European Commission Ruling Has Potential to Upend ISU Eligibility Rules

by George S. Rossano

(5 October 2016)

European Commission Issues Statement of Objections to ISU in Antitrust Case, ISU Responds

In October 2015 the European Commission opened an anti-trust investigations into the eligibility rules of the ISU. This investigation was launched as a result of a complaint from two Dutch speed skaters. The heart of the investigation is whether ISU eligibility rules violate antitrust laws by restraining athletes from engaging in their profession by limiting who can organize skating events that include the participation of ISU eligible skaters.

The details of this investigation were announced in the following release from the European commission in October 2015

Antitrust: Commission opens formal investigation into International Skating Union's eligibility rules

Brussels, 5 October 2015

The European Commission has opened a formal antitrust investigation into International Skating Union (ISU) rules that permanently ban skaters from competitions such as the Winter Olympics and the ISU World and European Championships if they take part in events not approved by the ISU.

The investigation follows a complaint by two Dutch ice speed skaters, Mark Tuitert and Niels Kerstholt. The Commission will in particular investigate whether ISU rules are unduly preventing athletes from exercising their profession by putting disproportionate and unjustified obstacles in the way of companies not linked to the ISU that want to organise alternative ice-skating events. Indeed, ISU rules threaten athletes who participate in such events with a lifetime ban. This may prevent alternative event organisers from entering the market or drive them out of business. If confirmed, such practices could constitute anti-competitive agreements and/or an abuse of a dominant market position in breach of EU antitrust rules.

EU Commissioner in charge of competition policy Margrethe Vestager said: "For many, sport is a passion – but it can also be a business. We recognise and respect the role of international sports federations to set the rules of the game and to ensure proper governance of sport, notably in terms of the health and safety of the athletes and the integrity of competitions. However, in the case of the International Skating Union we will investigate if such rules are being abused to enforce a monopoly over the organisation of sporting events or otherwise restrict competition. Athletes can only compete at the highest level for a limited number of years, so there must be good reasons for preventing them to take part in events."

"The Commission has decided to pursue this investigation because it raises specific allegations of breaches of competition law at the international level rather than wider issues of internal governance or rule-making in a sport federation."

The opening of proceedings does not prejudge in any way the outcome of the investigation.

Background

The ISU is the sole body recognised by the International Olympic Committee (IOC) to administer the sports of figure skating and speed skating on ice. Its members are national ice-skating associations.

Sporting rules are subject to EU antitrust rules when the body setting the rules or the companies and persons affected by the rules are engaged in an economic activity. On the basis of EU Court case law, sporting rules are compatible with EU law if they pursue a legitimate objective and if the restrictions that they create are inherent and proportionate to reaching this objective. This assessment can be performed by national courts, national competition authorities, particularly vis-à-vis national bodies, and by the Commission, especially in the case of practices at international level.

Many disputes about sporting rules raise primarily issues related to governance of the sport, i.e. relations between different stakeholders belonging or being closely connected to the structure headed by sports federations. Such disputes can usually be best handled by national courts rather than by the European Commission. The same goes for disputes resulting from the application of sporting rules to individuals, e.g. athletes being sanctioned for breach of relevant anti-doping or match-fixing regulations, that are best handled by relevant arbitration bodies or national courts.

Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit respectively anticompetitive agreements and the abuse of dominant market positions. The implementation of these provisions is defined in the EU's Antitrust Regulation (Council Regulation No 1/2003), which can also be applied by national competition authorities.

Article 11(6) of the Antitrust Regulation provides that the initiation of proceedings by the Commission relieves the competition authorities of the Member States of their competence to also apply EU competition rules to the practices concerned. Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated.

The Commission has informed the ISU, the complainants and the competition authorities of the Member States and of Switzerland that it has opened proceedings in this case.

There is no legal deadline to complete inquiries into anti-competitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence.

More information is available on the Commission's competition website, in the public case register under the case number AT.40208

On 27 September 2016 the European Commission released its initial findings and issued a statement of objections to the ISU. These initial findings find in favor of the athletes, but do not constitute a final decision on this case. The statement of objections follows.

Antitrust: Commission sends Statement of Objections to International Skating Union on its eligibility rules

Brussels, 27 September 2016

The European Commission has informed the International Skating Union (ISU) of its preliminary view that the ISU rules under which athletes face severe penalties for participation in unauthorised speed skating events are in breach of EU antitrust rules.

The ISU eligibility rules ban skaters from international speed skating events such as the Olympic Games or the World Championship, if they participate in international speed skating events that are not approved by the ISU. If skaters break these rules, they can face up to a life-time ban. The Commission's preliminary view is that the rules restrict the athletes' commercial freedom unduly and result in a situation where they are not willing to participate in speed skating events other than those organise by the ISU or its members (national federations). This prevents new entrants from organising alternative international speed skating events because they are unable to attract top athletes.

Commissioner Margrethe Vestager, in charge of competition policy, said: "International sports governing bodies play a unique role in setting the rules of the game and ensuring standards of conduct. They are responsible for both the health and safety of athletes and for the integrity of competitions. We have concerns that the penalties the ISU imposes on skaters through its eligibility rules are not aimed at preserving high standards in sport but rather serve to maintain the ISU's control over speed skating. The ISU now has the opportunity to reply to our concerns".

The Commission opened proceedings in relation to the ISU's eligibility rules in October 2015 following a complaint by two Dutch professional speed skaters, Mark Tuitert and Niels Kerstholt.

The Commission's concerns are outlined in a Statement of Objections addressed to the ISU. The sending of a Statement of Objections does not prejudge the outcome of the investigation.

The Commission's concerns

The Commission takes the preliminary view that the penalties set out in the ISU Eligibility rules restrict the commercial freedom of athletes and prevent new organisers of international speed skating events from entering the market because they are unable to attract top athletes.

If an athlete participates in an unauthorised event, the athlete faces a range of penalties leading potentially to a life-time ban from all key international speed skating competitions. The career span of a professional athlete is considerably limited in time. As a result athletes cannot risk losing the possibility of participating in events such as the Olympic Games, the World Championships or the European Championships, as this would be extremely damaging and possibly even put an end to their speed skating career.

The Commission is concerned that the system of penalties set out by the ISU Eligibility rules, as amended at the ISU Congress in June 2016, remains disproportionately punitive and would prevent non-ISU affiliated players from organising international speed skating competitions. If this concern is proven, the ISU Eligibility rules may breach Article 101 of the Treaty on the Functioning of the European Union (TFEU) that prohibits anticompetitive practices.

Background

Many disputes about sporting rules raise primarily issues related to governance of the sport, i.e. relations between different stakeholders belonging or being closely connected to the structure headed by sports federations. Such disputes can usually be best handled by national courts rather than by the European Commission. The same goes for disputes resulting from the application of sporting rules to individuals, e.g. athletes being sanctioned for breach of relevant anti-doping or match-fixing regulations, which can be handled by relevant arbitration bodies or national courts.

Article 101 TFEU prohibits anticompetitive agreements and its implementation is defined in the Antitrust Regulation (Council Regulation No 1/2003), which can be applied by the Commission and by the national competition authorities of EU Member States.

A Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them. The addressees can examine the documents in the Commission's investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.

There is no legal deadline for the Commission to complete antitrust inquiries into anticompetitive conduct. The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence.

More information is available on the Commission's competition website, in the public case register under the case number AT.40208.

The ISU responded the same day with a statement of its own rejecting the conclusions of the European Commission. The ISU posted on its website the following statement.

ISU believes that the European Commission’s antitrust allegations are unfounded

27 Sep 2016 - Lausanne,

The International Skating Union (ISU) is surprised by the news that the European Commission has adopted a “Statement of Objections” in the course of its antitrust investigation of the ISU’s eligibility rules prohibiting Skaters from participating in unauthorized events that are not on the ISU international calendar.

The adoption of the Statement of Objections by the European Commission is just one of the stages of the antitrust investigation and does not imply that the ISU is responsible or liable for any violation of EU antitrust legislation. The ISU will review the Statement of Objections with care and will respond fully to any allegation of anti-competitive conduct. The ISU believes the claims made by the European Commission to be unfounded.

Any allegation that the ISU’s rules are somehow anti-competitive appears to be based on a misplaced understanding of the governance structure of sport and the Olympic movement. The European Union’s founding Treaty as well as the EU institutions have long recognized the autonomous governance structure of sport as being essential to the protection of the integrity, safety and health in sport. These rules benefit sports organizers, sportspersons and spectators.

The ISU reiterates that independent organizers are able to organize international tournaments on the ISU international calendar. Indeed, the ISU recently authorized an event in the Netherlands to be co-organized by Icederby – the organization which initiated the complaint through two Dutch Skaters. As such, there is no basis for the Commission’s claim that organizers are foreclosed from the market.

It appears then that the European Commission has failed to take adequate account of the importance of the legitimate objectives pursued by the ISU’s eligibility rules. A neoliberal and deregulated approach to sport could destroy the Olympic values underpinning sport. The ISU will show that the specific nature of sports governance as applied in its rules is perfectly compliant with EU competition law.

This case has significant implications for all sports within the Olympic movement and all related national governing bodies.

ISU rules result in ineligibility of skaters who participate in activities not sanctioned by the ISU or involve the participation of ISU ineligible persons. If the initial findings of the Commission are sustained, it would mean that skaters could compete in any event whether sanctioned by the ISU or not, and still also be able to compete in ISU events. Indeed the entire concept of eligible and ineligible could cease to exist. Since most Olympic sports follow the same practices as the ISU regarding eligibility, a ruling against the ISU could impact all sports in the Olympic movement.

Further, the rules of the ISU require that the eligibility rules of ISU members (national governing bodies) be no more restrictive that the rules of the ISU. Thus, a ruling against the ISU would trickle down to the national skating federations who might also have to give up the distinction between eligible and ineligible skaters.

A ruling against the ISU could also have significant financial implications for the ISU, since the ISU generates income from sanction fees for the events it sanctions and TV rights fees for those events which are held by the ISU. U.S. Figure Skating, however, only generates sanction income from its national championships, and not from the hundreds of competitions its member clubs hold each year.

If ISU skaters were freed in a final ruling to appear in non-ISU-sanctioned competitions with no consequences, the need for promoters to obtain an ISU sanction would be eliminated and the associated revenue streams for the ISU cut off.

Finally, a ruling against the ISU has the pot ential to result in multiple competing world or regional championships unaffiliated with the ISU with rules different from those of the ISU, leading to chaos within sporting competition.

As stated by the ISU "A neoliberal and deregulated approach to sport could destroy the Olympic values underpinning sport." More than that, it could destroy the entire organizational structure underpinning international sport.