Barcelona bedlam

| Innsikt

The current grave financial difficulties of the Spanish top clubs, and in particular FC Barcelona, have fostered creative ways to not only seek new income, but also new ways to apply the EU competition rules. In this article partner and EU/EEA law expert Anders Thue addresses some of the issues that have surfaced so far.

When I was a young lawyer working for the Norwegian Competition Authority, a complaint was received that gave rise to some amusement among the staff at the authority. The complainant argued that the Norwegian football club Viking FK’s signing of the half-decent footballer Ragnvald Soma from rivalling club SK Brann constituted an infringement of Norwegian competition law.

Nowadays, competition law in football is no longer a laughing matter. The current grave financial difficulties of the Spanish top clubs, and in particular FC Barcelona, have fostered creative ways to not only seek new income, but also new ways to apply the EU competition rules. FC Barcelona has itself felt the consequences of the application of EU state aid law when the European Commission found that a Spanish tax scheme, advantageous to, inter alia, FC Barcelona, infringed European state aid law (upheld by the European Court of Justice in March this year, C-362/19P[1]).

A Norwegian saying is that when the manger is empty, the horses start to bite each other. The manger in Spanish football is very empty. And the horses are biting. Petitions are now flying in all directions. The latest developments include Real Madrid CF and Barcelona FC trying to stop the CVC deal[2], as well as an attempt by some of the members of Barcelona FC to stop the club’s talisman and hero thorough the past two decades, Lionel Messi, from being signed by the French top club PSG[3]. In respect to the latter matter, reports state that the members of Barcelona FC seek to argue before the European Commission and French courts that the Messi signing in some way involves illegal state aid to PSG. Even without the benefit of detailed knowledge of the case, this attempted application of European competition law seems far-fetched. The money having propelled PSG from the European backwaters to (almost) reaching the pinnacle of world sports originate in Qatar, and not in France. This makes it very difficult to argue that this is illegal state aid in the context of European competition law. How PSG will manage to stay compliant with football’s own financial fair play rules is another matter.

A more interesting case in terms of European competition law, is the case between the clubs involved in the (so far) failed project of the European Super League and the European football association UEFA and the world football association FIFA. When the top clubs in the big leagues in Europe announced the formation of a breakout Super League, the reaction from UEFA was rapid and fierce. By threatening to impose heavy sanctions on the participants, UEFA managed in effect to shoot down the initiative within days. In the aftermath, however, the few remaining clubs behind the European Super League has obtained an order in Spain to block such sanctions[4], as well as having convinced a Spanish judge to refer questions to the European Court of Justice[5].

Now this is a different kettle of fish, as UEFA’s actions would likely have amounted to a blatant abuse of a dominant position in breach of TFEU Article 102 (and possibly a breach of TFEU Article 101, as well) in any other business than sports. An important question here, though, is whether UEFA’s actions are legitimate in light of the specific characteristics of sport (cf. for instance T‑93/18[6]). However, UEFA seems to have a problem, since UEFA’s stance would seemingly provide UEFA with a monopoly within European football for all future. Such a situation does not sit well with the aims of European competition law.

In my opinion, the European Super League and its founding clubs should have a strong case arguing that UEFA is in breach of TFEU Articles 102/101. If such a breach is found to be the case, this could lead to substantive fines for UEFA. However, and even more intriguingly, a breach will also open the door for a massive claim for damages. For such a claim to succeed, several factors, determined by EU[7] and national law, must be in place, i.e. a basis for the claim, an economic loss and causality between the two. A breach of TFEU Articles 102/101 will most likely provide the basis for a claim. The planned (and arguably likely) extra profits of a European Super League must be assumed to be substantial. Finally, without disregarding the significance of the reactions and condemnations of football fans, causality seems also to be in place as UEFA’s threats is what seemingly made most of the breakout clubs throw in the towel. A successful claim for damages against UEFA along these lines would be a devastating blow for the organisation.

UEFA is playing high stakes poker with regard of EU competition law. Initially this was successful, as most potential Super League clubs folded. However, a few clubs, FC Barcelona, Real Madrid CF and Juventus FC are upping the ante and it will be extremely interesting to see whether they have the better hand in the end. A joker in this game is the European Commission who will most certainly intervene in any proceedings before the European Court of Justice. Another joker is the general public. Fan condemnation was unison when the Super League was announced. In the mind of the average European football fan, UEFA is in the right (for once) and the «greedy» owners of the clubs are very much in the wrong. This provides for an interesting cocktail, but it remains to be seen if not the Court of Justice will see things differently from the fans.

 

Anders Thue is an expert in EU/EEA law and has pleaded landmark cases before Norwegian and European courts, cf. in particular the cases E-16/16 and E-7/18 before the EFTA Court.