The European Court of Justice (“ECJ”) has ruled that FIFA’s transfer rules violate competition law and the free movement of persons.
This ruling of the ECJ was issued in a dispute between football federation FIFA and Lassana Diarra, a former professional footballer. He was dismissed at his club Lokomotiv Moscow in 2014 after a salary dispute and forced to pay compensation under the FIFA Regulations on the Status and Transfer of Players. These transfer regulations provide that both a player whose employment contract is terminated through his own fault and the new club hiring him are jointly and severally liable for compensation to the former club. A transfer ban may furthermore be imposed on the new club. As a result, Diarra could not be transferred to a new club. Diarra subsequently instituted an action for loss of earnings against FIFA. The Belgian court has presented preliminary questions on this matter.
With reference to the Super League case, the ECJ has stated that the practice of top sport (and sport in general), if it constitutes an economic activity, is covered by EU law. The protection of the stability of football leagues and the protection of professional football players may be regarded as legitimate objectives when creating transfer rules. Even the unilateral termination of fixed-term contracts by players can be prohibited. However, the ECJ found that the transfer rules in their current form aim to restrict competition. The ability to attract players is an essential competition parameter in football. The current transfer rules shield the market by distributing players between football clubs. This is similar to a non-solicitation clause. Transfer rules may also unnecessarily hinder the free movement of workers.
Interestingly, the ECJ did not address the doctrine of inherent restraints (also known as ancillary restraints). These are restraints that are nevertheless permitted because they are secondary and necessary to achieve a legitimate purpose. Last year, it also appeared to follow from the ISU judgment and the Super League judgment that this exception as implemented in the Wouters and Meca Medina case law is obsolete for the sports world. The question is whether this also applies to other sectors. That does not appear to be the case. The ECJ did address this doctrine, for instance, in its recent judgment on Booking.com’s parity clauses.
FIFA, meanwhile, has promised to initiate a dialogue on amending the transfer rules. FIFPRO, the International Federation of Professional Footballers, has already announced its intention to file a mass claim for the loss consequently incurred by players. Other proceedings against FIFA are also pending. Some of them concern the FIFA Football Agent Regulations, under which requirements are imposed on players’ agents, including their training and fees. A German court has now also referred questions to the ECJ on this point. So the game is not over yet.
This blog was also published in the Snelrecht section of specialist journal Mr. Online. The article can be read here.
Information on dawn raids by ACM and the European Commission can be found at invalacm.nl.
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