On April 30, 2024, Advocate General Szpunar delivered his opinion recommending the Court of Justice to respond to the Court of Appeal of Mons (Belgium) that rules of the Fédération Internationale de Football Association (“FIFA”) restricting the transfer of players among football clubs are contrary to Article 101 and Article 45 TFEU.[1]
Background and FIFA’s Regulations on the Status and Transfer of Players
Advocate General Szpunar’s Opinion is the latest development of a dispute between FIFA, the global regulatory body for football and organizer of major international tournaments, and a former French football player, Lassana Diarra, concerning FIFA’s Regulations on the Status and Transfer of Players (the “RSTP”).
In 2013, Russian football club Futbolny Klub Lokomotiv (“Lokomotiv Moscow”) signed a four-year contract with player Lassana Diarra. In 2014, Lokomotiv Moscow formally terminated the contract with Diarra for disciplinary reasons, due to his alleged failures to perform his obligations under the contract. The club requested the FIFA Dispute Resolution Chamber (the “DRC”) to order Diarra to pay compensation, claiming breach and ‘termination of contract without just cause’ within the meaning of Article 17 of the RSTP.
The version of the RSTP in force in August 2014 included,[2] among other provisions, three types of restrictions on the transfer of players between clubs. First, if a player terminated their contract with their club without just cause, both the player and any club wishing to subsequently employ him or her were jointly and severally liable for any compensation due to the player’s former club. Second, clubs that induced a breach of contract¾which is presumed to be the case for any club signing a player having terminated his/her contract with a former club without just cause¾could be banned from registering new players for two consecutive registration periods. Third, the association to which the player’s former club belongs shall refuse to deliver an International Transfer Certificate (“ITC”) to the association where the player’s new club is registered, as long as the contractual dispute with the former club remains ongoing. An ITC is required for a player to be able to register at a new association and thus, to be able to play in a new club.
The DRC upheld Lokomotiv Moscow’s claim in part, fixing the amount of compensation payable by the player at €10.5 million. The Court of Arbitration of Sport (“CAS”) upheld the DRC’s decision in 2016. After the termination of his contract, Diarra was only able to receive one offer from a club, the Belgian club Sporting du pays de Charleroi. The offer was conditional on Diarra being registered with the Belgian Football Association (“URBSFA”), for which an ITC was needed, as well as on obtaining confirmation that the club could not be held liable for any compensation due to Lokomotiv Moscow.
Diarra brought proceedings against FIFA and URBSFA before a Belgian commercial court, seeking damages for loss of earnings of €6 million that he claimed to have suffered as a result of the application of the RSTP. He was successful at first instance, but FIFA appealed the decision to the Belgian Court of Appeal, which then referred a preliminary ruling to the Court of Justice, asking whether the abovementioned RSTP rules were compatible with Article 101 and Article 45 of the TFEU.
Breach of Article 101 TFEU
Advocate General Szpunar found that the contested RSTP provisions constitute decisions made by an association of undertakings—FIFA—that are thus subject to Article 101 TFEU. He further observed that under the RSTP, the termination of a contract without just cause by a player leads to “draconian” consequences, i.e., heavy compensation to be paid by both the player and the new club, sporting sanctions, and non-issuance of an ITC. In view of the Advocate General, these consequences would make it highly unlikely that a player would pursue this option. He considered that FIFA deliberately designed the rules to deter transfers of players and thus, that the RSTP would, by its “very nature,” limit player’s possibilities of switching clubs and, conversely, of clubs hiring new players.[3] This would necessarily affect competition between clubs on the market for the acquisition of players given that the recruitment of players is an essential parameter of competition for football clubs, as recently ruled by the Court of Justice.[4]
The Opinion concludes that these elements are a strong indication of the existence of a restriction of competition by object, and that, at the very least, the contested provisions clearly restrict competition by their effect.[5] Finally, the Advocate General did not assess a potential exemption under Article 101(3) TFEU, finding that the requirements were clearly not met.[6]
Breach of Article 45 TFEU
Advocate General Szpunar found that the RSTP undoubtedly restricts football players’ freedom of movement.[7] Indeed, the contested provisions discourage clubs from hiring players who have terminated their previous contract and could effectively prevent players from exercising their profession with a club located in another Member State.[8]
Nonetheless, a restriction to the free movement of workers can be justified if it serves an overriding reason of public interest[9] and is proportionate.[10] While Advocate General Szpunar accepted that the rules could serve an overriding reason relating to the public interest, insofar as they seek to maintain contractual stability, and found them suitable to achieve this objective, he considered that they go beyond what is necessary in order to attain such contractual stability and thus, are not proportionate.[11] In his view, a compensation for breach of contract may be proportionate provided it is compensatory and not punitive.[12] According to Advocate General Szpunar, the RSTP rule that systematically holds the new club as joint and severally liable is not proportionate in a situation where the new club was not involved in the premature and unjustified termination of the player’s contract. Despite the DRC’s ability to allow for a derogation of this principle, the Advocate General still found the rule disproportionate given the lack of legal certainty on the likelihood of obtaining such a derogation. Advocate General Szpunar also found the presumption that the new club had induced the player to commit the breach to be disproportionate and very hard to rebut.[13] Likewise, he also viewed the prohibition to the former club from issuing an ITC to the new club as disproportionate, given it would apply to situations where a breach of contract is merely alleged and not yet proven.[14]
Breach of Article 15 of the Charter of Fundamental Rights
Although not raised by the referring court, Advocate General Szpunar assessed whether the RSTP is compatible with Article 15 of the Charter of Fundamental Rights of the European Union (“CFR”), which protects the freedom to choose an occupation and the right to engage in work.[15] The CFR only applies to the EU institutions and to Member States when they are implementing EU law. Although its provisions are not expressly aimed at private entities, Advocate General Szpunar argues that in a situation such as that of the present case, private entities such as FIFA are functionally comparable to a Member State seeking a derogation of a fundamental freedom.[16] By referring to settled case-law concerning the applicability of Treaty provisions to entities like FIFA, the Advocate General argued that if the Court was able to apply Article 45 TFEU horizontally to FIFA, the same could be done with respect to the CFR.[17]
The Opinion further supports that the contested provisions, which concern the exercise of the profession of footballers, fall within the scope of Article 15 of the CFR, which protects the right to choose and pursue an occupation or profession. According to Article 52 of the CFR, it is possible to limit the exercise of this right when provided by a law that respects the essence of those rights and the principle of proportionality.[18] While according to the Advocate General, the limitations to the referred right contained in the RSTP would be equivalent to a “law” from a functional perspective, he found that such limitations would be disproportionate under Article 15 of the CFR for the same reasons that he found them disproportionate under Article 45 TFEU.[19]
Implications
By arguing for the existence of a restriction of competition by object and placing sport governing body regulations under the scope of the CFR, Advocate General Szpunar’s stance in the FIFA case is stricter than that of the Court of Justice in its Superleague ruling, where the Court of Justice found that pre-authorization rules which prevented clubs and athletes from participating in unauthorized third-party sports events did not constitute a restriction of competition by object under Article 101 TFEU nor an abuse of dominant position under Article 102 TFEU if they were based on transparent, objective, non-discriminatory, proportionate, and reviewable criteria. [20] If the Court of Justice endorses Advocate General Szpunar’s Opinion, its judgment would reshape FIFA’s transfer system in the EU, 29 years after the landmark Bosman ruling, which allowed free movement of players within the EU upon contract expiration.[21] Furthermore, the CFR would emerge as a new tool for those seeking to challenge rules established by sport governing bodies. A rebalancing of the bargaining power between players and clubs on the European football scene may be on the horizon.
[1] Opinion of Advocate General Szpunar in Fédération internationale de football association (FIFA) v. BZ (Case C-650/22) EU:C:2024:375 (the “Opinion”).
[2] The contested provisions were Articles 9.1 and 17.1, 2 and 4 of the 2014 version of the RSTP, and Article 8.2, paragraph 7 of Annex 3 to the 2014 version of the RSTP. The RSTP has been amended on several occasions since 2014. The RSTP version in force at the time of publication of this article is of June 2024. The provisions formerly set out in Article 8.2, paragraph 7 and paragraph 4(b) of Annex 3 to the RSTP regarding the refusal to deliver an ITC in the event of a contractual dispute between the former club and the professional player are now set out in Article 11 paragraphs 2 and 3 of Annex 3 to the RSTP.
[4] See Opinion, paras. 52–54. See also UL and SA Royal Antwerp Football Club v. Union royale belge des sociétés de football association ASBL (C-680/21) EU:C:2023:1010.
[5] Opinion, paras. 56–57.
[6] Opinion, para. 58.
[7] Opinion, para. 42.
[8] Ibid, para. 43.
[9] As well as on grounds of public policy, public security, or public health pursuant to Article 45(3) TFEU. These were not relevant to the case at hand.
[10] Opinion, para. 60.
[11] Ibid, para. 62.
[12] Ibid, para. 67.
[13] Ibid, para. 68.
[14] Ibid, para. 69.
[15] Ibid, para. 70. This argument was made by Lassana Diarra in the main proceedings.
[16] Ibid, paras. 73 and 74. Pursuant to Article 51(1) of the CFR, the CFR is addressed to the institutions, bodies, offices, and agencies of the Union and to the Member States only when they are implementing Union law. See too B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española (Case 36-74) EU:C:1974:140.
[17] Opinion, para. 75.
[18] Opinion, para. 84.
[19] Ibid, paras. 81–82, 85 and 86.
[20] See landmark cases European Superleague Company SL v. UEFA and FIFA (Case C-333/21) EU:C:2023:1011 and International Skating Union v. Commission (Case C-124/21 P) EU:C:2023:1012, as commented on in a Cleary Antitrust Watch Blog post, “Revolution for sport gatekeepers? The grand chamber of the Court of Justice Rules on the European Super League and International Skating Union Cases,” available here. See too UL and SA Royal Antwerp Football Club v. Union royale belge des sociétés de football association ASBL (C-680/21) EU:C:2023:1010.
[21] See Union royale belge des sociétés de football association ASBL v. Jean-Marc Bosman, Royal club liégeois SA v Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman (C-415/93) EU:C:1995:463.