Socrates wrote:There has been a members' vote for ffp too, Europe wide and EPL... Why would a members' vote be more valid for other forms of rule?
Football cannot reclassify itself whatever it does, the articles would have to be renegotiated to do that. SPORT is specifically exempted whether big business or not. Article 81 and 82 are clear. There is no minefield. The inclusion of financial rules has occurred in other sports and precedent in football goes back decades. In terms of EU law football is only impacted when matters outside the general rules of competition come into play - e.g. free movement of labour. If we were prevented from selling merchandise it would apply. Rules of competitions however don't. Can it be any clearer?
Clear?...
"A number of people have asked whether the FFPRs could be challenged as illegal under a number of avenues; one being competition law. As a competition lawyer, it seemed appropriate to briefly outline some of the risks and justifications from a competition law
perspective. If clubs are refused their UEFA license, meaning they cannot participate in the Champions League, may decide to challenge the legality of the FFPRs. Set out below is an outline analysis of whether the FFPRs could be challenged on competition law grounds, by whom and whether UEFA could provide enough resolute justifications.
The FFPRs are for ease of reference assessed here in relation to Article 101 of the Treaty on the Functioning of the European Union (TFEU), though before domestic courts, national competition rules would usually apply. A challenge to the rules would be likely to occur in the form of a complaint to the European Commission, a national competition authority or a civil action in the domestic courts. Presumably, an aggrieved club could make complainant representations to the European Commission or national competition regulator once the UEFA appeals procedures had been exhausted; the European Commission could then initiate an investigation. Note that Article 66 of the Disciplinary Regulations states that any appeal is final, which would suggest that no other civil court proceedings could be commenced.
It should also be noted that club X who finishes one place below Champions League qualification club Y may become an interested party and complain to UEFA if it believes that UEFA should have refused club Y a license because it was in breach of the FFPRs. Ian Ayre, the Liverpool Managing Director, commented recently that: These rules should be rules and should be hard and fast. What will kill the initiative, or certainly stifle it, is people easing themselves into it rather than the rules applying and everyone operating within them. The rules should be clearly defined, you cannot have a half rule process.
http://go.warwick.ac.uk/eslj/volume9/number1/geeyReading between the lines, some clubs who feel confident of passing the FFPRs could seek recourse to the courts if the UEFA appeals process does not deliver the desired outcome and the rules are not consistently applied. Without delving into the detailed law governing the correct forum for any such dispute, it is necessary to point out that UEFA regulations stipulate that recourse to the courts is prohibited. It gives jurisdiction to the Court of Arbitration for Sport (CAS) to arbitrate on conflicts to the "exclusion of any ordinary court" (Article 60 of the UEFA Statutes).
[url]http://www.uefa.com/MultimediaFi
les/Download/Regulations/uefaorg/General/01/47/69/97/1
476997_DOWNLOAD.pdf[/url]
Therefore UEFA has the power to initiate disciplinary proceedings against a UEFA affiliated club if it begins national court proceedings. Suffice to say that if a club still decides, after incurring the wrath of UEFA, to use competition law to challenge the
FFPRs it is worthwhile to note that Article 101(1) outlaws:
All agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market and specifically (b) limit or control production, markets, technical development, or investment.
Should a club challenge the legality of the FFPRs and pass all the potential domestic and/or EU requisite standing requirements, it would then have to prove that the FFPRs restriction fell within Article 101(1) by arguing that the rules have the object or effect of restricting the ability of a club owner to spend whatever they chose. In other words, the autonomy of what a club owner can do is restricted. The club challenging the rules would have to argue that Article 101(1) (or its domestic equivalent) is engaged. UEFA would argue that the FFPRs either:
do not fall within the Article 101(1) restriction in the first place (see for example
Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (C309/99))
; or
that the agreement can be exempted under Article 101(3) (see for example provision 7 in 2003/778/EC: Commission Decision of 23 July 2003 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (COMP / C.2-37.398-Joint selling of the commercial rights of the UEFA Champions League))
Article 101(3) states that:
The provisions of paragraph 1 may, however, be declared inapplicable [if the restriction] (i) contributes to improving the production or distribution of goods or to promoting technical or economic progress, while (ii) allowing consumers a fair share of
the resulting benefit, and which does not, (iii) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
or (iv)
afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Therefore, if the challenging club gets over the first hurdle of engaging Article 101(1), which is by no means guaranteed, UEFA would argue that Article 101(3) applies and that even if the FFPRs were deemed anti-competitive that the four 101(3) tests would be satisfied and the FFPRs could therefore be exempted.
From a practical perspective, such an investigation would take time and in the case of a club whose license had been rejected in advance of next season’s Champions League participation, it would be extremely unlikely that a European Commission investigation or court case could be concluded in time for participation in that year’s competition. A club could perhaps decide to seek declaratory relief in court proceedings as the basis for re-instatement into the UEFA competition.
UEFA would stress that the process of drafting the rules has been conciliatory, the European Club Association (ECA) has been engaged in every step of the way and that any clubs who had substantive concerns should have voiced their displeasure at the formative stages. This author’s understanding of the consultation process with UEFA and the ECA is that a number concessions were made (i.e. the Annex XI provisions, the staggered standard deviation approach and the removal of all infrastructure and youth development costs from the break-even calculation).
http://go.warwick.ac.uk/eslj/volume9/number1/geeyThis author is yet to hear of any club claiming that the FFPRs are illegal. Indeed UEFA would no doubt argue that if clubs have not yet criticised the rules and/or questioned their legality, why only challenge the rules when the club has breached them and
are facing sanction? The general argument would be that a club cannot use competition law as a weapon when that same club has tacitly accepted the rules of the game and, more so, been active in the very formulation of the rules. In addition UEFA would also contend that the FFPRs do not limit investment at all. On the contrary they incentivise investment in long-term projects like youth
development or stadium construction over shorter term investment on transfer fees andwages.
An aggrieved club however may argue that there is an indirect investment restriction because in order to break even, or reach the acceptable deviation point, clubs can only spend what they earn. They are thus indirectly constrained by their own cost base. To counter this, UEFA would use such arguments that a benefactor could buy a club and invest heavily on infrastructure, youth development and other FFPRs exempt costs. Whilst this does restrict the autonomy of what an owner can do, UEFA would point to the restrictions having the pro-competitive benefits of:
ensuring the integrity of competitions;
promoting good governance;
safeguarding financial stability of clubs and leagues; and
encouraging longer term infrastructure investment.
Additionally, it is worthwhile pointing out that the rules only apply to clubs in UEFA competitions. In a previous article, in relation to third party player ownership, I stated that in relation to multiple club ownership:
CAS decided in the ENIC case that the rule prohibiting one company owning more than one club competing in the same UEFA club competition was proportionate. This was because, among other reasons, it still allowed an entity to purchase more than one European club. The prohibition was that two commonly owned clubs could not compete in the same competition.
CAS explained that the UEFA rule was proportionate because there was not an absolute prohibition on a company’s ability to buy two European football clubs. It just meant both could not play in the same European competition.
(See
http://www2.warwick.ac.uk/fac/soc/law/elj/eslj/issues/volume7/number2/geey/#a10)
It would appear the same kind of logic may apply to the current situation in that clubs can effectively spend what they want whilst playing in domestic competitions (subject to national association rules). UEFA is only regulating entry into its competitions and there are a variety of other national competitions that a club can participate in which are not subject to UEFA's FFPRs.
Therefore UEFA would state that its rules are not all encompassing. Indeed, any club that qualifies can chose whether it wants to apply for a license for participation in European competitions. Needless to say, the challenging club would argue that if you want to be a top club, Champions League revenue is vital and therefore re-occurring qualification into the Champions League is imperative to maintain revenues and compete at the top of the national league.
It is on this proportionality ground (number 3 of Article 101(3)) that UEFA may have strong reasons for arguing it has not gone beyond what is necessary for securing the objective of financial fair play. UEFA would however have to set out appropriate reasons for why the regulations would pass the other three tests that make up Article 101(3) gateway. In reality many of the arguments may overlap.
The European Commission recently gave its tentative approval to the FFPR by stating: The Commission welcomes the adoption of measures aimed at enhancing financial fair play in European football while recalling that such measures have to respect Internal
Market and competition rules. (See
http://ec.europa.eu/sport/news/doc/communication/communication_en.pdf)
Rather unhelpfully however such a comment was so heavily caveated that the statement is of little practical use. Being in favour of the FFPRs subject to EU law offers little guidance on the European Commission’s thinking as to the practical legalities of the regulations.
It was recently confirmed to by Andrea Traverso of UEFA that UEFA has had a series of consultations with the European Commission to ensure that the rules complied with EU law. Presumably the European Commission would have wanted UEFA to explain the various
reasons (i.e. defences) to demonstrate why:
the FFPRs would not fall under Article 101(1) but if they did; that
there were enough substantive justifications to ensure that they are covered by the Article
101(3) exemption.
It is not surprising that UEFA has had detailed discussions with the European Commission to ensure that there are robust legal arguments underpinning the FFPRs. So whilst this section can only speculate as to the challenges that face the FFPRs in the future, it is clear that UEFA has done much behind the scenes to engage with clubs and the regulators alike."
