England Rugby’s Overseas Player Rule – A Restraint of Trade?
1. Introduction
Since 2012, the Rugby Football Union (“RFU”) has operated a policy under which players playing for clubs outside of England cannot be selected to play for the England national team, save in exceptional circumstances (the “Policy”).
It is understood that the Policy, also known as the RFU’s ‘overseas player rule’, forms part of the Professional Game Agreement between the RFU and Premiership Rugby, which is presently being re-negotiated.
The Policy has long been controversial but has come under particular scrutiny over the past 12 months, owing to the recent exodus of England national team players to French TOP14 clubs. The likes of Owen Farrell, Manu Tuilagi, Henry Arundell, Joe Marchant, Kyle Sinckler, Lewis Ludlam, Jack Willis, and Dave Ribbans, all of whom starred for England at the 2023 Rugby World Cup, will be playing their club rugby across the Channel next season, as Premiership clubs struggle to compete with the wages on offer in France.
There are reports, too, that Billy Vunipola has been offered a contract by Suntory Sungoliath, in Japan, while Ben Loader now plays for the Stormers in the United Rugby Championship.
This trend can likely be explained by to the Premiership’s financial pressures, with the insolvency of Wasps, Worcester and London Irish last season having created a saturated market for player services, and the salary cap having effectively fallen.[1] The French TOP14, which has 14 Clubs, and a significantly higher salary cap,[2] is (understandably) more attractive than ever.
Yet, as matters stand, the Policy means that the many players who are leaving England will no longer be eligible to play for their country. While the Policy was, last week, re-affirmed by the RFU,[3] it comes at a significant cost, as players are being deprived of the opportunity to compete at the highest level of the game (and to earn the associated financial rewards), and the England team is being deprived of some of its best players. To many, this seems unfair.
This article will therefore consider whether the Policy could be legally challengeable.
2. Relevant legal principles
Any legal challenge to the Policy would likely be brought under the doctrine of restraint of trade and/or competition law.[4]
The restraint of trade doctrine provides that any agreement which is in restraint of trade (i.e., which limits an individual’s ability to work freely) will be unlawful unless it can be justified as reasonable, by reference to the interests of the parties concerned and the public.[5]
As for competition law, the Competition Act 1998 prohibits (i) agreements which have as their object or effect the prevention, restriction, or distortion of competition within the UK (the so-called “Chapter I prohibition”), and (ii) the abuse of a dominant position which may affect trade within the UK (the so-called “Chapter II prohibition”).
It is well established that the rules and agreements of sports governing bodies are capable of breaching the Chapter I and II prohibitions. However, apparent breaches will not be unlawful if they can be justified as necessary and proportionate in pursuit of a legitimate objective.[6]
In this regard, it has often been said that sports governing bodies enjoy a margin of appreciation (i.e., discretion) when adopting such measures. However, the recent decision of the FA Regulatory Commission in the challenge to FIFA’s new agent regulations (CAA Base and others v. The Football Association & FIFA (November 2023)) makes clear that this is not correct, and whether such a measure can be justified is a question for the court to decide, as a matter of evidence.[7]
3. Effects of the Policy
The Policy would seem to have several restrictive effects on players, as well as impacting the wider rugby ecosystem, and the England national team itself.
Primarily, the Policy prevents England-qualified players working overseas from being selected to play (i.e., to work) for England. This is a prima facie restraint of trade.
World Rugby Regulation 8 grants England-qualified players the right to be eligible for selection for the England national team, and the Policy deprives those playing abroad of that right. Playing for England is not only highly remunerative in the short-term, but it also enhances players’ reputations and thus has significant financial benefits in the long-term (in relation to the value of future club employment contracts, endorsement deals and post-rugby earnings). In competition law terms, therefore, the Policy restricts competition for England selection (which may also harm the success of the team itself) and for the resulting commercial benefits.
Secondarily, although the Policy does not strictly prevent England-qualified players from working for foreign clubs, it does strongly discourage them from doing so (as shown by the very small number of such players who have moved to France, until recently). The incentive of representing England is significant, and the RFU makes no secret of the fact that the Policy is designed to keep England-qualified players playing for English clubs.[8] This, too, is a prima facie restraint of trade.
In competition law terms, the Policy produces anti-competitive effects in the market for the services of England-qualified players in the UK, as the otherwise global market is effectively limited to the 10 Premiership clubs. Premiership clubs are thus, primarily, competing with only nine other clubs for the services of England-qualified players, which is likely to suppress player wages.
In other words, players are limited in their freedom to maximise their earnings. They are also limited from pursuing opportunities to play for high-performing teams outside of England, which may limit their ability to develop and thus to maximise their earnings in future.
The Policy is also liable to saturate the Premiership market with English-qualified players, leaving less room in squads for high quality foreign players, which is liable to reduce the competition’s global appeal and overall quality, to the detriment of the clubs and the league, the development of the players within it and its fans.[9]
Further, professional cubs in Wales, Scotland, and Northern Ireland (i.e., the rest of the UK) are effectively limited in their ability to compete for the services of England-qualified players.
It might be said that the restraint of trade / anti-competitive effects cannot be that serious, given the recent exodus of England players to France. However, this only serves to illustrate the extent of wage deflation in the Premiership (albeit this is not only attributable to the Policy) and does not change the fact that these players are now prevented from being selected for England, with the anti-competitive effects that entails.
It might also be noted that the Policy enables England-qualified players to command a higher salary when playing overseas, given that foreign clubs know that they are not going to be selected to play international rugby during the club season, and will thus remain available to and under the control of the club throughout (noting that rugby, unlike football, continues to have overlaps between the club and international calendars). Nevertheless, the potential benefits of playing for England would seem so significant that players are still likely to be worse off than if they were able to play club rugby wherever they like and still be eligible for international selection, and, in any event, are still being denied the opportunity to compete at the highest level of the sport.
In this author’s view, the Policy may thus be considered a prima facie restraint of trade, an anti-competitive agreement by object (and/or effect), and/or a prima facie abuse of dominant position.
4. Can the Policy be justified?
As noted above, apparent breaches of competition law or the restraint of trade doctrine may be justified, by reference to the aims of the measure in question and the proportionality/reasonableness of the restriction it entails.
The aim of the Policy from the RFU’s perspective is promoting the success of the England national team, by facilitating greater access to England-qualified players for the national team coaches (because, under the current Professional Game Agreement, the RFU is able to call upon England players at Premiership clubs at certain times during the season, outside of the ordinary international windows, for extra training camps etc., when the players’ clubs would otherwise be entitled to refuse such access).
Whilst it might be argued that this is a purely commercial objective (given that the England rugby team is ultimately a commercial asset for the RFU), and thus not a legitimate objective for the purposes of competition law, the success of the national team is also in the public interest (as it encourages the growth and development of the sport, for the benefit of society). In principle, this would therefore likely be seen as a legitimate objective.
However, Premiership Rugby has also made clear that the Policy is about ensuring that Premiership clubs can more easily retain top talent (i.e., for the commercial success of the clubs and the league).[10] This is more difficult to view as a legitimate objective (although Premiership Rugby might also argue that a strong professional club rugby competition is in the wider public interest).
Nevertheless, assuming that the Policy purports to pursue a legitimate objective, the questions are then whether it is a necessary and proportionate means of pursuing that objective – i.e., is the Policy actually needed for the success of the England team, and is the restriction of competition it entails proportionate to resulting benefit?
In this author’s view, it could well be argued that the answer to both questions is ‘no’.
World Rugby Regulation 9 prescribes international windows during which players must be released when they are selected for their national team. This includes the week before international matches, and three-day ‘Squad sessions’ the week prior to that, for training (plus more for Rugby World Cups). This is arguably the only ‘necessary’ time players need to be available for selection in order for national teams to be able to succeed. Indeed, South Africa has won the last two consecutive Rugby World Cups selecting players on this basis. It is thus difficult to describe the Policy (which purports to allow greater access to players) as ‘necessary’.
Of course, the Policy would be unthinkable in football (which operates the same international player release model), and it is impossible to imagine Harry Kane being ineligible for this summer’s Euros simply because he is currently playing for Bayern Munich…
Notably, the pre-amble to World Rugby Regulation 9 states that (emphasis added):
High quality international Rugby is in the best interests of the sport at all levels. It promotes the sport and encourages new participants and support for the sport around the world and at all levels. International Rugby is a major public interest and it is in the best interests of the public that the best teams and Players represent their Unions. The retention of high quality international Rugby benefits Players because it fulfils their aspirations to play at the highest level of the sport. The selection of the best Players for international Rugby also represents the fairest selection system as it is based on playing merit. Rugby Bodies and Clubs benefit if Players play international Rugby as it improves the quality and experience of Players, increases their value and enhances commercial returns in respect of merchandising, broadcast, sponsorship and gates thereby contributing to the interests of the Rugby Body or Club that Player represents. The development of the sport is enhanced and furthered as a result of the generation of funds from international Rugby for reinvestment in the sport.
This makes clear the importance of Unions being able to select their best players for international rugby – regardless of where they are based – to the interests of the sport as a whole. Indeed, the free movement of players promotes the globalisation of the sport, and its commercial growth at club and international level worldwide (including in England).
Yet, the Policy undermines these wider interests, by potentially rendering the best England players ineligible from selection, and it is thus difficult to see it as either reasonable or proportionate. That is all the more so when one considers the anti-competitive/restrictive effects for players, and clubs, described at Section 3 above.
However, that is not to say that some form of compromise might not be found.
The RFU is reportedly intending to award “hybrid contracts”,[11] which contract players to the RFU as well as their clubs, (presumably) in return for an additional salary in respect of their England role. This would go some way to reducing the impact of the Policy on players who may wish to remain in England. However, it would not address the concerns surrounding the non-selection of England-qualified players based abroad, nor the wider impacts of the Policy.
A more proportionate solution might be to amend the Policy so as to allow the RFU to select only a limited number of players who are playing their club rugby outside of England in each England squad. Blanket bans are rarely proportionate, as less restrictive measures are typically feasible, and modifying the Policy in this way would reduce some of its harmful effects, whilst preserving most of the potential benefits.
5. Conclusion
This author’s view is therefore that the RFU’s overseas player rule may be susceptible to a legal challenge, as its protectionist nature may be incompatible with competition law and/or the restraint of trade doctrine. Whilst the Policy purports to serve the interests of English rugby, this does not necessarily hold true when considered in the round, particularly when taking account of the players’ interests.
Such a challenge may be in the interests of both England-qualified players and their agents, given the potentially wide-ranging commercial benefits that eliminating the Policy may have, though the issue may yet be resolved in the re-negotiation of the Professional Game Agreement. However, given the RFU’s very public stance in favour of the Policy, it may yet require further action.
Article by Ben Cisneros. Ben is an Associate at Morgan Sports Law with a dedicated rugby practice. This article reflects only the author’s personal views. Please email ben.cisneros@morgansl.com with any legal or media enquiries.
References
[1] During the Covid-19 pandemic, the salary cap was lowered, but clubs were allowed to sign players on long-term contracts which would only be counted at 75% of their value for the purposes of the cap. Many of these contracts have now expired, whilst the number of ‘marquee players’ permitted outside of the £6.4m cap has fallen from two to one.
[2] The TOP14 has a salary cap of €11m (i.e., approx. £9.4m).
[3] See ‘England: No plans to change eligibility rules – Bill Sweeney’ (BBC Sport)
[4] There has been some suggestion in the case law that claims of restraint of trade and competition law are mutually exclusive (see, for example, Days Medical Aids v. Pihsiang Machinery Manufacturing [2004] EWHC 44 (Comm)). However, the recent decision of the FA Regulatory Commission in the challenge to FIFA’s new agent regulations (CAA Base and others v. The Football Association & FIFA (November 2023)), featuring former Supreme Court judges Lord Collins and Lord Dyson, suggests otherwise – i.e., there is indeed room for both claims to be made simultaneously, as they may produce different legal effects, particularly post-Brexit (see paras. 399-406).
[5] See Chitty on Contracts, 34th Ed (2021), at 18-123
[6] See Meca-Medina v. Commission and CAA Base v. The FA & FIFA, for example.
[7] See para. 191, which held that a court which is not expert in sport may consider “whether a sporting authority could reasonably have considered that a regulation was necessary, but it needs, nonetheless, to verify that there is evidence to support the finding of necessity”.
[9] This effect is also exacerbated by the RFU’s foreign player rules, which effectively limit the number of foreign players clubs may sign.
