The Court of Justice: MOTOE

The ruling in which the Court was enabled to engage more closely with choices about governance in sport which carried with them direct commercial consequences for the organizing body involved is Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio.24 The ruling, conveniently abbreviated to MOTOE, is a decision of the Grand Chamber of the Court of Justice and so it carries a high level of authority.

The sport is motorcycling; the territory is that of Greece. MOTOE was the Greek Motorcycling Federation. It was a non-profit-making association governed by private law. Under Greek law state authorization was required to organize motorcycling competitions. MOTOE had asked for authorization. But it had been refused.

The Greek State had not acted unilaterally in refusing MOTOE. Greek law provided that authorization would be granted only after consent had been secured from the official representative in Greece of the Federation Internationale de Motocyclisme (the International Motorcycling Federation). That official representative was ELPA (Elliniki Leskhi Aftokinitou kai Periigiseon, Automobile and Touring Club of Greece). It too organized sporting competitions in Greece. ELPA had entered into negotiation with MOTOE. It had supplied MOTOE with information about regulations which had to be observed in the planning of competitions and had asked MOTOE for information about the events which MOTOE planned to organize. But ELPA did not give its consent. The Greek State therefore did not authorize MOTOE to proceed to organize motorcycle competitions.

MOTOE claimed it was the victim of unlawful treatment by the Greek State. It sought compensation before the Greek courts. As a matter of EU law its claim was that a violation of what were then Articles 82 and 86(1) of the Treaty Establishing the European Community (EC), which are now Articles 102 and 106(2) TFEU, had occurred. MOTOE argued, in short, that the Greek law in question conferred [1] [2]

on ELPA a position of dominance over the organization of motorcycle events in Greece which, MOTOE claimed, ELPA had abused by refusing to grant consent to MOTOE. So both the state and ELPA were accused of action in violation of EU law.

MOTOE reached the Court of Justice in Luxembourg as a preliminary reference made by the Diikitiko Efetio Athinon.

The Court found it relatively easy to decide that ELPA occupied a dominant position for the purposes of (what is now) Article 102 TFEU. Cases involving occupation of an alleged dominant position frequently involve complicated and contested analysis of market structure and market power in order to ascertain whether a commercial undertaking which is economically powerful has crossed a threshold which confers on it a ‘power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’^ Acquisition of such power is not of itself a basis for legal intervention. But at that point the threat to competition in the market causes the undertaking to be loaded with a ‘special responsibility not to allow its conduct to impair genuine undistorted competition’^6 In the precise terms of Article 102 it must not abuse its dominant position. The identification of a dominant position will commonly be relatively straightforward in application to governing bodies in sport. The whole point of the governing body’s existence is to claim monopoly power: one of the features that makes sport special is the presence of a single body that is responsible for setting common rules that ensure the sport maintains a global integrity. This is then typically enforced by a continentwide association, below which lie national associations. All hold monopoly power under the ‘pyramid’ structure of governance according to which most sports with aspirations to global relevance operate^7 It is conceivable that on occasion a sports governing body may hold monopoly power because it supplies a product or service which consumers regard as ‘standing alone’, incapable of being replaced by an alternative.28 It is, however, entirely normal that such a body is not in competition with other suppliers of rules. This was ELPA’s role in Greek motorcycling. The relevant market identified by the Court was the ‘functionally complementary’29 organization of motorcycling events allied to their commercial exploitation by means of sponsorship, advertising, and insurance contracts on Greek territory.[3] [4] [5] [6] [7] [8]

ELPA dominated that market as a sports regulator equipped with the statutory protection conferred on it by Greek law.[9] [10] [11] [12] [13]

A clutch of other attempts to resist the application of Article 102 TFEU to the lex sportiva and, in particular, to the Greek system for authorizing motorcycling met a fate that should be familiar to the reader of this book. Chapter 4 showed how the Court in Bosman systematically dismantled a series of pleas designed to shelter sporting autonomy from EU law, and a similar pattern is found in MOTOE, albeit in connection with competition law, not free movement. The Treaty rules on competition apply to an ‘undertaking’. The concept of ‘undertaking’ goes undefined in the Treaty, but it has been consistently interpreted by the Court to involve engagement in economic activity, and neither legal form nor the method of financing is of significance. It is a functional test.32 Accordingly attempts to place ELPA beyond the reach of the EU’s competition rules failed. A body performing public functions and fulfilling (more or less well) defined social tasks which also carry economic implications may not count as an ‘undertaking’ where the activity is not pursued in the market in actual or potential competition with other economic operators. An example drawn from the Court’s case law is institutions dealing with air traffic controls But providing facilities for which airlines pay constitutes an economic activity^4 And in MOTOE the reference made by the Diikitiko Efetio Athinon stated that ELPA’s activities were not limited to purely sporting matters—it was not a ‘pure regulator’. It also engaged in economic activities such as entering into sponsorship, advertising, and insurance contracts. These activities generated income for ELPA. Moroever it organized its own sporting events. ELPA was engaged in ‘the organisation and commercial exploitation of motorcycling events’S Even if its stated objectives were non-profit making, its activities potentially coexisted with those of other operators seeking to make a profit. It was an ‘undertaking’ and accordingly it could not operate autonomously of EU competition law.

The final seawall swept away by the Court’s broad jurisdictional interpretation of Article 102 TFEU was an appeal that the Treaty competition rules apply only on condition that trade between Member States is affected. This is correct, but the Court pointed out that even where the undertaking’s conduct appears to relate only to a single Member State it is perfectly possible that it may ‘have the effect of reinforcing the partitioning of markets on a national basis, thereby holding up the economic interpenetration which the Treaty is designed to bring about’S In her

36 ibid para 42 of the judgment.

Opinion Advocate General Kokott followed the Commission: ‘the business of sport is becoming international’.[14] [15] [16] The Greek rules hindered that evolution by deterring non-Greek undertakings from operating on Greek territory and, since their actual or potential effect was, as a result, not felt solely on Greek territory, the Court held that they fell within the scope of EU law.

ELPA held a dominant position in the market for supply and the commercial exploitation of motorcycling events on Greek territory. But had it abused that position of power?

In short, it had. The key to the Court’s condemnation of ELPA’s practices as a sports regulator is felicitously captured by a phrase which the Court does not explicitly adopt, but which is used by Advocate General Kokott in her Opinion: there is a conflict of interest^ ELPA organizes and markets motorcycling events; it is granted a power under Greek law to decide whether other suppliers shall be allowed to enter the Greek market in circumstances where its own economic interests are directly engaged by the decision. These are the germs of abuse within the meaning of Article

102 TFEU.

The Court insisted that a ‘system of undistorted competition, such as that provided for by the Treaty, can be guaranteed only if equality of opportunity is secured as between the various economic operators’.39 This was missing in the circumstances before it, given ELPA’s privileged position. It has ‘an obvious advantage over its competitors’; its right may lead it ‘to deny other operators access to the relevant market’.[17] [18] It could ‘distort competition by favouring events which it organises or those in whose organisation it participates’^1

The Court noted that a violation of Article 102 TFEU occurs where rights of the type conferred on ELPA are liable to create a situation in which that undertaking is led to commit such abuses; or where they give rise to a risk of an abuse of a dominant position.42 The judgment comes very close to an approach that can be termed ‘inevitable abuse’. The identification of a dominant position is in principle distinct from a determination whether that dominant position has been abused, but where it has been found that in practice the conditions that lead to the creation of a dominant position carry with them an inevitable slide into abusive conduct, then the formal separation between the identification of a dominant position and the finding of its abuse loses practical bite. The one leads to the other. This lies at the heart of the Court’s approach in MOTOE. This is not unique to sport. The Court in MOTOE carefully cited other rulings in EU competition law, remote from sport, which tack close to the notion of ‘inevitable abuse’.43 Decisions subsequent to MOTOE too show that this is a reflection of general EU competition law. So, for example, in OTOC the Court drew on MOTOE in insisting on the importance of preserving an equality of opportunity among economic operators in a context where a chartered accountants’ body which provided professional training was able to decide on whether to issue a licence to would-be competitors.44 It is, however, a model likely to be found in sport relatively readily, given the orthodox pattern whereby the regulator is attributed monopoly power to set rules. The problem, however, is not the creation of centralized regulatory power: the problem is its exploitation to serve the commercial interests of the regulator. Put another way, EU law is suspicious of the operation in practice of the lex sportiva, not its attachment in principle to a top-down rule-making governance model.

A few years before MOTOE the Commission had hinted at similar concerns in its decision in FIA (Formula One)4 Part of the Commission’s objections in FIA targeted rules that provided a financial disincentive for contracted broadcasters to show motor sports events that competed with Formula One. The Commission announced itself satisfied with a solution according to which the FIA relaxed its grip by releasing broadcasters to make their own commercial choices about which events to show. MOTOE takes the matter on to a more authoritative plane. Moreover, it is a ruling of the Grand Chamber.

  • [1] ibid para 46.
  • [2] 24 Case C-49/07 Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio [2008]ECRI-4863.
  • [3] eg Case 27/76 United Brands and United Brands Continentaal v Commission [1978] ECR 207;Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461; Case 322/81 Nederlandsche Banden-Industrie-Michelin v Commission [1983] ECR 3461, all cited at MOTOE (n 24) para 37. See alsoCommission Notice on the definition of relevant market [1997] OJ C372/5.
  • [4] 26 Case 322/81 Michelin v Commission [1983] ECR 3461, para 57.
  • [5] Boxing is an exception: some major North American sports are also different.
  • [6] The narrowest market definition of all is found in the Commission’s Decision on the 1998Football World Cup in which the market for match tickets for the tournament stood alone from theperspective of the consumer: Comm Dec 2000/12 1998 Football World Cup [2000] OJ L5/55, according to which the organizers were fined for discriminatory practices in violation of EC, Art 82 nowTFEU, Art 102. See also Ch 11 for narrow market definition in broadcasting.
  • [7] MOTOE (n 24) para 33 of the judgment.
  • [8] At ibid para 60, Opinion of Kokott AG, she raises the (perfectly logical) possibility that the market may extend beyond motorcycling, but the Court does not pursue this.
  • [9] TFEU, Art 106(2) allows Member States to confer exclusive rights which may be damaging to thecompetitive process in so far as they promote the operation of services of general economic interest, butthe conditions for reliance on this provision were clearly not satisfied in the case.
  • [10] 32 eg Case C-41/90 Hofner and Elser [1991] ECR I-1979; Joined Cases C-264/01, C-306/01,C-354/01, and C-355/01 AOKBundesverband and others [2004] ECR I-2493, all cited in MOTOE(n 24) para 21 of the judgment.
  • [11] eg Case C-364/92 SAT Fluggesellschaft [1994] ECR I-43; Case C-82/01 P Aeroports de Paris vCommission [2002] ECR I-9297, both cited at MOTOE (n 24) para 24.
  • [12] Case C-82/01 P Aeroports de Paris v Commission [2002] ECR I-9297, paras 68—83, cited atMOTOE (n 24) para 24.
  • [13] ibid para 26 of the judgment.
  • [14] ibid para 66, Opinion of Kokott AG. In similar vein, aid to relatively small football clubs has beentreated as having an effect on inter-state trade within the meaning of TFEU, Art 107: see eg SA.40168
  • [15] Willem II, especially paras 15, 39—40; SA.41614 Den Bosch, paras 7, 62—63.
  • [16] 38 MOTOE (n 24) para 98, Opinion of Kokott AG. 39 ibid para 51 of the judgment.
  • [17] ibid. The Court cites, as analogies, Case C-202/88 France v Commission [1991] ECR I-1223; andCase C-18/88 GBInno BM [1991] ECR I-5941.
  • [18] MOTOE (n 24) para 52 of the judgment. 42 ibid para 50 of the judgment. 43 eg Case C-41/90 Hofner and Elser [1991] ECR I-1979; Case C-260/89 ERT [1991] ECR I-2925; Case C-179/90 Merci convenzionaliporto di Genova [1991] ECR I-5889; Case C-323/93 Centred’insemination de la Crespelle [1994] ECR I-5077; Case C-380/05 Centro Europa 7[2008] ECR I-0000,
 
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