On 11 September, The Times reported that the Ligue Nationale de Rugby (“LNR”) had “filed a legal case” with the European Commission challenging World Rugby’s Regulation 9 on player release. According to the report, the LNR is “seeking to strip World Rugby of its power and control”.
In legal terms, it appears that the LNR has filed a complaint with the European Commission, under Art.7 of Regulation (EC) No 1/2003, alleging that World Rugby has infringed EU Competition Law.
The LNR are aggrieved primarily because World Rugby has extended the 2020 autumn international window in response to COVID-19. World Rugby Regulation 9 obliges clubs to release players called up for international duty during the various “release periods”. This normally includes a three-week window in November. However, as a result of the disruption caused by COVID-19, the Northern Hemisphere window was extended to seven weeks, allowing the remaining Six Nations fixtures to be played and giving Unions the opportunity to stage fixtures and generate desperately needed revenue. Of course, this clashes with the (delayed) start of the Northern Hemisphere club season, including that of the LNR.
There are also ongoing discussions about a “global calendar” – an arrangement under which the club and international seasons in the Northern and Southern Hemisphere would become more aligned, reducing the overlap between club and international matches, and promoting meaningful competition at international level. One of the key proposals under consideration is the moving of the July international window to October, creating a longer block of autumn international fixtures and reducing the total number of “release periods” from three to two. Yet, this is the time when the European club game is typically getting underway, and there is resistance from clubs (including those in the LNR) to moving away from their traditional slot.
As such, the LNR appears to be trying to challenge World Rugby on Competition Law grounds. Ahead of the return of international rugby this weekend, this article will consider the LNR’s probable arguments and will explain that it is unlikely to succeed – certainly, its complaint will have no impact on the 2020 autumn fixtures.
What does a European Commission complaint entail?
Under Art.7 of Regulation (EC) No 1/2003, any natural or legal persons who can show a “legitimate interest” are entitled to bring a complaint to the European Commission (the “Commission”) that there has been an infringement of EU Competition Law.
Given that World Rugby Regulation 9 applies to Unions and clubs in the European Union (e.g. France, Ireland, and Italy), and its effects may impact upon trade between Member States, EU law is applicable to the dispute.
The Commission is obliged to examine all complaints submitted in accordance with Art.7 to determine whether it warrants the opening of an investigation.[1] It will consider, among other things, the significance of the alleged infringement against the likelihood of being able to establish it and the extent of the investigative measures required to do so.
If the Commission does decide to investigate, the complainant (here the LNR) will typically have little influence over the Commission or the speed at which the investigation takes place. The Commission will endeavour to inform the complainant of any (investigatory) action it proposes to take within four months of receiving the complaint.[2]
Once the investigation (if any) has taken place, the Commission will move to its decision-making phase, which, after the initiation procedure, will see a formal Statement of Objections sent to the defendant. This may then result in a hearing and a decision against the defendant company (here World Rugby), if the Commission determines that Competition Law has been infringed, and the parties have not already settled. It may impose a fine if the infringement was “intentional or negligent”.[3] However, the defendant may then challenge this decision before the EU courts.
By way of comparison, a complaint against the International Skating Union was lodged with the Commission by two athletes in June 2014. It formally opened proceedings in October 2015 and only sent a Statement of Objections to the ISU in September 2016. In January 2017, the ISU defended its position and in December 2017, the Commission adopted a decision against the ISU. This was challenged before the EU General Court in June 2020 and, at the time of writing, judgment is yet to be handed down – more than six years on from the original complaint.
The LNR’s complaint is unlikely to have any real effect for some time yet, if it has any at all.
Has World Rugby infringed EU Competition Law?
There are two distinct issues which may potentially infringe of EU Competition Law: the player release obligations of World Rugby Regulation 9, and the extension of the November release period in 2020.
Each may potentially be challenged under Arts.101 and 102 of the Treaty on the Functioning of the European Union. There may be scope for arguing that they amount to anti-competitive agreements/decisions (Art.101) or an abuse of dominant position (Art.102).
This is not the first time that such questions have been asked. In the early 2000s, football saw a similar debate. The group of European football clubs known as the G-14 were unhappy at the fact they had to release their players for UEFA competitions without compensation and were often left with injured players afterwards. A legal challenge was launched by Belgian club Sporting du Pays de Charleroi, backed by G-14, arguing that FIFA’s equivalent rules on player release were an abuse of dominant position (i.e. a violation of Art.102).[4] The case was referred to the European Court of Justice but was settled out of court in 2008 after FIFA and UEFA agreed to make payments to clubs providing players for the European Championships and to limit the number of qualifying games for the tournament.
It may now be rugby’s turn.
1. World Rugby Regulation 9
World Rugby Regulation 9 compels clubs to release players selected for international duty during release periods. In Europe, outside of the Rugby World Cup and Lions Tours, there are typically three release periods: seven weeks for the Six Nations (February – March), three weeks for the Summer Tours (July) and three weeks for the Autumn Internationals (November). The Six Nations and Autumn Internationals clash with the European club season – there is no “international break”, like in football. Yet, clubs are not entitled to compensation for releasing their players, though Unions are now required to have insurance in place to cover the cost of the player’s club salary if the player is injured and cannot play for the club (temporarily or permanently).[5]
a. Art.101 – Anti-competitive agreements
Regulation 9 would likely be considered either a decision by an association of undertakings, or an agreement between undertakings. World Rugby is a company in and of itself, but the Unions are its members, and vote (through the World Rugby Council) on the drafting of the Regulations. Regulation 9 could therefore be construed either way. The question is then whether Regulation 9 has as its “object or effect the prevention, restriction or distortion of competition within the internal market” (Art.101(1)).
Object
To be a restriction by object, the agreement/decision under challenge must, by its very nature, cause a “sufficient degree of harm to competition” such that there is no need to examine their effects.[6] In determining whether there is such harm, “regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part”.[7]
Here, the LNR would argue that Regulation 9 inherently restricts their ability to compete in the market for revenue associated with professional rugby. It would argue that, by depriving them of their best players during international windows, the clubs’ ability to compete for broadcast, sponsorship, ticket and other rugby revenues is restricted. This would reflect the view that the club game is competing with the international game, and that Regulation 9 inherently limits the clubs’ ability to compete.
However, the international game inevitably benefits the club game in various ways. Firstly, owing to the prestige of international sport, and the history attached to international rugby, test matches raise the profile of the sport significantly and give players the opportunity to develop a reputation. Unlike in football, where players now make their name primarily by excelling in club competitions, rugby players’ greatest stage is undoubtedly the international arena. The clubs benefit from this outside of international windows and attract revenue by showcasing the best talent in the world – which is only possible because the players earned that label at international level.
Further, the international game funds community rugby. Within their respective jurisdictions, the Unions have responsibility for grassroots rugby, for ensuring that club rugby is available to young people and that there are pathways to the professional game. Though the clubs operate academies, the Unions play a vital role in ensuring sustainable participation and generating interest in the wider community. These functions inevitably benefit the professional club game and enable them to compete in the market for rugby-associated revenue. Without the community game, interest in professional club rugby would inevitably be reduced. Most Unions rely on international matches to generate the majority of their revenue to fund these activities, and the principle of player release is necessary for those matches to take place. In this sense, Regulation 9 is pro-competitive – it enables rugby’s whole eco-system (and therefore the market for associated revenues) to flourish.
It therefore would be difficult to argue that Regulation 9 causes a sufficient degree of harm to competition such that it could be a restriction by object. Indeed, the principle of player release is necessary to enable international competition to take place. I would argue that international sporting competition is in the public interest and, thus, Regulation 9 has a perfectly legitimate aim. As the panel in Premier Rugby Limited v Saracens [2019] noted, “organisers of sports competitions have a margin of appreciation to identify appropriate measures to achieve legitimate objectives”,[8] following established EU jurisprudence.[9] World Rugby would thus be allowed some room for discretion.
Effect
The LNR might alternatively argue that Regulation 9 has an “appreciable adverse effect” on competition.[10] To do so, it would need to adduce evidence proving that Regulation 9 negatively impacted the ability of the clubs to compete. This might include financial data showing the drop-off in revenue during international release periods, or financial reports showing that the broadcast revenue that the clubs could generate would be appreciably higher if international players did not have to be released.
However, as the panel in Saracens pointed out, when trying to prove an anti-competitive effect, it is essential to select “a realistic counter-factual”.[11] Here, given the self-evident necessity of player release, the LNR would not be able to argue that they could generate much greater revenue if they never had to release their players – that counter-factual is not at all realistic. Instead, the LNR might be better off arguing that the way in which the release periods are structured creates this anti-competitive effect. In other words, it is the length and frequency of the release periods (without compensation) that is the problem. In this regard, the clubs might have more of a case.
It might also be relevant, as Stephen Weatherill has pointed out, that the release periods are staggered.[12] For example, European clubs may have to release all international players for the Summer Tours in July, Southern Hemisphere players for the Rugby Championship in August – October, all international players for the Autumn Internationals in November and then Northern Hemisphere players for the Six Nations in February – March. This staggering effect creates disruption and may damage, for example, the broadcast value of club competitions. The clubs would say that this makes it difficult to avoid the international release periods, even if they wanted to vary their schedules to fit around them.
Nonetheless, even if the LNR were able to establish an appreciable adverse effect, World Rugby would have a defence if it could prove that Regulation 9 was a proportionate means of achieving a legitimate aim.[13] As explained above, Regulation 9 certainly has a legitimate aim. The question would thus be one of proportionality and, again, the margin of appreciation of sports governing bodies would be relevant. It might be asked whether Regulation 9 goes further than necessary to achieve its aim. This is a difficult question to answer and would likely depend upon an assessment of the financial burden on the Unions. Do the 11 or 12 international matches each year, for Northern and Southern Hemisphere Unions respectively, go too far? In these times of economic crisis, it will be difficult to argue that Regulation 9 is disproportionate. Furthermore, there is nothing stopping the clubs arranging their matches around the international release periods.
As regards the staggering of the international calendar, it might be asked what the cost to World Rugby (and the associated Unions) would be of streamlining the calendar, to reduce the disruption. This might be the most fruitful avenue for challenge – but the traditional rugby season of the Southern Hemisphere Unions would merit consideration also, so the position is far from clear-cut.
I would suggest that the prospect of an Art.101 challenge succeeding against World Rugby Regulation 9 is slim.
b. 102 – Abuse of Dominant Position
Art.102 TFEU will be infringed where an undertaking abuses a dominant position within the internal market. Though I am of the view that arguments can be made about player release under Art.101, the majority of opinion to date has focused on Art.102.[14] This is perhaps because the position held by international governing bodies, and the vertical relationship between them and the relevant clubs, fits more neatly into an Art.102 analysis than the traditional “cartel” analysis of Art.101. Nonetheless, I consider both to be worthy of discussion and, as will be explained, the arguments do not significantly differ.
A dominant market position has been defined as:
“a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”[15]
World Rugby inevitably holds a dominant position, as the exclusive international regulator of rugby union. It has a monopoly over the rugby market. Though it is not the sole organiser of international competitions, its Regulations (including Regulation 9) authorise those competitions to take place.
The concept of “abuse” was defined in Hoffmann-La Roche v Commission as:
“an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition”[16]
The points made above about the pro- and anti-competitive effects of Regulation 9 are also relevant here. Though the ability of clubs to compete in the market for rugby-associated revenues may be restricted by Regulation 9, there are ways in which it reinforces competition.
Two further points are particularly relevant to the concept of abuse, however. First, the lack of compensation paid to clubs for players’ services and the risk that the players may return injured. Second, the consultation of the clubs about Regulation 9.
In his 2005 article, Weatherill argued that “it is abusive for federations to enforce rules which allow them to take the benefit while imposing the burden of supplying players on the clubs”.[17] He suggested that federations ought to pool their revenue and pay the clubs to compensate them for use of their assets. Such a system now exists in football.
In rugby union, though there is no compensation for the fact of release, the provisions of Regulation 9 require Unions to have an insurance policy in place to cover players’ wages in the event that they are injured on international duty and thus cannot play for their club.[18] This mitigates the “abusiveness” of Regulation 9.
A system of compensatory payments by Unions to clubs would further balance out the relationship, though Unions would say that the indirect beneficial impact of the international game is sufficient. Certainly, this argument is stronger in rugby than it is in football, where the international game is increasingly secondary to the top club competitions.
Further, many Unions in rugby could not afford to pay clubs – some can barely afford to pay their players. Indeed, if Unions were obliged to pay clubs, it would inevitably be at the cost of players’ match fees. In other words, any system of compensation would be to the detriment of players. Given the risks that they take to play the game, that cannot be a good thing.
The idea of Unions pooling revenue to pay the clubs is more plausible but is complicated by the fact that World Rugby does not own the two major annual international competitions (The Six Nations and The Rugby Championship).
As regards consultation, the clubs may have stronger grounds for complaint, as they are not formally represented on the World Rugby Council. That said, at the recent meetings to discuss the global calendar, and at the global calendar meeting in San Francisco in 2017, where a long-term agreement was reached, Premiership Rugby and the LNR (the two most powerful leagues) were represented. Thus, the procedural argument for abuse, too, is weak.
Even if Regulation 9 were found to be abusive, the same reasoning as above would apply as regards the legitimate aim/proportionality, and World Rugby’s margin of appreciation. It is unlikely that Regulation 9 infringes Art.102.
2. The Extension of the 2020 November Release Period
The decision of World Rugby to extend the November 2020 release period from three to seven weeks may, separately, be subject to challenge.
Under Art.101, the same arguments about the restrictive object and effect would apply, albeit that this single period of seven weeks may cause greater harm to competition than Regulation 9 normally does. Though the total number of matches each Union may play in the year has not changed (11 for the Northern Hemisphere), three of these ordinarily take place in the summer, when the European club competitions are not taking place. The re-organised calendar is a much greater intrusion into the club season. Indeed, it has been reported that England players will miss at least 11 of the first 14 Premiership matches next season due to clashes with the international game – though this will likely become irrelevant after Brexit. The longer international period may also increase the likelihood of a player returning injured, potentially causing losses to their club. It may be easier to establish a prima facie breach of Art.101.
Equally, it might be easier to argue that this is abusive under Art.102. In particular, as well as making the point about the longer intrusion into their season, the clubs could argue that the impact of COVID-19 on their own finances aggravates the impact of the decision – especially given the lack of compensation. Moreover, it does not appear that the decision to extend the November release period was taken in consultation with the clubs. This decision appears more open to challenge.
Nonetheless, World Rugby would be able to argue that it was acting proportionately in pursuit of a legitimate aim. That legitimate aim would be enabling the Unions to generate revenue, to prop up the sport internationally. Though not every Union is competing this Autumn, those that are playing are in desperate need of revenue. Given the wider role of the Unions, it is in the public interest that they do not collapse, and that they can continue to fund the sport within their jurisdictions. Thus, I would argue that the extension of the release period has a legitimate aim.
Whether the extension of the release period by four weeks is proportionate will thus be the crucial question. On one hand, this seems a significant inroad into the autonomy of the clubs, at a time when they are on their knees. On the other hand, it is a necessary measure enabling the Unions to support the grassroots game now and into the future, and the total number of international games played in 2020 has stayed the same. The clubs are unlikely to have many fans (if any) attending their games in 2020, and broadcast deals are already in place. Thus, the material impact on them may not be as significant as in other years. By contrast, the wider game is desperate for support. Given World Rugby’s margin of appreciation, it would be difficult to find this decision disproportionate.
In any event, the European Commission will not have time to act prior to the 2020 autumn international fixtures, which are now upon us. Had the LNR sought an injunction against World Rugby in the English courts, there might have been greater jeopardy.
Conclusion
In my view, on the basis of the above analysis, it is unlikely that the complaint lodged by the LNR with the European Commission will result in a finding that World Rugby has breached EU Competition Law. Though the provisions of Art.101 and 102 may be engaged by Regulation 9 and the issue of player release, its pro-competitive effects and the margin of appreciation afforded to sports governing bodies tend to suggest that they are not infringed. Certainly, the continued involvement of club representatives in discussions about the global calendar and the provision of insurance for injuries suffered on international duty will go a long way to assuaging fears of abusive conduct.
However, regardless of the legalities, one is left with the distinct impression that an agreement between World Rugby and the major club competitions is necessary – in all of their interests. A thriving club game and a thriving international game are in the best interests of the sport, and all its stakeholders. I hope that talks of a global calendar will soon yield an agreement that minimises clashes between club and international fixtures and enables the various drivers of the sport’s success to be more synchronised going forward.
Article by Ben Cisneros. Ben is a Trainee Solicitor at Morgan Sports Law. Please email ben.cisneros@morgansl.com for any legal or media enquiries.
[1] Paragraph 42, Commission Notice on the handling of complaints by the Commission under Articles 81 and 82 of the EC Treaty.
[2] Ibid., para 61.
[3] Art.23(2) Regulation (EC) No 1/2003
[4] C-243/06 Sporting du Pays de Charleroi and Groupement clubs de football européens.
[5] World Rugby Regulation 9.17-18 & Appendix 3.
[6] C- 67/13 Groupement des Cartes Bancaires v Commission, para 49.
[7] Ibid., para 53.
[8] Premier Rugby Limited v Saracens [2019], paras 44 and 45.
[9] Case C-309/99 Wouters and Case C-519/04 Meca Medina.
[11] Premier Rugby Limited v Saracens [2019], paras 55 and 89.
[12] S. Weatherill (2005), ‘Is the Pyramid Compatible with EC Law?‘, 3-4 ISLJ 3,7.
[13] Case C-519/04 Meca Medina.
[14] See, for example, S. Weatherill (2005), ‘Is the Pyramid Compatible with EC Law?‘, 3-4 ISLJ 3.
[15] Case 27/76 United Brands v Commission [1978] ECR 207, [1978] 1 CMLR 429
[16] Case 85/76, [1979] ECR 461
[17] S. Weatherill (2005), ‘Is the Pyramid Compatible with EC Law?‘, 3-4 ISLJ 3,7.
[18] World Rugby Regulation 9.17-18 & Appendix 3. Wages are covered up to £500,000 for up to one year.