In its judgment of 29 May 2015, the Court of First Instance of Brussels referred a case to the European Court of Justice (“ECJ”) for a preliminary ruling on the interpretation and lawfulness of UEFA’s Financial Fair Play (“FFP”) rules.
The FFP rules are measured based on the simple principle of the “break-even rule” and were integrated in 2012 within the UEFA Club Licensing System and FFP Regulations. The first break-even assessment was conducted during the 2013/14 season. The idea is to prevent professional football clubs playing in the Champions League or the Europa League from spending more than their generated revenue. For example, if the revenue of Real Madrid is estimated at €500 million in 2015, its expenses throughout the same year can not exceed this figure. Where violations of this financial balance requirement occur, football clubs may be subject to severe sanctions including fines, player transfer bans or disqualification from the European competitions. In May 2014, UEFA imposed a fine of up to €60 million for breaching the FFP rules on Paris Saint-Germain and Manchester City.
In the present case before the Brussels court, the plaintiffs consisted of two players’ agents, an important number of football supporters from several clubs such as Manchester City and Paris Saint-Germain, and one Belgian second division football club.
The plaintiffs, who initiated civil proceedings against the UEFA and the Royal Belgian Football Association (“RBFA”), alleged that the “break-even” rule violates European competition law, especially Article 101 of the Treaty on the Functioning of the European Union (“TFEU”), which prohibits restrictive agreements, and Article 102 of the TFUE, which prohibits the abuse of a dominant position. According to the plaintiffs, the “break-even” rule also infringes three freedoms of the European single market, namely the free movement of capital, services and workers as enshrined in Articles 63, 56 and 45 of the TFEU, and is disproportionate and discriminatory.
Therefore, the plaintiffs requested the Brussels court to confirm such violations and to grant monetary relief or, in subordinate order, to refer this case to the ECJ for a preliminary ruling. In view of which they formulated a number of questions. In addition, the plaintiffs sought a provisional interim order to freeze UEFA’s plan to implement the second phase of the FFP rules, which will reduce “the permitted break-even deficit” for professional football clubs further from €45 million to €30 million as from the 2015/16 season.
The Brussels court, despite the fact that it declined its territorial jurisdiction to decide on the merits, ruled that it was competent, and indeed accepted, to impose interim measures by prohibiting the UEFA to activate and implement the next phase of FFP rules and by referring three preliminary questions to the ECJ, which can be summarised as follows:
- Do the restrictions of competition generated by the “break-even rule” violate Articles 101 or 102 of the TFEU and are they proportional to the objectives pursued by the UEFA?
- Do the obstacles to the free movement of capital, services and workers, as generated by the “break-even rule”, violate Articles 63, 56 and 45 of the TFEU (and Articles 15 and 16 of the Charter of Fundamental Rights of the European Union) and are they proportional to the objectives pursued by the UEFA?
- Do Articles 65 and 66 of the UEFA Club Licensing System and Fair Financial Play Regulations, setting up rules with regard to overdue payables towards football clubs, employees and social/tax authorities, violate the abovementioned principles of EU law, in that such rules are disproportionate and/or discriminatory as they advantage the payment of certain creditors and – correspondingly – disadvantage the payment of unprotected creditors, in particular players’ agents?
As expected, UEFA, shortly afterwards, declared that it will lodge an appeal before the Court of Appeal of Brussels against the judgment, adding that it remains fully confident that FFP rules are entirely in line with EU law.
Moreover, in late June, the UEFA Executive Committee met in Prague to discuss, among other subjects, the state of play of the FFP rules. Some refinements were adopted to further encourage responsible investors and stakeholders to contribute to the strong and healthy growth of club football across Europe.
While an ECJ ruling could settle this heated debate, the defendants’ appeal, which is expected to be introduced in September 2015, will suspend the preliminary ruling procedure at least until the decision of the Court of Appeal of Brussels, which probably should not be expected until June 2016, becomes final.
Court decision details: Judgment of the Court of First Instance of Brussels (Belgium), 29 May 2015, docket number 13/11524/A, Daniel Striani e.a. v. UEFA and URBSFA.