The European Commission has recently published its decision finding that the International Skating Union’s (ISU) eligibility rules breached EU competition law. The Commission found that the eligibility rules, which imposed penalties (including potential lifetime bans) on athletes who participated in any non-ISUsanctioned speed skating competition, constituted a restriction of competition by object in the worldwide market for the organisation and commercial exploitation of international speed skating events. 

Background 

The ISU is the sole body recognised by the International Olympic Committee to administer figure skating and speed skating on ice. Under the eligibility rules, skaters could receive up to a lifetime ban from international speed skating events (including the Olympic Games and World Championships) if they participated in non-ISU-sanctioned speed skating events. The Commission opened an investigation into the eligibility rules after receiving complaints from two Dutch professional speed skaters. 

European case law has made clear that, while the organisation of sports is unique, sporting rules are nonetheless subject to the application of EU law, including EU competition law. The Commission will consider the legitimacy of objectives pursued by sporting organisations in setting rules, whether any restrictive effects of those rules are inherent in the pursuit of those objectives and whether those rules are proportionate to such objectives. 

Commission’s findings

 The Commission found that the eligibility rules restricted competition by object as they were enacted by the ISU in furtherance of its own commercial interests to the detriment of athletes and organisers of competing events. The Commission concluded that the aim of the eligibility rules was inherently to: (i) exclude athletes from participating in non-ISU-sanctioned events, therefore foreclosing competing event organisers; and (ii) exclude competing event organisers (who were consequently unable to attract top athletes to compete). Such a draconian restriction could not be justified by reference to a legitimate sporting objective. 

This was particularly apparent as according to the eligibility rules, sanctions could be imposed on athletes who competed in non-ISU-authorised events even if such events would not endanger the integrity of the sport, athlete well-being or the proper conduct of the sport. 

The Commission quickly dismissed the ISU’s argument that such a restriction was necessary to ensure that revenue created from speed skating competitions was shared with grassroots speed skaters. This was not a legitimate sporting objective but rather a purely commercial objective. 

By object v by effect

The Commission found that the content and objectives of the eligibility rules, the economic and legal context and the ISU’s intent to exclude competition from rival organisers constituted a restriction of competition by object. 

This case is interesting in the development of the scope of by object infringements, particularly following the Cartes Bancaires judgment. In that case, the European Court of Justice (CJ) found that by object anti-competitive behaviour must be interpreted restrictively and may only be applied to certain types of coordination which can be regarded as revealing “a sufficient degree of harm to competition [such] that it may be found that there is no need to examine their effects”. 

The test used by the Commission to assess the eligibility rules could be seen as a lower test than that expressed in Cartes Bancaires, potentially broadening the scope of by object infringement. This arguably runs counter to the efforts of the CJ to reign in the Commission’s attempts to broaden the scope. The ISU decision is important as it suggests that the Commission remains willing to test the boundaries of competition law should the opportunity present itself. The ISU has appealed the decision to the European General Court and so it remains to be seen whether the Commission’s by object reasoning will stand up to judicial scrutiny. 

Remedies 

The Commission required that the infringements be brought to an end within 90 days and that the ISU refrain from undertaking any measure that had the same or an equivalent object or effect. The Commission suggested that the ISU bring the infringement to an end by introducing: 

(i) sanctions and authorisation criteria for alternative speed skating events that are objective, transparent and non-discriminatory and do not go beyond what is necessary to achieve legitimate objectives (excluding the ISU’s financial interests); and 

(ii) an objective, transparent and non-discriminatory procedure for the adoption and effective review of decisions regarding the ineligibility of skaters and for the authorisation of speed skating events. 

The Commission did not impose a fine on the ISU for the following reasons: (i) this is the first decision of the Commission concerning specific rules set by sports governing bodies; (ii) the eligibility rules have been in place and were publicly known upon their adoption in 1998; and (iii) the ISU is a sports body acting to promote the sport of speed skating worldwide including the development of the sport. However, the Commission did impose periodic penalty payments in the event that the ISU fails to implement changes that bring the infringement to an end before the 90-day deadline.

Implications for professional sport

In a statement made on 8 December 2017, Competition Commissioner Vestager noted that the Commission was not questioning the pyramid structure of governance in ice skating or sports with a similar governance structure and made clear that the Commission was not questioning the rights of federations to organise sport, protect athletes and protect the integrity and proper conduct of the sport.

However, Commissioner Vestager explained that penalties used by such federations must be necessary and proportionate to achieve legitimate objectives and “shouldn’t be used to unfairly favour the federation’s own commercial interests, at the expense of athletes and other organisers.” The Commissioner went on to note that sport is a business, and a livelihood for professional athletes, and that the decision was “about making it clear to sporting federations that the business of sport also has to comply with competition rules.” 

Comment

However, Commissioner Vestager explained that penalties used by such federations must be necessary and proportionate to achieve legitimate objectives and “shouldn’t be used to unfairly favour the federation’s own commercial interests, at the expense of athletes and other organisers.” The Commissioner went on to note that sport is a business, and a livelihood for professional athletes, and that the decision was “about making it clear to sporting federations that the business of sport also has to comply with competition rules.”