Sporting Justifications under EU Free Movement and Competition Law: The Case of the Football ‘Transfer System’

• Date: 01 March 2015
• Published date: 01 March 2015
• Author: Geoff Pearson
• DOI: http://doi.org/10.1111/eulj.12110

Sporting Justif‌ications under EU Free

Movement and Competition Law:

The Case of the Football ‘Transfer System’

Geoff Pearson*

Abstract: Governing bodies have signif‌icant autonomy in the organisation of profes-

sional sport in the EU, a situation now supported by Article 165 TFEU. However the

post-Lisbon competence for sport does not grant any exemption for practices that

infringe fundamental freedoms or competition law; such infringements can only be

justif‌ied where they are a proportionate response to an inherent need in that sport. The

football ‘transfer system’ has been the subject of a series of EU law challenges, but

continues to place obstacles in the way of the free movement of players between Member

States and may restrict the ability of most clubs to compete for the elite players. Court

of Arbitration for Sport decisions in transfer dispute cases have entrenched this situation,

and recent evidence casts doubt on both the ability of the authorities to justify the current

system and the 2001 decision by the European Commission to sign it off as being an

acceptable balance between the rights of the stakeholders.

I Introduction

Free movement of workers across national boundaries is one of the four fundamental

freedoms of EU law.1Although rules of public authorities preventing workers migrat-

ing between Member States were its original focus, in a series of decisions following

the case of Walrave2the Court of Justice of the European Union (CJEU) has ruled

that the freedom now equally applies to private parties engaged in the collective

regulation of economic activities.3Similarly, CJEU jurisprudence following Bosman4

* Senior Lecturer, Management School, University of Liverpool, Chatham Street, Liverpool L69 7ZH,

UK, Email: pearsong@liv.ac.uk. I am grateful to Professor Stephen Weatherill for his comments on an

earlier draft of this work. Thanks also to the two anonymous European Law Journal reviewers for their

constructive and helpful feedback.

1B. Bercusson, European Labour Law (Cambridge University Press, 2009), at 357; C. Barnard, The

Substantive Law of the EU: The Four Freedoms (Oxford University Press, 2013).

2Case 36/74 Walrave and Koch v. Union Cycliste Internationale [1974] ECR 1405.

3H. Schepel, ‘Constitutionalising the Market, Marketising the Constitution, and to Tell the Difference:

On the Horizontal Application of the Free Movement Provisions in EU Law’, (2012) 18/2 European

Law Journal 177–178; J. Snell, ‘Private Parties and Free Movement of Goods and Services’, in M.

Andenas and W. Roth (eds), Services and Free Movement in EU Law (Oxford University Press, 2002),

at 244.

4Case 415/93, Union Royale Belge des Sociétés de Football Association ASBL v. Jean-Marc Bosman

[1995] ECR I-04921.

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has also developed free movement law beyond its original focus on practices that

discriminated on the grounds of nationality to embrace a wider non-discriminatory

‘prohibition on restrictions’ or ‘obstacles’ test that prohibits any barriers to individ-

uals moving across EU borders to pursue employment.5Measures directly impeding

market access have to be justif‌ied even if they do not discriminate against foreign

interests.6Therefore, any national laws or ‘private’ industry regulations or practices

that seek to limit the ability of nationals from one Member State to work, or seek

work,7in another Member State will potentially be incompatible with Article 45 of the

Treaty on the Functioning of the European Union (TFEU).

However, for professional footballers, the freedom to move to an EU employer of

their choice remains severely curtailed. Players midway through a contract

with a club in one Member State who wish to move to a club in another will

f‌ind a number of barriers in their way. First, s/he8will only be able to move clubs in

less than four months of any given year. Second, s/he will only be able to move with

the consent of the current employer, which is unlikely to be given without the desired

new club paying a fee which may amount to tens of millions of Euros. If the player

attempts to move without the consent of her/his existing employer, then s/he has only

15 days in the year to do this, the new club will need to pay an uncertain amount of

compensation, and if the player is in the early stages of her/his contract, s/he will also

serve a suspension from playing football. Younger players will have signif‌icantly less

freedom than older players and will even be subject to some restrictions following the

conclusion of their employment contract.9In economic terms, this means that elite

players will be restricted to moving to a small number of clubs in a handful of EU

states, which may exclude their nation of origin. This in turn may have an impact on

competition law by reducing the ability of the vast majority of EU clubs to compete

in the market for the best players.

Among the EU workforce, the restrictions on free movement for footballers10 are

mirrored only by similar restrictions in other professional sports,11 but this situation

is only part of the story. Of equal signif‌icance is the fact that the football ‘transfer

system’ has been the focus of both the CJEU and the European Commission on

5C. Barnard, The Substantive Law of the EU,281n1supra; P. Craig and G. De Burca, EU Law (Oxford

University Press, 2011), at 731, 762; M. Maduro, ‘Harmony and Dissonance in Free Movement’, in

M. Andenas and W. Roth (eds), Services and Free Movement in EU Law (Oxford University Press,

2002), at 41, 60; W. Roth, ‘The European Court of Justice’s Case Law on Freedom to provide Services:

Is Keck Relevant?’ in M. Andenas and W. Roth (eds), Services and Free Movement in EU Law (Oxford

University Press, 2002), at 1, 2; J. Snell and M. Andenas, ‘Exploring the Outer Limits: Restrictions on

Free Movement’, in M. Andenas and W. Roth (eds), Services and Free Movement in EU Law (Oxford

University Press, 2002), at 69, 81.

6J. Snell and M. Andenas, Restrictions on Free Movement, 117 n 5 supra.

7Case 85/96 Martinez Sala v. Freistaat Bayern [1998] ECR I-2691, para 32.

8Although professional football in the EU is dominated by male players and leagues, there are an

increasing number of women’s professional leagues.

9This paper will not address potential discriminatory claims under Council Dir 2000/78/EC establishing

equal treatment in employment on the grounds of age.

10 Transfer fees diminish the capacity of workers to enjoy their free movement rights (K. Groenendijk

et al., ‘Annual Review on the Free Movement of Workers in Europe 2010–2011’, European Commission

2012, 104), which should be contrasted with a lack of labour mobility overall—free movement of

professional footballers within the EU is actually increasing (M. Dalziel et al., ‘Study on the Assessment

of UEFA’s “Home Grown Player Rule”’, European Commission, 2013).

11 See K. Groenendijk et al., ‘European Report on the Free Movement of Workers 2011–2012’ (European

Commission, 2013).

March 2015 The Case of the Football ‘Transfer System’

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