On 16 December 2020, the General Court of the European Union (the “General Court”) issued its judgment in the International Skating Union case. The General Court confirmed that the ISU’s eligibility rules breached competition law but found that the Commission was wrong in considering that the ISU’s arbitration rules, providing for dispute resolution by the Court of Arbitration for Sport (“CAS”), constituted an aggravating circumstance.
The ISU’s eligibility rules provided for the possibility of up to a lifetime ban if they participated in any speed skating event not authorised by the ISU (or one of its members). The ISU had refused to approve a third-party event to be organised by IceDerby to take place in Dubai, and thus limited IceDerby’s ability to attract speed skaters without the threat of severe sanctions.
Sports Federations Must Give Clear Third-Party Event Authorisation Criteria
In December 2017, the European Commission found that the ISU’s eligibility rules breached competition law by providing the possibility of up to a lifetime ban if athletes participated in speed skating events not authorised by the ISU.
The General Court held that the eligibility rules constituted an anticompetitive agreement between its members restricting competition in the market for international skating events. The eligibility rules gave rise to a potential conflict of interest under the ISU’s dual role as an event organiser and sport regulator. As the sole international sports federation recognised by the IOC as regulatory body, which itself organises the most important speed skating events, it has an obvious advantage over those competitors which require pre-authorisation by the ISU in order to organise their competitions. The authorisation process should be such that it does not deprive potentially competing event organisers access to the market for speed skating competitions.
At issue was therefore the pre-authorisation system set up by the ISU (and most other international federations) under which the ISU would be required to authorise an event prior to any third-party organiser being able to stage it. The European Commission’s decision found that the ISU’s authorisation criteria were not inherent and proportionate to the pursuit of sports-legitimate objectives.
The General Court agreed with the Commission in finding that in the absence of transparent, non-discriminatory, and verifiable criteria for authorising third-party events, the ISU’s eligibility rules prevented organisers from providing competing events on the market. The ISU’s rules did not meet this standard considering that the General Court found them not only to lack objective, transparent, non-discriminatory and verifiable authorisation criteria,but also that the ISU retained a broad discretion to authorise events that was in no way limited. By lack of an appropriate and balanced pre-authorisation system, the ISU could not prevent athletes from competing in unauthorised events through the threat of severe sanctions.
This ruling is significant as it goes to the heart of what international sports federations can impose when regulating their sports, events, and member athletes. It is clear that many sporting bodies will now need to amend or update their respective regulations to ensure that they remain compliant with competition law, which will entail a balancing act between preserving the integrity and safety of the sport and addressing commercial pressures from third party event organisers.
Should international federations wish to retain any pre-authorisation system they must now establish transparent, non-discriminatory, and verifiable criteria which, once met by a third-party applicant, would permit them to organise events and attract athletes without fear of sanctions. These criteria will be valid so long as they are inherent and proportionate to the pursuit of sports-legitimate objectives. These include the proper functioning of sport (including uniform rules, event calendars, competitive balance, fairness, and openness); protection of athletes’ health and safety (including anti-doping); integrity of sport (including anti-corruption and gambling); and promotion of youth training and prevention of racism.
CAS Arbitration Remains Valid
The European Commission’s decision further asserted that the ISU’s arbitration rules, which provided that disputes should be resolved before the CAS in Lausanne, Switzerland, aggravated the breach of competition law under the eligibility rules. The European Commission argued that because CAS was not an arbitral body in an EU Member State, athletes seeking to enforce their rights under competition law could not go to a court in the EU nor could the CAS refer questions of EU law to the European Court of Justice.
The General Court however did not agree with the European Commission. The judgment finds that it was not entitled to consider the ISU’s arbitration rules as an aggravating circumstance. Only unlawful conduct or circumstances which render the infringement more harmful can justify an increase in the penalty imposed for an infringement of EU competition law. The arbitration rules were not anticompetitive in themselves, and thus the Commission could not order the ISU to amend them.
Moreover, the General Court highlighted that CAS has been found by the European Court of Human Rights to be a legitimate arbitral body and provides significant benefits and efficiencies to dispute resolution within the sports world.
The General Court judgment could be appealed by either the ISU or the European Commission to the European Court of Justice. However, this is a balanced judgment providing both the European Commission and sporting bodies with reasons to be pleased. International federations retain the ability to have a pre-authorisation mechanism for third party events as well as their established arbitration system. The European Commission has established that international federations do not have carte blanche to use their regulatory powers and responsibilities to distort competition in their commercial favour.