG Rantos, as well as in the Court’s case law (e.g. Bosman).

42. The next points in AG Rantos’ argument (Op., pts. 43 et seq.) concern the conflict of interest between the regulatory power of federations and their economic activity, in other words between the economic objectives and the purely sports-based objectives. This section serves to highlight that – even within the European model – everyone agrees that there are indeed several objectives at play, and thus that not all of these objectives so purely represent the public interest as to be able to validate restrictions under the ancillary restraints doctrine.

In the present case, and unlike the Netherlands Bar or the Italian council of geologists for example, FIFA is a private organisation without any formal delegation of power or oversight from a government body. Although it is ostensibly a non-profit seeking to promote the sport of football, a significant amount of its resources relate to running, directly or indirectly, a multi-billion dollar global business.

As AG Rantos correctly points out, citing the MOTOE ruling (C-49/07), in case of a conflict of interest between the economic and regulatory roles of a federation, its “regulatory power should therefore be exercised subject to restrictions, obligations or review, so as to prevent the legal person concerned from being able to distort competition by favouring events which it organises or those in whose organisation it participates” (Op., pt. 46). He admits that this is clearly applicable to UEFA in the present case (Op., pt. 47). He even provides guidelines on how precisely to apply that jurisprudence through “criteria identified… to prevent any risk of misuse” (Op., pts. 111 et seq.). However the next points in the demonstration somehow lead to a surprising and seemingly opposite result:

It should, however, be observed, at the outset, that it is clear from the case-law of the Court cited in point 46 of this Opinion that the mere fact that the same entity performs the duties both of regulator and of organiser of sporting competitions does not entail, in itself, an infringement of EU competition law. (Op., pt. 48)

Though this is true, it is certainly not the point that the MOTOE ruling (cited as demonstrating this argument) is establishing. MOTOE affirms that because of the danger that “the legal person entrusted with giving… consent [may] distort competition by favouring events which it organises or those in whose organisation it participates” (C-49/07, pt. 52) it is crucial that that entity is “made subject to restrictions, obligations and review” (ibid., pt. 53), otherwise it would infringe EU competition law (cf. also along these lines, OTOC (C-1/12), pts. 88 et seq.).

According to AG Rantos,

it follows from that case-law that the main obligation on a sports federation in UEFA’s position is to ensure that third parties are not unduly denied access to the market to the point that competition on that market is thereby distorted. (Op., pt. 48)

Similarly, he states in his ISU opinion that

while certain obligations are imposed on sports federations in order to restrict their powers and review the proper exercise of those powers, the protection of the economic interests of a sports federation such as the ISU is problematic from the standpoint of competition law only if that federation unjustifiably [emphasis AG Rantos] deprives a competitor of market access. (Op. in C-124/21)

This is again a distortion of the MOTOE ruling which does not establish any such obligation for sports federations (whether they are a “main obligation” as he writes, or otherwise). The obligation to not distort competition applies to all operators based on article 101 TFEU (or 102 if we are investigating dominant positions, in which FIFA / UEFA certainly find themselves, cf. Op. pt. 129). In other words, the added value of the MOTOE case is precisely to raise the bar higher for a federation that has (government-sanctioned) regulatory powers, and not lower. Stating that a federation is simply required to not distort the market is just a repetition of well-established competition law.

43. The following paragraph attempts to somehow transform this platitude into a novel interpretation of EU competition law:

It follows that sports federations may, subject to certain conditions, refuse third parties access to the market, without this constituting an infringement of Articles 101 and 102 TFEU, provided that that refusal is justified by legitimate objectives and that the steps taken by those federations are proportionate to those objectives. (Op., pt. 49)

There appears to be a large logical gap missing between the first part of this phrase and the second part. No one contests that there may be certain circumstances and conditions in which an operator on a market having some regulatory power over that market may refuse third parties access to that market. For example, as in MOTOE, a body governing sports and also organizing competitions may do so under the strict conditions that ensure the market is not distorted, including the extra obligations and reviews that this ruling mentions. A developer of a proprietary technology who is required to grant access to infrastructure may, under certain strict conditions, refuse third party access to that infrastructure (the “essential facilities” doctrine is specifically addressed in pts. 137 et seq. of the Opinion, correctly excluding its application to the present case). A party having a dominant position on a market may, in specific conditions, protect its interests on that market to the detriment of competitors. A manufacturer may, in certain circumstances, legitimately refuse third parties access to the market of its replacement parts. What is different and critical in each of these cases is precisely those “certain conditions” that justify the refusal.

MOTOE certainly did not mention anything about the ancillary restraints doctrine that AG Rantos draws down in the second phrase as the conclusion to his line of reasoning. There is no demonstration made from any of the preceding paragraphs that would imply that a federation may refuse third party access in a way that restricts competition on the market simply because it is “justified by legitimate objectives” and that it is done in a way that is “proportionate to those objectives”. This would circumvent any normal competition procedure under article 101, and even if this were simply a restatement of the ancillary restraints doctrine, it is missing the key condition of “stratification” (cf. supra, pts. 17, 29 et seq.).

44. Stepping back from the above problematic line of reasoning, we have seen in this section that there are clearly at least two major groups of objectives at play in the present case: (i) sports-related objectives (e.g. the regulation of the sport of football) and (ii) economic objectives (e.g. profiting from the competitions). The applicability of the ancillary restraints doctrine in this context does not concern itself with the possible conflict of interests between the two, or with any additional resulting obligations incumbent on federations who are in that situation of conflict. All the prior applications of the ancillary restraints doctrine focused on finding one group of objectives clearly in the service of the public interest that could legitimize the primary set of restraints, whether these were to guarantee the independence of the legal profession or the safety of athletes subject to anti-doping tests.

This is not to say that the presence of more than one set of objectives would preclude the ability of one set to validate the main restrictions. However, the very presence of several possible objectives – especially if they are in conflict – “dilutes” the connection between the objective and the ancillary restraints that must be inherent in that objective and which must implement it in a proportional way. If FIFA would not itself organize and profit from any competitions, and the only reason it excluded a grassroots club who wanted to compete with a professional club was for the safety of the athletes concerned, all would agree that the exclusion is beneficial and proportionate to the safety objectives. Similarly, if a selective distribution operator excluded a seller that does not meet the qualitative selection criteria, the exclusion is clearly inherent and proportional to the organisation of a normally function selective distribution system. On the other hand, if, as in the present case, FIFA’s exclusion is motivated not only by objectives that are sport-related, but also by objectives that help it profit from a global business, it is indeed harder to determine which objective is being implemented, and consequently if such implementation is necessary and proportionate to the objective.

We would thus disagree with the assertion that “it cannot be disputed that most of the objectives invoked by UEFA and FIFA stem from the ‘European Sports Model’… with the result that their legitimacy cannot be contested” (Op., pt. 93). There are certainly some objectives at play that stem from the European model, but there are also certainly objectives that relate to purely economic considerations. In such circumstances, where it is difficult to link the restriction to the objective, and because of the great procedural power that the ancillary doctrine wields, it seems too risky and inappropriate to apply this doctrine. We would thus hope that the Court either refuses to apply it altogether, or at least transfers its implementation to the referring jurisdiction.

It is not only the confusing presence of more than one competing objective that should preclude applying the ancillary restraints doctrine in the present case, but it is also the fact that even the primary sporting objectives themselves do not necessitate the exclusion of competing federations.

This short observation however may not be construed as an operative directive, any more than stating how things are “usually structured”:

Values-based organised sport in Europe is usually structured on a national basis and in principle organised by one federation per sport [emphasis added], allowing for a comprehensive approach to rules, regulations, and standards as well as respecting competition calendars and qualifications for competitions. (Resolution of the Council and of the representatives of the Governments of the Member States meeting within the Council on the key features of a European Sport Model (2021/C 501/01), pt. 9)

The very fact that something “is usually structured” one way implies that there are other possible alternatives, and such alternatives are not ruled out.

The strongest support for the Ein-Platz-Prinzip or a “one competition system rule” may be in this resolution:

Calls for a European sports model that recognises the need for a strong commitment to integrating the principles of solidarity, sustainability, inclusiveness for all, open competition, sporting merit and fairness, and accordingly strongly opposes breakaway competitions that undermine such principles and endanger the stability of the overall sports ecosystem [emphasis added]; stresses that these principles should be encouraged by all sports stakeholders and national authorities (European Parliament resolution on «EU sports policy: assessment and possible ways forward » (2021/2058(INI)), pt. 13)

However the term “breakaway competitions” is not identical to having more than one competition structures within the same country. For example, if there were two federations organizing sports in a country, and the member clubs organize competitions within their respective structures, then there are no “breakaway competitions”. Even if this were a too technical interpretation of the text, and even if the European legislature intended to say that they oppose more than one federation per country, one must keep in mind that this sits within a consultative resolution on “possible ways forward” and is certainly not operative or directly applicable legislation.

46. To our knowledge, there is no case law of the Court of justice that would establish either the Ein-Platz-Princip, a “one competition system rule”, or the promotion-relegation model.

Thus the objectives of the European Sport Model, as they appear in operative law (which basically boils down to article 165 TFEU), do not require per se that there can only be one federation for a given sport operating in any given EU country or by extension one competition / league system, whether “closed” or “open”.

Furthermore, even if the Ein-Platz-Prinzip is not itself a requirement or an objective, we see no reason that the various other clear objectives that are mentioned expressly (for example open competition, sporting merit and fairness) could not be implemented in practice even where there were two competing federations both of which apply the European Sport Model, or even one federation applying the European Sport Model and another applying the American model.

The Provincial Court of Madrid qualifies the recourse to the European Sport Model as justification for FIFA’s practices as “a flimsy excuse” (AAP M 2/2023); although we have attempted a more technical qualification above, we would tend to agree with that body that – given the extremely limited presence of that model in positive EU law – high-level concepts such as those in the European Sports Model are best left out of competition analyses, especially when such references are used to override fundamental principles of free competition:

La eventual justificación de la conducta de FIFA y UEFA como un intento de proteger el modelo deportivo europeo la estimamos, prima facie, como una excusa endeble. Los criterios de índole sociológica o cultural pueden ayudar a contextualizar la comprensión de los comportamientos humanos, pero no deben hacer perder la perspectiva cuando lo que se enjuicia es el propósito del desempeño por un emprendedor de una actividad económica en el seno de un mercado que genera un caudal de recursos de enorme cuantía, que pide que no se le opongan los obstáculos propios de modelos cerrados y anacrónicos que no se avienen con la libre competencia y el principio de libertad de empresa que rigen en Europa. Es precisamente esa vertiente económica del fútbol la que debe ser observada bajo los postulados del Derecho de la Unión Europea. (AAP M 2/2023)

That ruling proceeds to provide several arguments explaining other ways that competition to FIFA’s system would not, in and of itself, go against the stated objectives of the European Sport Model, but, given that they do not focus on the technicalities of the application of the ancillary restraints doctrine as we do in the present analysis, we will refer the curious reader to the Provincial Court’s decision directly.

Assuming, for the sake of the analysis, that the objectives of the European Sport Model clearly require the Ein-Platz-Prinzip or an “open” league system to function, in the case at hand one would still need to determine if FIFA’s restrictions are inherent in and proportional to these objectives.

The EU legislature itself describes “the current structure of European football” as problematic (e.g., the issues raised in the legislative instruments at pt. 45) and thus not necessarily something that needs to be safeguarded, but rather reformed and updated. We fail to see anything “closely linked” between the legitimate objective of solidarity and the necessity of organizing competitions exclusively “under the aegis of FIFA and UEFA”; indeed, a multiplicity of organizations redistributing and reinvesting revenue would mathematically reduce the impact of corruption within any given single body.

Thankfully AG Rantos tones down the intensity of any conclusion drawn from the above problematic demonstration, and would hand back the matter to the referring court, at least insofar as the financing aspect is concerned:

It should, however, be made clear in that regard that, in view of the differing views expressed at the hearing as to the intended purpose and the scale of the funding in question, it is for the referring court to ascertain whether the profit redistribution mechanism provided for by UEFA does indeed allow the objectives pursued to be achieved. The same goes for ESLC’s proposal (or commitment) to ‘cover’ the amounts currently paid by UEFA by means of ‘solidarity payments’ in order to establish whether such a mechanism would in fact enable the mechanism currently established by UEFA to be replaced (without compromising the current structure of European football). (Op., pt. 99)

51. AG Rantos pursues the examination of other economic objectives in considering the result of “reducing the appeal” of FIFA’s national championships that would be caused by the existence of ESL’s alternative model (Op., pt. 102). The underlying objective could be termed “solidarity” (i.e. wealth redistribution) in sport (Op., pt. 105), however ESL had clearly indicated that it would contribute to grassroots football via “solidarity payments” (Op., pt. 99).

52. Similarly, while “fairness in competition” is certainly a key objective in sport, it seems somewhat stretched to extend this concept to the relative financial standing of the clubs at play (Op., pt. 103). Although it may be true that ESL clubs would generate more revenue from participating in both FIFA’s and ESL’s systems, and that this would help “financing the acquisition and the remuneration of new players” (ibid.), we should not lose sight of the fact that theoretically “participation in competitions is based on ‘sporting merit’ and the results achieved on the pitch” (ibid., pt. 102), and that within FIFA’s system in theory, two clubs in competition should be relatively well-matched in talent, regardless of how they acquired that talent. From a financial perspective, we must also remember that participating in two sets of competitions means greater expense as well, not to mention extra strain on athletes or even the necessity to have more athletes on the roster in the first place. Thus any possible advantage to the ESL clubs is certainly not mathematically double that of clubs participating exclusively in the FIFA system, and would not thereby indirectly ensure that the ESL clubs would have an unfair competitive advantage over other clubs thanks to the additional revenue.

53. Perhaps the core economic issue of the present case may be that ESL tried to implement “dual membership” for its clubs:

It must be pointed out, in this regard, that ESLC’s intention is not to create a ‘proper’ closed and independent league (a breakaway league) but to set up a rival competition to UEFA’s in the most lucrative segment of the market for the organisation of European football competitions, whilst continuing to be part of the UEFA ecosystem by participating in some of those competitions (and in particular in the national championships). In other words, it would appear that ESLC’s founding clubs want, on the one hand, to benefit from the rights and advantages linked to membership of UEFA, without however being bound by UEFA’s rules and obligations. (Op., pt. 107)

It is, however, inaccurate to state that ESLC’s founding clubs only want the advantages of UEFA membership without “being bound by UEFA’s rules and obligations”; they accept all the rules and obligations except specifically those that would prevent the formation of a separate competition-focused organisation. One must keep in mind that one of the primary questions the Court faces in the present instance is not the examination of the ESL clubs’ approach, i.e. whether or not it is legitimate for members of a federation to join breakaway organisations, but rather FIFA’s and UEFA’s approach, and in particular, whether a federation may impose rules in such a way as to question the existential right of breakaway organisations.

54. Returning to the examination of inherency under the ancillary restraints doctrine, AG Rantos states that

[f]rom the perspective of competition law, an undertaking (or an association of undertakings such as UEFA) cannot be criticised for attempting to protect its own economic interests, in particular in relation to such an ‘opportunistic’ project that would risk weakening it significantly. (Op., pt. 108)

However, it is not FIFA’s desire or attempt to protect its own economic interests that is in question, rather the means through which it does so, which may not be anticompetitive, barring exceptional circumstances. For example,

the Court has already found to be appropriate provisions of the statutes of a cooperative association limiting the ability of its members (including through sanctions involving exclusion) to participate in other forms of cooperation which are in competition. (Op., pt. 108)

But what is true for a validated form of agricultural commerce (cf., for example, APVE et al. (C-671/15) and DLG (C-250/92)), is not necessarily true for a sports federation. For his line of reasoning to stand, AG Rantos would need to demonstrate the legal equivalency between agricultural cooperatives for example and a sports federation, and in particular that the objectives upon which the sports federations exclude competitors are so clearly in the public interest (as is the case for the agricultural cooperatives) that they are capable of validating restraints ancillary to their attainment. As we have seen (pts. 33 et seq.), this demonstration has not been made convincingly in the present case.

55. Without further addressing this key question in greater detail, AG Rantos simply repeats the vague objectives whose link to the restrictions is, as we have seen in this section, debatable:

In the light of the foregoing observations, I take the view that the non-recognition by FIFA and UEFA of an essentially closed competition such as the ESL could be regarded as inherent in the pursuit of certain legitimate objectives (within the meaning of the case-law deriving from the judgments of 19 February 2002, Wouters and Others (C-309/99, EU:C:2002:98), and of 18 July 2006, Meca-Medina and Majcen v Commission (C-519/04 P, EU:C:2006:492)), in that the purpose of that non-recognition is to maintain the principles of participation based on sporting results, equal opportunities and solidarity upon which the pyramid structure of European football is founded. (Op., pt. 110)

The test of inherency under the ancillary restraints doctrine requires a specific type of link between an objective and the restraint, and not simply the observation that such restraints have as their “purpose” certain objectives. One would need to determine whether “without the restriction the main non-restrictive transaction would be difficult or impossible to implement” or whether that restriction is “necessary for the proper functioning of the agreement” (pt. 47). In our view, that demonstration was not conclusively made by AG Rantos in the points of the Opinion analysed above.

A similar departure from standard methodology, with respect to linking the objective to the restraint, impacts his approach to the proportionality test.