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General Court rules on extent of powers of sports governing bodies

Posted on 21 December 2020

The General Court has ruled on the extent to which sports governing bodies are free to exert control over the competitions that athletes are allowed to compete in. While the case concerned the International Skating Union (ISU), its findings are of general significance for other sports.

The Court made clear that governing bodies can have pre-authorisation mechanisms for third party competitions. However, these must pursue a legitimate objective and do so in a proportionate manner. They must also contain "clearly defined, transparent, non-discriminatory and reviewable authorisation criteria". The Court ruled further that the severity of penalties imposed on athletes for taking part in unauthorised events is particularly relevant to assessing the legitimacy of such mechanisms.

The Court separately held that an arbitration system that directs disputes to the Court of Arbitration for Sport is legitimate, which will be welcome news to governing bodies.

Facts of the case

The ISU is the sole international sports federation recognised by the International Olympic Committee for the purpose of managing and administering figure skating and speed skating.

In carrying out this function, the ISU has in place a pre-authorisation system, which sets out 'eligibility' rules that third parties wishing to organise professional skating events are required to meet. Athletes that compete in unauthorised events are subject to penalties imposed by the ISU (which previously included a life-time ban from competitions organised by the ISU).

In 2017, two Dutch professional speed skaters complained to the European Commission that the ISU’s eligibility rules were incompatible with EU competition rules (Article 101 TFEU), in that their object was to restrict professional speed skaters from taking part in international events organised by third parties. The Commission found in favour of the skaters, and the ISU then appealed the decision to the General Court.

Legitimate objective

The Court recalled that the protection of the integrity of the sport constitutes a legitimate objective recognised in Article 165 TFEU, and that it was therefore legitimate for the ISU to establish rules seeking to "avoid the risks of manipulation of competitions liable to result from sports betting and to ensure that sporting competitions meet common standards".

However, the Court held that the rules adopted by the ISU went beyond what was necessary to achieve those objectives and so could not be considered proportionate.

Eligibility rules

The Court found that the ISU's rules for pre-authorising competitions did not expressly set out the legitimate objectives pursued. Instead, they simply set out non-exhaustive criteria, which could not be regarded as "clearly defined, transparent, non-discriminatory and reviewable authorisation criteria".

In effect, the ISU retained a broad discretion to refuse to authorise competitions proposed by third parties and, as a result, they were incapable of ensuring that organisers of competitions had effective access to the relevant market.

Penalties

The Court stressed that the severity of penalties provided for in such mechanisms are "particularly relevant when identifying potential obstacles to the proper functioning of competition on the relevant market".

The Court considered that the severity of penalties may dissuade athletes from taking part in competitions not authorised by the ISU, including where "there is no legitimate reason for such a refusal to grant authorisation".

Importantly, the Court considered that even after the ISU amended its rules to remove its life-time ban, the penalties continued to be disproportionate. The categories of infringements remained ill-defined and their duration severe given the average length of a skater’s career.

What does this mean for governing bodies of other sports?

The General Court's decision is significant and will have ramifications across all sports.

Governing bodies will be relieved to have confirmation that pre-authorisation mechanisms are a legitimate way to ensure the integrity of their sports. However, it has been made very clear that such mechanisms must not go any further than what is strictly necessary to achieve this aim (and this includes the penalties imposed on athletes for competing in unauthorised events).

Sports bodies will therefore need to review their policies and practices to ensure that they are legitimate. In particular, where a body also organises events themselves (as the ISU does) an increase in complaints can be expected where third parties feel that the rules are being used unfairly to protect the commercial interests of the sports body.

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