Competition | UK Regulatory Outlook October 2024

Competition and sport

FIFA has said it will negotiate changes to its rules on the transfer of players, after the EU's Court of Justice said the rules are not in line with competition and free-movement laws. This is only the latest instalment in the long-running saga involving various sports authorities and competition regulators. We are closely tracking a number of these developments. Please see our previous Insights on the independent regulator for English football, Manchester City v Premier League and the European Super League for more detail.

On 4 October, the ECJ ruled that some aspects of FIFA's transfer rules regarding financial compensation and imposing additional sporting sanctions on both club and player in case of early contract termination without "just cause" are incompatible with the guarantee of freedom of movement and EU competition law. As a result FIFA has opened a global dialogue on the transfer system, involving key stakeholders, to adapt article 17 of the Regulations on the Status and Transfer of Players.

As an initial measure, FIFA has already invited key stakeholders, including representatives from the European Club Association, FIFPRO and the World Leagues Association, to analyse the conclusions to be drawn from the decision of the ECJ in the Diarra case. Additionally, FIFA has established a platform that will enable all interested parties to submit feedback by 15 November 2024 as part of the consultation process.

FIFA sees the Diarra decision as an opportunity to keep modernising its regulatory framework, which has been one of the declared objectives of the FIFA president since 2016. As part of this dialogue, it has indicated that it will consider "parameters to calculate compensation for breach of contract, sanctions for breach of contract and a mechanism to issue the International Transfer Certificate".

Several competition authorities have undertaken reviews of various sports. This has included new sporting competitions (such as the European Super League) and the rules of a number of sporting organisations (football authorities being a prime candidate here but competition authorities have also addressed the rules of World Sailing and the International Skating Union). It is clear that businesses are unable to use the often quoted justifications of sport having certain specific characteristics that make the imposition of seemingly anti-competitive rules proportionate and necessary.

The future of competition

Both the UK and EU are assessing their respective approaches to the regulation of competition. On the EU side this is covered by the Draghi report on "The Future of European Competitiveness" and the UK has published a consultation on its green paper – "Invest 2035: The UK’s Modern Industrial Strategy".

The Draghi report contains a number of recommendations in relation to competition policy aimed at ensuring that competition law is not "a barrier to Europe's goals", while still maintaining the benefits that can be brought about by competition. The recommendations set out in the Draghi report are not legally binding. Ultimately, it will be up to Ursula von der Leyen and the new Commission to decide how many of them will be taken forward. However, the “mission letters” for the new Commissioners-designate, which were released on 17 September 2024, make it clear that all Members of the College should draw on the recommendations of the Draghi report in the context of their individual missions.

The publishing of the UK's green paper on its modern industrial strategy was preceded by Keir Starmer, the prime minister, who was addressing the investment summit in London, stating an intention to “rip up the bureaucracy that blocks investment" and "make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does." In the days following this several senior regulators publicly claimed that their work was entirely consistent with this growth mission.

However, the green paper is markedly different from these comments by the PM. The green paper discussed how "competition policy creates incentives for businesses to innovate" and states that the government will "investigate ways to boost competition… whether through competition law and economic regulation, or through integrating competition considerations into other government policies".