MOTOE and Review of Sports Governance

MOTOE asserts a power of review over governance arrangements in sport pursuant to EU law. In particular, it focuses on the potentially abusive mix of functions pursued by a sports regulator. The core problem—the conflict of interest—is the leverage of regulatory power to achieve commercial advantage. ELPA had, as Advocate General Kokott notes on several occasions in her Opinion, a dual role.

It is, however, thematically important to reinforce the model of conditional autonomy under EU law. EU law does not wipe out the possibility to sustain the model of governance favoured by sport, which is focused on a single federation for a single territory and, ultimately, at the apex of the ‘pyramid’ of governance, a single global authority. Instead EU law requires that it be shown why such a model is necessary for governance in sport, and in particular it refuses to accept that more objectionable—abusive—aspects of the system’s detailed operation which are not necessary in sport governance may be maintained. So, in line with the thematic investigation contained in this book, EU internal market law is a force for reform in sports governance, but it is not implacably insensitive to the legitimate and all cited in MOTOE (n 24) paras 49 and 50 of the judgment. See R Whish and D Bailey, Competition Law (8th edn, OUP 2015) ch 6.48, dealing in particular with cases on ‘conflict of interest’.

• 44 Case C-1/12 OTOC (Ordem dos Tecnicos Oficiais de Contas), judgment of 28 February 2013, especially para 88.
• 45 COMP 35.163, Notice published at [2001] OJ C169/5.

distinctive concerns of sport. As Article 165 TFEU declares, sport has a ‘specific nature’ and the question here is to fit that into the concept of abuse within Article

102 TFEU.

MOTOE does not demand that the supply of competitive sporting events shall become a wholly unregulated market. Sports governing bodies remain able in principle to arrange the calendar, to decide how many events should be permitted, and to perform a gate-keeping function as far as would-be organizers are concerned. Prior approval is a potentially proper and lawful feature of a governance regime applicable to the staging of sports events. The objection in MOTOE is not to regulation of sport but rather to this system of which MOTOE fell foul, most of all the conflict of interest under which ELPA, equipped with a dual role, laboured.

The Court is properly focused on finding just why the arrangements which it is asked to inspect constitute a violation of EU law, rather than on elaborating in any detail an appropriate model for the future which would conform with EU law. However, there are crumbs within the ruling that suggest the sort of features that would be favourably regarded under a reshaped model of governance. In MOTOE the Court has a clear concern for ‘equality of opportunity ... between the various economic operators’,^{[1] [2] [3]} which was missing in the case of Greek motorcycling because of the advantages enjoyed by ELPA.

The Court noted in particular ELPAs power to give consent to applications for authorization to organize motorcycling events ‘without that power being made subject by that rule to restrictions, obligations and review’Th The problem, then, is primarily the absence of constraint over a decision-making power conferred on ELPA which is contaminated by its conflict of interest.

The Opinion of Advocate General Kokott in MOTOE is characteristically fuller in reflecting on what is allowed rather than simply what is condemned as abusive. She explicitly embraced the virtue of relying on the expertise of governing bodies. She believed there could be ‘no objection if the national legislature provides in certain cases that the relevant authorities should obtain expert advice before granting authorisation for an activity’; this would permit the involvement of sports associations in a way apt to ensure the taking into account of the ‘particular characteristics of sport and of the sport in question’^⁸ Refusal of consent to authorize an event could be justified by objective reasons associated with the need to take precautions to address the safety of the racers and spectators. However, the Advocate General expressly accepted that objective reason for refusing consent need not be restricted exclusively to technical safety requirements.49 She referred to the need for each sport to operate according to rules that are as uniform as possible; for individual competitions in a particular sport to be incorporated into an overarching framework run under a timetable that prevents clashes; and, more generally and citing the Commission’s 2007 White Paper on Sport,5° she approved the pyramid structure

of governance found in most sports which is apt to deliver uniform rules and a uniform timetable.5¹ Sport can certainly be regulated. The objection arises where the structure tips over into one that confers a power to promote the organization’s own economic interest, to the detriment of other potential service providers. That strips away objective justification in the interests of sport and converts the governance arrangements into an abuse. Precisely when this tipping-point is reached requires a close examination of each aspect of the system, not a generalized assessment. This is exactly in line with the Court’s insistence in Meca-Medina on a case-bycase examination. 52 There are and can be no bright lines that limit the reach of EU law, beyond which sporting autonomy reigns supreme: the law of the internal market is by nature a broad, functionally driven system. This is the message of the Commission’s 2007 White Paper on Sport, into which the reasoning in MOTOE could comfortably be integrated. Most of all, for Advocate General Kokott ‘the maintenance of effective competition and the ensuring of transparency require a clear separation between the entity that participates in the authorisation ... of ... events and, where appropriate, monitors them, on the one hand, and the undertakings that organise and market such events, on the other’7³

So what is needed is a separation of function, with the regulatory function focused on what is objectively justified as necessary in the governance of the sport, coupled to decision-making according to objective, non-discriminatory criteria, which are moreover open to review. These are the ‘restrictions, obligations and review’ to which the preliminary reference made by the Greek court refers and on which the Court insists in its ruling.5⁴ Sports federations are not required to give prior approval to new events. They may protect and preserve the structure of the calendar over which they preside and which they have typically created. The key issue is the conduct of the prior approval system. A sports regulator can clearly be centrally involved, indeed exclusively responsible, but the procedure must be shaped in such a way as to reflect and restrain any commercial self-interest on the part of the decision-maker. In addition the procedures and criteria for selection must be transparent, objectively justified, and non-discriminatory on paper and in their practical application and there should moreover be a right to a hearing, a duty to give reasons for decisions taken, and the possibility of review by an independent body; otherwise—abuse. This approach is visible elsewhere in case law dealing with Article 101 TFEU55 and, in fact, it is consistent too with the Court’s approach to the law of free movement, where systems requiring prior approval before a product or service may be marketed can be justified only if the restriction on trade is proportionate to the objective pursued and provided applicable criteria are objective, ^{[4] [5] [6] [7] [8]}

non-discriminatory, and known in advance^^{[9] [10]} The point is that there is a procedural dimension to internal market law generally.5⁷ The concern is to define as tightly as possible the basis of the decision-making process in order to prevent arbitrary or self-motivated choices.

MOTOE, as a ruling requiring adaptation in but not abandonment of established patterns of sports governance, stands with other landmark judgments of the Court concerning sport. In Bosman the very idea of a transfer system was not ruled incompatible with EU law: the particular system of which Bosman was victim was condemned. 58 In Lehtonen a discriminatory transfer window was found to be incompatible with EU law, but the Court did not at all deny that sport may have a particular need for restrictions on the mobility of employees at the sharp end of a season.5⁹ So too Meca-Medina: doping controls were not treated as incompatible with EU law, though rules that were excessive judged with reference to the method of finding an offence or with regard to the severity of penalties would be.6° So in MOTOE the whole notion of regulated access to the market for staging sports events was not ruled unlawful, but rather the particular challenged Greek system, which generated a profound conflict of interest, was condemned as abusive.

Practice will doubtless develop over time.6¹ In October 2015 the Commission announced the opening of an investigation into the eligibility rules of the International Skating Union (ISU)62 and in September 2016 it took the matter on to a more formal level by issuing a statement of objections.6³ The problem lies in the ISU’s treatment of skaters who take part in events that are not approved by the ISU. It reserves the power, conferred on it because it is the sole governing body in the sport recognized by the International Olympic Committee (IOC), to ban such skaters from the Olympic Games and the World Championship. This throws up an obvious conflict of interest: the ISU is able to act in a way that protects and promotes the events which it organizes at the expense of competing suppliers. The ISU has a proper role as regulator of the sport, but the Commission’s view is that it reserves to itself powers that exceed what is necessary for the organization of the sport and maintenance of its integrity.

A sports regulator might choose to surrender completely its commercial activities. This might in fact be the best route to achieving autonomy: it might not even

63 AT.40208 ISU, IP/16/3201, 27 September 2016.

constitute an ‘undertaking’ within the meaning of EU law in such circumstances^[11] and, even if it does, the risk of abuse would be minimized by the elimination of any conflict of interest between regulatory and commercial functions. But EU law, as interpreted in MOTOE, does not go so far as to require that commercial activities be stripped from a sports regulator. It is a conflict of interest of the type of which ELPA was egregiously guilty which raises concerns. They may feasibly be met by structural separation of regulatory and commercial activities within a sports regulator combined with effective procedural safeguards to ensure fairness in the decisionmaking process.

It is the commercial consequences of governance choices made in sport which bring EU law into play. The more the system is shaped by and responsive to the interests of governing bodies and the less the voice of would-be organizers, participant clubs, and athletes is taken into account in the drafting and application of the rules, the more likely it is that an abuse condemned by Article 102 TFEU will be found. This provides the basis for exploration of other aspects of sports governance to discover whether they may be contaminated by an endemic conflict of interest to the extent that they fall foul of EU law.

• [1] MOTOE (n 24) para 51. 47 ibid paras 52, 53 and the operative part of the ruling.
• [2] 48 ibid para 101, Opinion of Kokott AG. 49 ibid para 91, Opinion of Kokott AG.
• [3] 5° See n 11.
• [4] MOTOE (n 24) paras 91—96, Opinion of Kokott AG. See S Weatherill, ‘Is the Pyramid
• [5] Compatible with EC Law?’ (2005) 5(3—4) Intl Sports LJ 3.
• [6] 52 See Chs 5.3, 7.3. 53 MOTOE(n 24) para 102, Opinion of Kokott AG.
• [7] 54 See ibid paras 18, 48, 52, 53 and the operative part of the judgment.
• [8] CaseC-67/96 Albany International BV [1999] ECR I-5751 paras 88—122, especially para 120 onrespect for the expertise of a decision-making body and para 121 on safeguards attached to its decisionmaking process.
• [9] 2 eg Case C-390/99 Canal Satellite Digital SL [2002] ECR I-607, especially para 35; Case C-432/03 Commission v Portugal [2005] ECR I-9665, especially para 50; Case C-219/07 Nationals Raad vanDierenkwekers en Liefhebbers [2008] ECR I-4475, especially paras 33—37; Joined Cases C-458/14 andC-67/15 Promoimpresa srl, judgment of 14 July 2016, especially paras 64—74. 57 cf C Barnard, The Substantive Law ofthe EU: The Four Freedoms (5th edn, OUP 2016) 193—94. 58 Case C-415/93 Union royale belge des societes de football association ASBL v Jean-Marc Bosman[1995] ECR I-4921. See Ch 9. 59 Case C-176/96 Jyri Lehtonen and Castors Canada Dry Namur-Braine ASBL v Federation royalebelge des societes de basket-ball ASBL (FRBSB) [2000] ECR I-2681. 6° Meca-Medina (n 3) para 48 of the judgment. 61 There is a growing body of case law, not only at EU but also at national level: see B Van Rompuy,‘The Role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations’(2015) 22(2) MJ 179, 198-206.
• [10] 2 IP/15/5771, 5 October 2015.
• [11] SATFluggesellschaft (n 33). 2 COMP 37.806 ENIC/UEFA, IP/02/942, 27 June 2002.