On 30 April 2024, the CJEU was advised in a non-binding opinion by Advocate General Maciej Szpunar that certain FIFA rules restricting the transfer of a football player to another club may contravene EU competition and free movement laws. The case concerns a claim by French player Lassana Diarra, who seeks compensation for a lost opportunity to complete a transfer to Belgian club Sporting du Pays de Charleroi – it had expressed concern about implications under FIFA rules of a transfer during a contractual dispute between Diarra and his former club Lokomotiv Moscow. The claim will ultimately be determined by a Belgian court, which referred the issues of competition and free movement laws to the CJEU in October 2022.
In essence, three interrelated FIFA transfer rules – which are implemented by FIFA and its member national football associations worldwide – are at issue: (1) the player and the club wishing to sign them will be jointly and severally liable for any compensation due if the player's previous contract is found to have been terminated without just cause; (2) a club which signs a player who terminated their previous contract without just cause is presumed to have induced a breach of contract and is thereby liable to sanction; (3) the association of the former club may not deliver the mandatory International Transfer Certificate (ITC) if there is a dispute between the former club and the player involving such a breach of contract. The Belgian court requested guidance on whether these particular rules are prohibited by Articles 101 and 45 of the Treaty on the Functioning of the European Union (TFEU) (respectively on competition in the internal market and free movement of workers).
Restriction on competition
The Advocate General concludes that the rules in question constitute an unlawful restriction of competition "by object" under Article 101(1) TFEU which do not come close to any exemption provided in Article 101(3) TFEU. A restriction "by object" is anti-competitive by nature and so is prohibited regardless of the actual effect (if any) that the restriction has in the relevant market. In reaching this conclusion, the Advocate General describes the rules as "draconian" and deliberately designed to have a "chilling effect" to deter transfers where there is a prior contract which has not been justifiably concluded or it is alleged that is the case. Accordingly, in his view, the rules constitute an intentional restriction on competition between commercial clubs on the market for the acquisition of professional football players.
Since the Advocate General considers the rules comprise a "by object" restriction, he confirms that it is not necessary to establish any actual anti-competitive effect or to consider whether any such effect is justifiable in the proportionate pursuit of legitimate objectives in the public interest. However, he observed that there does appear to be a restriction "by effect", and that the justification test that would follow from that conclusion would in essence be comparable to the justification test under Article 45 TFEU, as explained below.
Restriction on free movement
Article 45 TFEU precludes measures which may prevent or deter an EU national from moving from one Member State to another in order to pursue an economic activity, such as professional football. The Advocate General finds that the rules at issue in this case are liable to restrict the free movement of workers in contravention of Article 45 TFEU, unless it can be established that the test for justification on the ground of public policy has been met. The Advocate General opines that the restriction may be justified if: (1) the rules on liability do not apply or can be disapplied where the (proposed) new club was not involved in the alleged breach of contract; (2) as to the ITC, there are genuine and expeditious provisional measures which can be applied to facilitate a transfer where there is a mere allegation that a prior contract is breached (noting an argument that there is already flexibility in the rules to allow for this). Establishing whether these justifications in fact apply is outside the scope of the Advocate General's opinion.
The Advocate General added that, in his opinion, FIFA is bound by the EU Charter of Fundamental Rights in implementing these rules (and is functionally equivalent to Member States in this regard) – a conclusion he describes as having some "constitutional significance". However, in this instance, his analysis of the application of the Charter is not substantially different from his analysis of Article 45.
Comment
The CJEU is not bound by the opinion of the Advocate General but such opinions are commonly followed.1 The opinion in this case recommends a response to the Belgian court's request for guidance which would: (a) confirm the test under Article 101(1) TFEU, but leave the Belgian court to decide whether there is a restriction of competition "by object" or "by effect", and therefore whether there is scope for justification; (b) confirm that there is a restriction under Article 45 TFEU absent justification, but leave the Belgian court to address the justification considerations articulated by the Advocate General (summarised above) and make a determination on justification.2
If the rules at issue are ultimately concluded to be in breach of Article 101(1) TFEU then they are automatically void as a matter of EU law; they cannot be applied even to football transfers within Member States. In contrast, the Advocate General suggests that if Article 45 TFEU is contravened it only creates an issue to the extent the rules apply to transfers between different Member States. Any such finding could affect the transfer market as between EU clubs and as between English and EU clubs – it would likely lead to the removal of the offending rules, at least insofar as they apply in the EU, thereby ending the "chilling effect" which severely discourages a transfer in the wake of a player's premature termination of their contract. This could ultimately lead to an increase in premature contract terminations by players, in order to open themselves to lucrative transfer opportunities. The question of whether any such finding would have implications for transfers outside of the EU market entirely would depend on how FIFA chooses to amend its transfer rules in response.
The case is yet another recent example of the increasing relevance of competition law to international sporting activities, a topic on which we have written previously (see for example).
The case is C-650/22. The Advocate General's Opinion, dated 30 April 2024, is available here. "CJEU" is the Court of Justice of the European Union. "FIFA" is the Fédération Internationale de Football Association. "TFEU" is the Treaty on the Functioning of the European Union. The rules at issue are within FIFA's Regulations on the Status and Transfer of Players.