Sports Self-Regulation on Thin Ice

The General Court of the European Union has handed down a landmark judgement in the application of competition law to elite sport, largely upholding the European Commission’s interpretation of banning athletes who participate in non-sanctioned events as anti-competitive. This case centred around regulations imposed by the International Skating Union (ISU), the global governing body of ice skating competition. The rules in question provided that skaters competing in events not sanctioned by the ISU could be banned for life from events under the governing body’s remit – which would include the European and World Championships and Olympic Games. The judgment, however, has wide-ranging implications in the world of sport. There are three core elements to the judgment, each of which has the potential to fundamentally reshape sports governance across Europe.

Finding of a Potential Conflict of Interest

The Court considered that the ISU’s dual function as the regulator of integrity in ice skating and the primary vehicle for its commercialisation (and thus the livelihoods of its professional competitors) was innately capable of giving rise to a conflict of interests. This is a typical structure replicated widely across European sport, with many sanctioning bodies also connected to the commercial element of the sport. The Court appears to be concerned that this double role could incentivise restricting new entrants’ access to the market, such that the regulatory function of sports governing bodies can be used as a protectionist measure for their commercial market position.

It is important to acknowledge that the Court did not state that this dual role inevitably resulted in an infringement of competition law, rather that in exercising its regulatory functions, the governing body must not unduly deprive competitors of access to the relevant market.

Nonetheless, this may lead to calls for a greater separation of powers within sport, with regulatory functions being made independent from commercial positions. While that in principle appears intrinsically desirable, it raises serious questions over how the (very expensive) function of sports integrity regulation would be funded. New financing models would undoubtedly be needed if sports governance roles were to be properly insulated from commercial sporting activity. Equally, if the bodies which protect the integrity of sports cannot influence the status of its competitions, integrity regulation may become fractured and ineffective across the wider sport.

Anti-Competitive Rules

Significantly, the General Court ruled not only that the ISU regulations had an anti-competitive effect, but that, in this case, the very object of the rules was anti-competitive. In other words, the Court did not accept that the threat of long or lifetime bans for athletes who took part in non-ISU competitions was intended to protect the integrity of ice skating – rather, they deemed that it was disproportionate to that objective and more likely aimed at preventing potential market disruptors from accessing the top athletes in the sport.

This is far from the first time that a potential competitor league has been resisted with the threat of bans. FIBA, the world’s primary basketball governing body, has frequently been at loggerheads with the EuroLeague, Europe’s premier club basketball competition, since its successful breakaway from FIBA at the start of the 21st century. FINA has experienced similar issues with the International Swimming League, and both governing bodies have threatened bans for those who involve themselves in the alternative competitions. The ruling will strengthen the position of potential disruptors, but may cause concern for those who fear that it will be difficult to tell when an established governing body resists an emerging competition on the grounds of genuine integrity concerns and is potentially left powerless to prevent it gaining a foothold in the sport. The argument has been fuelled by the strong public positions taken on integrity issues by potential alternative competition bodies – for example, the International Swimming League has proclaimed a zero tolerance approach to doping violations as one of its founding principles, refusing admission to anyone who has ever been found guilty of a doping violation. The league appears to have the integrity of the sport at the heart of its formulation, but even where that is the case, questions will be asked as to whether upstart sporting bodies will be able to effectively police the increasingly sophisticated world of sports integrity without the assistance and experience of the existing world bodies.

The impact of the anti-competitive ruling will be felt most keenly by sports which are less lucrative for their participants. The PGA Tour, for example, has not had to take such a hard stance against the World Golf League, in large part because many of the world’s top golfers have publicly declared their disinterest in defecting. This is doubtless in part because the best male golfers in the world stand to earn vast sums from participation on the established tours and can have long and lucrative careers doing so. There is thus little incentive to forfeit the chance to win the sports’ most iconic prizes – the Masters and Open, for example – in favour of a new competition format with a more secure financial offering. In other sports, such as ice skating, where careers are short and the money modest, a competitor league which is richly backed has a far more powerful draw, offering a level of financial security not otherwise accessible to elite athletes. The Court ruling aims to ensure that athletes cannot be forced to choose between the opportunity to maximise their living and to win an Olympic medal by a body acting in its own commercial interests. The potential dilemma arises in ascertaining when those truly are the ruling interests, and when there are real questions over the integrity of such competitions.

CAS Gets Seal of Approval – But Sports Autonomy Under Threat

The General Court did overturn one aspect of the Commission’s original ruling in favour of Icederby International, the would-be competitor body. Initially, the Commission deemed that the ISU rule conferring exclusive jurisdiction to hear appeals on eligibility upon the Court of Arbitration for Sport was an aggravating factor in the restrictive nature of the rules. The General Court disagreed and upheld the lawfulness of CAS’ jurisdiction. This provides some support for sports’ continued self-regulation, but the wider ruling confirms that sports’ ability to self-govern has its limits in the eyes of the Court. Although governing bodies will still be able to use the internationally recognised specialist court to resolve disputes, the General Court has laid down a marker on the boundaries of sports’ self-governance.

Conclusion

The Court did recognise that a regulator may pursue a lawful and legitimate interest in sanctioning third party competitions, but its criteria for doing so must be clearly defined, transparent and non-discriminatory and potential sanctions for competitors must be proportionate. It is perhaps inevitable that the exact boundaries and limits of these principles will be tested in the future in other sports.

As such, this decision will resonate across many sports and threatens the degree of autonomous control enjoyed by numerous sporting regulators. Given the wide application of the rationale, it would not be a surprise to see an appeal lodged. The judgment is a major moment for elite sports, but while the battle has been won by the disruptors, the war is far from over.

For more information please contact Daniel McDonagh.