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On Your Skates! Lessons for Sports Governing Bodies and Event Organisers from the European Commission's ISU Decision

In the International Skating Union case, the European Commission investigated the compatibility of the ISU’s Eligibility Rules with EU competition law following a complaint by two Dutch ice speed skaters. Upon finding the ISU’s Eligibility Rules incompatible with Article 101 TFEU, the Commission issued a decision requiring the ISU to adopt remedies to end the infringement. At its June 2020 hearing before the EU General Court, the ISU challenged the validity of the Commission’s infringement finding as well as the remedies imposed upon it.  Pending judgment, this alert explores the guidance those remedies provide to sports governing bodies and event organisers.

The ISU is an international sport federation recognised by the International Olympic Committee as the body globally administering figure skating and speed skating on ice. The ISU is composed of individual national associations ("Members") that administer those sports at the national level. The ISU's Eligibility rules form part of the ISU Statutes and General Regulations, adopted by the ISU Congress. These rules are binding on Members, their affiliated clubs and individual members. The ISU Eligibility Rules investigated by the Commission prevented skaters and officials from participating in events that had not been authorised by the ISU or one of its Members. Any skaters or officials participating in unauthorised events were deemed ineligible to participate in events on the ISU international calendar (including the European and World Championships and the Winter Olympic Games).

 

Background to the Commission’s Investigation of the ISU Eligibility Rules

The ISU was approached by Icederby, an independent event organiser that wanted to create a new type of Speed Skating event based on betting. Icederby’s plan was to hold an "Icederby Grand Prix" for six consecutive years (2014-2020) in countries where betting is legal. The ISU refused to authorise the Icederby events on the basis that they were contrary to its ethical rules (which prohibited the support of betting).  Icederby subsequently informed the ISU that it would organise an event without betting in Dubai, where betting is not legal; however, the ISU did not authorise the event as it considered betting could still be involved in other Icederby events. The ISU also informed its Members and all skaters that they would be subject to the lifetime ban established by the Eligibility Rules if they took part in the Dubai event. 

Two Dutch speed skaters (Mark Tuitert and Niels Kerstholt) wanted to participate in the Icederby Dubai event, but held back because of the risk of facing a lifetime ban pursuant to the ISU’s Eligibility Rules. The two skaters launched an antitrust complaint with the Commission in June 2014. 

Soon after the current EU Commissioner for Competition took office,1 the Commission opened proceedings under Articles 101 and 102 of the TFEU in relation to the ISU’s Eligibility Rules on 5 October 20152 and sent a Statement of Objections ("SO") to the ISU on 27 September 2016. The Commission's preliminary view was that the ISU’s Eligibility Rules unduly restricted the skaters’ commercial freedom and resulted in a situation where they were not willing to participate in speed skating events other than those organised by the ISU or its Members. This in turn caused a situation that prevented new entrants from organising alternative international speed skating events because they were unable to attract top athletes.

The ISU defended its position in its response to the SO on 16 January 2017, and by taking part in an oral hearing on 1 February 2017. It argued that the Eligibility Rules were necessary to ensure that the ISU was able to protect the good functioning of the international calendar and to uphold sporting principles relating to health, safety and integrity. The complainants, along with the European Athletes Association and the International Olympic Committee as interested third parties, were also heard in the proceedings. On 8 December 2017, the Commission adopted a decision finding that the ISU’s Eligibility Rules infringed Article 101 TFEU.

 

Key Elements of the Commission Decision

The Commission found that the ISU Eligibility Rules infringed EU competition law because there was no clear scale of sanctions in place, meaning that skaters and officials in breach of the rules by participating in events arranged by third party organisers risked lifetime bans. The Commission also considered the ISU Eligibility Rules to protect the financial interests of the ISU. Another important factor in the Commission’s finding was the lack of a transparent, non-discriminatory procedure for the review of applications for authorisation, which meant that there was a risk of a conflict of interest and that applications by independent organisers in competition with the ISU could be rejected in an arbitrary manner.

Despite the infringing Eligibility Rules having been in place for around 20 years, the Commission decided not to impose a fine on the ISU.  This exceptional decision took account of the unprecedented nature of the case and the fact that the ISU3 devotes a large part of its revenues to the development of skating. Nevertheless, the Commission decision required the ISU to adopt remedies to end the infringement and to refrain from any measure that has the same or an equivalent object or effect.  

A key issue in the case was whether the ISU had the right to regulate events organised by independent organisers through a pre-authorisation system. In the decision, the Commission noted that in the absence of the ISU Eligibility Rules, skaters would be free to participate in independent events without risk of sanction even if they had not been authorised by the ISU.5  Such a decision would have radically changed the current governance model of sport, as sports governing bodies would have been unable to enforce their rules. Ultimately, as the Commission would later tell the EU General Court, the Commission decided to chart a "middle ground" in its remedies.6

Although the Commission stated that the ISU could remedy the infringement by abolishing its pre-authorisation system, it accepted that the ISU could maintain such a pre-authorisation system provided it met the following three conditions: 

  • First, provide for sanctions and authorisation criteria that are inherent in the pursuit of legitimate objectives (needless to say, the ISU’s financial and economic interests were not considered as legitimate objective7).
  • Second, provide for objective, transparent and non-discriminatory authorisation criteria and sanctions that do not go beyond what is necessary to achieve legitimate objectives. 
  • Third, provide for 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 ISU, having decided to maintain a pre-authorisation system, had 90 days to put in place a new authorisation system in accordance with these criteria. As the remedies were closely monitored by the Commission,the new system for the authorisation of independent (non-ISU) events is as an important precedent from which lessons can be taken by sports governing bodies and event organisers alike.

 

Top takeaways for sports governing bodies 

The good news for sports governing bodies is that the Commission’s decision confirms that they can retain a regulatory function over independent event organisers. When assessing existing authorisation systems or setting up new ones, sport governing bodies should bear in mind the following principles:

  • An authorisation system should only provide for sanctions and authorisation criteria that are inherent in the pursuit of legitimate objectives. The ISU’s revised Eligibility Rules are stated to protect such legitimate objectives as: guaranteeing uniform rules for skating; good functioning of the international calendar; health and safety standards; anti-doping regulations; integrity standards.9
  • The authorisation system should provide for an objective, transparent and non-discriminatory procedure for the adoption and effective review of decisions regarding the ineligibility of athletes and for the authorisation of non-ISU events. The ISU therefore adopted a new set of rules setting out the criteria to be assessed in the application and the timeframe in which the decision is to be adopted. Negative decisions can be appealed before the Court of Arbitration for Sport.
  • The ISU also put in place a clear condition on solidarity contributions. The Decision recognised that such contributions may be legitimate but criticised the vague nature of the previous ad hoc regime applied by the ISU.
  • The ISU also adopted a new Code of Ethics. Interestingly, this maintained a prohibition on events based on betting (which had prompted the original complaint against the ISU’s Eligibility Rules).
  • A new scale of sanctions was put in place to ensure the proportionality of the Eligibility Rules. In the ISU case, the Commission found that the sanctions foreseen for breach of the Eligibility Rules (which originally included a lifetime ban) were disproportionate, especially in light of the relatively short average career span of professional speed skaters. In the authorisation system adopted by the ISU to comply with the Commission’s Decision, much lower sanctions were foreseen for infringing the Eligibility Rules, with the lowest sanction being a warning and up to one year’s suspension for a first-time breach and two years in cases of recidivism.

Of course, each sport will have its own specific issues but the ISU’s remedies should form a template for other sports governing bodies seeking to modernise their rules in accordance with the principles established by the Commission’s Decision.

 

Top takeaways for sports event organisers 

There are also positives for independent sports event organisers. The decision confirms that sports governing bodies do not have the right to apply their rules in an arbitrary manner in order to block the emergence of new events. This ensures that independent organisers have a right to organise events with the same sportspersons. For those seeking to have a new event authorised for inclusion on an international calendar regulated by a sports governing body, the following rights will apply: 

  • An application should be reviewed pursuant to objective, transparent and non-discriminatory procedures. Any sports governing body that does not have such a procedure could be in breach of EU competition law requirements if they fail to put one in place.   
  • An application should be reviewed in a transparent and non-discriminatory manner, with any rejection based on legitimate reasons rather than the commercial interests of the sports governing body. Any conditions for authorisation that discriminate in favour of the sports governing body or serve to protect its financial interests may infringe competition law.  
  • Events should be accommodated on the international calendar in so far as possible, with the risk of any clash to be assessed according to the proposed dates, level of sportspersons to be invited, and location of the proposed event. 
  • The independent sports organiser may be able to propose novelties to the sport, subject to health and safety checks.  
  • Any negative decision must have the possibility of review before an independent body. 

 

Breakaway Leagues? 

The ISU case may also have an impact for any breakaway league from established governance/sporting structures. The ISU decision indicates that sports governing bodies are entitled to prohibit participation in unauthorised events so clubs/athletes in a true breakaway league could be potentially excluded. That said, organisers of a breakaway league may seek to remain within the same regulatory eco-system by obtaining authorisation, but any new format could face calendar conflicts. An issue left unaddressed by the ISU case is to what extent a breakaway league should co-exist with national club competitions. The on-going cases concerning basketball before the European Commission may shed further light on this subject.   

 

Conclusions

The ISU decision and subsequent remedies are currently the subject of an appeal before the EU General Court, with a hearing taking place in June 2020.  The judgment of the EU General Court is expected within 6 to 12 months.  Even if the Commission’s decision is upheld, the remedies show that there is still a wide margin of appreciation for how sports governing bodies act, taking into account the specific nature of their sport. The ISU decision did not bring about the deregulatory model much feared by the Olympic movement. That said, there is no carte blanche and the remedies outlined show how independent organisers can rely upon competition law to ensure fair access.

 

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1 Margrethe Vestager succeeded Joaquín Almunia as Commissioner for Competition on 1 November 2014. 
2 The case number is AT. 40208 (International Skating Union’s Eligibility rules) and publicly available material from the case file is available at:  https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_40208
3 Paragraph 348 of the Commission Decision explains the reasons as to why the ISU escaped a fine in this case: (i) this is the first decision adopted by the Commission concerning rules set by sports governing bodies; (ii) the ISU Eligibility rules have been in place and were publicly known upon their adoption in 1998; and (iii) the ISU is an international sports federation that, besides being involved in commercial activities, acts to promote the sport of speed skating worldwide, including by devolving part of its revenues to the development of the sport.
4 According to paragraph 346 of the Commission Decision, the ISU would be liable for non-compliance payments of up to 5% of its average daily worldwide turnover if it failed to comply with the Commission’s Decision. 
5 ISU Eligibility Rules decision, paragraph 163. 
6 MLex, "Ice-skating chiefs tell EU judges block on Dubai event was legitimate, not anticompetitive" 12 June 2020. 
7 The 2014 ISU Eligibility Rules indicated that "the condition of eligibility is made for the adequate protection of the economic and other interests of the ISU, which uses its financial revenues for the administration and development of the ISU sport disciplines and for the support and benefit of the Members and their Skaters."
8 MLex, "Skating union changes 'severe' event rules after EU antitrust ruling", 30 May 2018. 
9 The specificity of sport, i.e., the distinctive features setting sport apart from other economic activities, such as the interdependence between competing adversaries, will be taken into consideration when assessing the existence of a legitimate objective - Commission Staff Working Document - The EU and Sport: Background and Context - Accompanying document to the White Paper on Sport {COM(2007) 391 final} {SEC(2007)932} {SEC(2007)934} {SEC(2007)936} /* SEC/2007/0935 final, page 68.

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