Menu
Home
Log in / Register
 
Home arrow Law arrow Principles and practice in EU sports law
Source

Collective Selling—an Unresolved Question about the Place of ‘Solidarity’

Champions League provides an important but not exhaustive treatment of the legal issues at stake in the collective sale of rights to broadcast sports events. In fact the Commission was able to avoid the issue which would have shed most light on the extent to which collective selling of rights to broadcast sporting events might be different from collective selling more generally. This concerns the place of solidarity within the sport.

In pursuit of exemption, UEFA advanced an argument founded on solidarity.^ It argued that even though the collective basis on which rights were sold restricted supply-side competition and thereby raised prices paid by buyers above the (aggregate) price that would have been paid for rights sold on an individual basis by clubs, this was justified because the revenue so raised could be used to share income in pursuit of goals of solidarity. There are two distinct forms of solidarity that could feasibly be engaged. ‘Horizontal solidarity’ would refer to redistribution of income, in order to promote a degree of competitive equality designed to promote the appeal of the contest. ‘Vertical solidarity’ would concern the transmission of funding from elite level sport to the ‘grassroots’, in order to promote the general good of the sport.

These are sports-specific concerns: sausage-makers, car-makers, and suppliers of financial services do not support each other financially, nor do they subsidize amateur sausage-makers, amateur car-makers, or amateur suppliers of financial services. The question is whether sport is special enough for the interest in solidarity to play a legitimate role in the interpretation and application of EU competition law.

In Champions League the Commission was able to dodge the question. In response to UEFA’s reliance on its interest in promoting solidarity, the Commission accepted the desirability of promoting a balance between clubs playing in a League. It also accepted the value in encouraging the supply of young players. These objectives may be realized by cross-subsidy from rich clubs to poor. This, of course, loudly echoes and is in line with Bosman.n6 The Commission expressed itself in favour of the ‘financial solidarity’ principle, and referred to its endorsement in the Nice Declaration on Sport. The legal question, however, was whether the quest for

116 Bosman (n 2). See ch 4.

improved solidarity in the sport could override the damage done to the market by the restrictions on supply-side competition which lie at the heart of a system of collective selling. In Champions League the Commission did not need to answer this question, because it had already decided that the anti-competitive implications of the arrangements that brought them within the scope of Article 101(1) TFEU were outweighed by the economic benefits of the deal, such as the single identifiable brand and the reduction in transaction costs consequent on the single source of sale, which justified exemption pursuant to Article 101(3). That meant the Commission was able to deal with the matter without looking beyond the orthodox scope of Article 101. It did not need to ‘stretch’ the analysis to consider also the impact on solidarity in the sport. And, not needing to do so, it did not do so, and it chose not to offer any view on the merits of UEFA’s reliance on solidarity as a reason to exempt an anti-competitive deal. Nor was the matter treated any more fully in the German or English decisions.

The question would require an answer if a collective selling arrangement were devised which did not generate economic benefits of a type that justified exemption pursuant to Article 101(3) TFEU. If the interest in promoting solidarity were regarded as enough for such commercial practices to be given a green light, then this would amount to a striking recognition that sport is truly special.

This is intriguing. As long ago as the Helsinki Report on Sport, published in 1999,[1] [2] [3] the Commission, emphasizing a ‘European Sports Model’ characterized by the notion of solidarity (among other features), mentioned tentatively the worth of an inquiry into ‘the extent to which a link can be established between the joint sale of rights and financial solidarity between professional and amateur sport, the objectives of the training of young sportsmen and women and those of promoting sporting activities among the population’. In 2001 Mr Monti, the Commissioner responsible for Competition, cautiously suggested that ‘financial solidarity between clubs or between professional and amateur sport’ could be a relevant factor in assessing whether to grant an exemption to collective selling.n8

In the same vein, the Nice Declaration, to which the Commission made reference in Champions League, includes the following:

15. The sale of television broadcasting rights is one of the greatest sources of income today for certain sports. The European Council thinks that moves to encourage the mutualisation of part of the revenue from such sales, at the appropriate levels, are beneficial to the principle of solidarity between all levels and areas of sport.n9

The Commission’s 2007 White Paper maintained a tone of cautious receptivity to the virtue of solidarity as an organizational principle in sport allied to unwillingness to be legally precise.00 It noted that in sport ‘media rights are sometimes sold collectively by a sport association on behalf of individual clubs (as opposed to clubs marketing the rights individually)’, adding that although this raises competition concerns, ‘the Commission has accepted it under certain conditions’. It then stated:

Collective selling can be important for the redistribution of income and can thus be a tool for achieving greater solidarity within sports. The Commission recognises the importance of an equitable redistribution of income between clubs, including the smallest ones, and between professional and amateur sport.[4] [5] [6] [7]

In its 2011 Communication the Commission described the collective selling of media rights as ‘a good example of financial solidarity and redistribution mechanisms within sports’. It recommended that sport associations ‘establish mechanisms for the collective selling of media rights to ensure adequate redistribution of revenues’ but added too that this shall be ‘in full compliance with EU competition law’.i22

But what exactly is required to achieve ‘full compliance with EU competition law’?

One could imagine in law that, drawing (as is thematically usual) on the Wouters formula,03 it would be argued by governing bodies that it is necessary to achieve the objectives of intensified solidarity in sport by creating a system of restricted competition that, given its true context, is not in fact within the scope of Article 101 TFEU at all. The window through which special sensitivity to sport enters the analysis might be dressed by assertion of the horizontal influence in competition law of Article 165 TFEU’s direction that sport has a ‘specific nature’ that must be taken into account; and that Article 165(2) TFEU’s direction that Union action shall aim at ‘promoting fairness and openness in sporting competitions’ should count in favour of treating redistributive arrangements put in place as a basis for finding in favour of the legality of restrictions on competition.

The argument is not without merit, and structurally it is in line with Wouters. It must be cautioned that any chance of success would be conditional on demonstration that solidarity is in fact the aim of the selling arrangements and that schemes are in place effectively to deliver it. That is, the claim would certainly fail if it were revealed that this was in truth simply a means to maximize income—and so it would certainly fail if advanced by a breakaway ‘closed’ League of the type considered in Chapter 10.11. But even assuming the vitality of arguments about solidarity, a major problem is that what this in fact entails is that third parties, broadcasters, shall be required to pay for sport’s internal interest in promoting solidarity. The restriction on competition caused by the collective agreement between clubs causes a diminution in choice and an increase in price. The system may indeed allow clubs to raise more revenue than would otherwise be possible and to distribute that income horizontally, among competing clubs, and vertically, to the grass roots, but the fundamental question is just why sport should be permitted to improve its position at the expense of third parties, a category here covering both existing broadcasters and potential broadcasters kept out of the market by the restrictions imposed on supply and ultimately viewers required to pay more to watch matches. Solidarity could be promoted without collective selling: it would be permissible and, if solidarity is truly a sporting concern, rational for participant clubs to work together to distribute proceeds from individually sold matches in a manner which reflects the collective need to sustain healthy competition and to nurture the grass roots. True, the sums raised would not be so high as under a collective scheme, but the prices paid by broadcasters would be dictated by competition in the market that is not restricted on the supply-side. That would be to argue that the sports-specific anxiety to sustain solidarity would and should come into play only after third party broadcasters have enjoyed the right to participate in a ‘normal’ competitive market for the sale of rights. Sport should find other means to promote solidarity which do not impose costs on third party broadcasters and ultimately on consumers, such as internally arranged sharing of income. It would only be if it can be shown that this is simply not feasible—perhaps because a sufficient majority among clubs cannot be assembled under the league’s constitution—that collective selling that lacks features necessary for Article 101(3) TFEU exemption could plausibly be treated as lawful under EU law. In conclusion, the point was left deliberately open in Champions League and it remains open today, but the prejudicial effect of such arrangements on third parties is probably enough to rule out even this window of opportunity to save collective selling that, unlike Champions League, cannot satisfy the criteria for exemption set out in Article 101(3) TFEU.

  • [1] COM (1999) 644 and 644/2. See Ch 6.4.
  • [2] Speech delivered in Brussels at a conference on ‘Governance in Sport’, 26 February 2001, available as Speech/01/84 via accessed 29November 2016.
  • [3] See Ch 6.3: the full text of the Nice Declaration on Sport is at accessed 29 November 2016.
  • [4] White Paper on Sport, COM (2007) 391, 11 July 2007, available via accessed 29 November 2016. See Ch 6.5.
  • [5] White Paper on Sport (n 120) 17.
  • [6] Commission Communication, ‘Developing the European Dimension in Sport’ COM (2011)12 (January 2011) 8 accessed 29 November 2016. See Ch 6.11.
  • [7] Wouters (n 79). See Ch 5.
 
Source
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel