Volume: 15 Issue: 12
The European Commission issued its decision on 8 December 2017 following an investigation into the International Skating Union’s (‘ISU’) eligibility rules that impose ‘severe’ penalties on athletes participating in speed skating competitions not authorised by the ISU, finding that such restrictive penalties imposed on athletes breaches EU antitrust law. “This could prove to be the most significant legal development in Olympic sport in this decade,” said Jeff Benz, Arbitrator, Mediator and Attorney at 4 New Square Chambers. “It cuts to the heart of sport event sanctioning, possibly depriving International Federations of their long accepted exclusivity over conduct of events and participation by athletes. Though it is a decision of a European institution, if this stands, though the wording is at times very specific to the ISU situation, it undoubtedly will fundamentally affect sport governance around the world.”
The Commission’s decision requires the ISU to stop its illegal conduct within 90 days and refrain from any measure that has the same or equivalent object or effect. In particular, the Commission’s decision states that the ISU ‘should not impose or threaten to impose unjustified penalties on athletes who participate in competitions that pose no risk to legitimate sports objectives. If the ISU maintains its rules for the authorisation of third party events, they have to be based on objective, transparent and non-discriminatory criteria and not be intended simply to exclude competing independent event organisers.’
The Commission opened a formal antitrust investigation into the ISU’s eligibility rules that permanently ban skaters from competitions if they take part in events not approved by the ISU in October 2015 following a complaint by two Dutch speed skaters Mark Tuitert and Niels Kerstholt. The Commission’s investigation found that: under the ISU’s eligibility rules speed skaters participating in competitions that are not approved by the ISU face severe penalties up to a lifetime ban from all major international speed skating events and that the ISU can impose these penalties at its own discretion, even if the independent competitions pose no risk to legitimate sports objectives; by imposing such restrictions, the eligibility rules restrict competition and enable the ISU to pursue its own commercial interests to the detriment of athletes and organisers of competing events; and the eligibility rules prevent independent organisers from putting together their own speed skating competitions because they are unable to attract top athletes, which has limited the development of alternative and innovative speed skating competitions, and deprived fans of following other events.
The ISU introduced changes to its eligibility rules in June 2016, but despite these, the Commission found that the system of penalties set out by the eligibility rules remains ‘disproportionately punitive’ and prevents the emergence of independent international speed skating competitions. Therefore, the Commission concluded that the ISU eligibility rules are anti-competitive, in breach Article 101 of the Treaty on the Functioning of the European Union. “I consider the decision taken by the Commission to be very balanced. The decision does not question the right for sport organisations to regulate their sport and their events and to take legitimate measures to protect their competitions. Of course, those measures must be proportionate - and those imposed by the ISU were not,” explains Michele Bernasconi, Partner at Baer & Karrer AG.
The ISU issued a statement following the publication of the Commission’s decision stating that it disagrees with the decision that the ISU’s eligibility rules breach EU competition law and that the Commission’s decision fails to consider the specific nature of sport. ‘The decision harms not only the ISU but also Skaters and the entire Skating community,’ states the ISU. The ISU goes on to stress that its eligibility rules - which it states are similar to the eligibility rules of many other International Sports Federations - say that skaters may only participate in international skating events that have been authorised by the ISU and that such rules ensure the protection of the health and safety of skaters at all authorised skating events as well as the integrity of skating events. ‘These rules are essential to the role of the ISU as the guardian of Skating and the International Federation for the sport as recognised by the International Olympic Committee.’
“It is interesting that the European Commission decided to pursue the case, as most of the enforcement of competition law in the sports sector in recent times has been through the national courts. It may well be that the Commission thought that it has been a while since it has issued a decision in this area and wished to remind those active in the sport sector that they are also subject to the competition rules when they engage in economic activities,” concludes Paul Stone, Partner at Charles Russell Speechlys LLP. “In terms of the approach adopted by the Commission, it seems to follow the principles established by the case law in this area. As regards the outcome, it is worth noting that the Commission decided that it was not necessary or appropriate to impose fines in this case, presumably on the basis that this would simply have reduced the amount of funding available for the sport.”
If the ISU fails to abolish or modify its eligibility rules according to the Commission’s decision, it will be liable for a fine of up to 5% of its average daily worldwide turnover. The ISU has stated that it will now review the decision of the Commission carefully and that it reserves the right to file an appeal before the European Courts.