On 21 December 2023, the Court of Justice of the European Union (CJEU) rendered its judgment in the case of the European Superleague Company, a case that attracted significant attention beyond the circle of competition lawyers. On the same day, the Court delivered its judgment in the less prominent ISU case.

Both cases concern international sports associations that impose restrictions on their members wishing to organize or join competitions held by other associations. Both judgements raise the question of whether sports associations may be justified in restraining the ability of their members to take part in alternative competitions. The Court discussed whether, in these specific cases, such restraints could nonetheless be objectively justified and, hence, exempt from the application of EU competition rules (specifically Art. 101 (1) TFEU). Both cases gave the Court the opportunity to discuss and revisit old case-law that sets out the conditions for objective justifications applicable to associations vested with regulatory powers.

In essence, the Court held at paragraph 183 of its Superleague judgment that under well-established case-law (citing Wouters, Meca-Medina and Ordem dos Tecnicos Oficias de Contas (OTOC)), the decisions of an association of undertakings may be objectively justified where: (i) the measure is not such as to amount by its very nature to a restriction of competition (which we infer to mean a by object restraint); (ii) the measure is genuinely necessary to achieve the objective; and (iii) the inherent effect of the measure “does not go beyond what is necessary, in particular by eliminating all competition.” In short, the Court is calling for two tests, one on proportionality, and one on ‘no elimination of competition.’

That being said, the case-law to which the CJEU here refers does not explicitly mention the first condition—that the objective justification defense would be unavailable in the context of ‘by object’ restraints. In the subsequent paragraphs of its judgement, the Court goes on to emphasize that the case-law on which it relies implicitly, but nevertheless necessarily, makes it clear that the objective justification defense is not available “in situations involving conduct which, far from merely having the inherent ‘effect’ of restricting competition, at least potentially, by limiting the freedom of action of certain undertakings, reveals a degree of harm in relation to that competition that justifies a finding that it has as its very ‘object’ the prevention, restriction or distortion of competition.” In making this inference, the CJEU brings an unprecedented and binding interpretation of previously ambiguous law.

Further, even where the conduct could be considered to constitute a ‘by effect’ restraint—as it would not, by its very nature, be so deleterious to the effective operation of the relevant market—the same line of old case-law does not impose one leg of the third condition, i.e., that the effect of the association rules do not lead to the ‘elimination of all competition’ (NB: this is akin to the last condition of Article 101(3) TFEU).

What this means is that when faced with antitrust violations ‘by object,’ regulators shall no longer hear legitimate, objective justifications put forward by the undertakings concerned in support of their claim that the restraint falls outside EU competition rules. Further, those succeeding in convincing enforcing regulators to embark on an ‘effects’-based analysis (as opposed to using the easy ‘by object’ route) will need to demonstrate that the restraints under review are not such as to lead to the complete elimination of competition.

To be complete, the narrowing exercise which the Court has conducted in relation to the Superleague and ISU may arguably find application in the specific cases involving agreements or decisions concerning the rules adopted by an association, such as a professional association or a sporting association.

What to draw from European Superleague Company and ISU

The above raises the question of whether the narrowing down of the objective justification defense indeed applies solely to associations vested with self-regulatory powers or whether there could be a far-reaching shift in the CJEU’s case-law on the treatment of objective justifications. Is, for instance, the case-law established in the context of distribution agreements, e.g., online marketplace bans imposed in (selective) distribution systems, to protect the aura and image of products which are no longer available?

The Pierre Fabre and Coty judgments from the CJEU are good examples of where the Court carried out an analysis of the availability of an objective justification defense for what was otherwise was seen as a restriction of competition ‘by object.’

It is conceivable that the CJEU intended to turn towards a new approach of heavily restricting the exemptions to Art. 101 (1) TFEU. It is, after all, remarkable that the CJEU narrowed its own case-law instead of just letting the objective justification test fail when assessing the necessity or proportionality of the restraint.

That said, the CJEU does not refer to its entire case-law, rather it specifically speaks about “the case-law referred to in paragraph 183 of the present judgment,” i.e., Wouters, Meca-Medina and OTOC. Later, the Court cites two more decisions belonging to “that case-law”: API and Others (2014) and CHEZ Elektro Bulgaria and FrontEx International (2017). 

• API and Others is about a professional association of road transport companies that was legally authorized to set minimum operating costs for road transport. These charges could not be undercut for road haulage. The aim was to ensure the safety of road transport.
• CHEZ Elektro Bulgaria and FrontEx International is about a professional association of lawyers that issued a regulation setting minimum amounts for the remuneration of lawyers that must not be undercut.

All these cases had the following aspects in common:

• The respective organizations are associations in charge of regulatory matters, and;
• Those association were pursuing a non-economic public interest.

In these cases, the legitimate objective exemption was used to preserve regulatory rules which were in the public interest, even though an indirect consequence of their enforcement could be a restriction of competition. The rules in question pursued other objectives, yet still technically fell within the scope of Art. 101 (1) TFEU. In Meca-Medina, for instance, the objective was the fight against doping, with the aim of ensuring fair sports competitions. It is reasonable to assume that there was no economic interest for FINA or IOC in setting certain nandrolone levels for athletes.

It would be understandable if, this time around, the Court sought to draw a line as to the availability of the objective justification defense where the anticompetitive effects appear to be so significant and clear-cut that allowing them to persist would render prior case-law absurd. Although UEFA/FIFA and ISU claimed they were pursuing the public interest, they had very strong conflicting economic interests in upholding their restrictive rules, as they were making huge profits from having an exclusive mandate to organize and market their respective sporting events.

Conclusion

For the abovementioned reasons, it would arguably make the most sense to restrict the relevance of the recent CJEU rulings to this very string of case-law—namely that concerning professional and sporting associations—and not to all case-law, which includes situations where the objective justification exemptions from Art. 101 (1) TFEU have been accepted, even in the context of hardcore or ‘by object’ violations. However, we cannot be sure that the CJEU, the Commission and/or the NCAs will not take this as an impetus to generally limit the availability of objective justifications more strongly, especially in the case of restrictions of competition by object.

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Whether you are a sports association, a professional association, or any other type of organization that may be affected by the CJEU’s judgments, we can advise you on the best strategy to comply with the EU competition rules and to defend your interests. Just give us a call or send us an email and we will be happy to assist you. And remember, the game is not over until the final whistle.

We would like to thank Suheib Qaderi for the participation in the research and writing of this article.