Competition law leaves FIFA in offside in Germany

On September 8, FIFA issued a statement in which it agreed to waive several provisions of the Football Agents Regulations (FFAR) in Germany. The statement follows the interim injunction granted by the Dortmund District Court on May 24, 2023, in proceedings challenging the FFAR.

FIFA’s announcement comes at a key moment as several players’ associations are awaiting a ruling from the Court of Justice of the EU on the FFAR’s compatibility with European competition law and the freedom to provide services (the request for a preliminary ruling is available here).

As we commented in a previous post, the FFAR, a FIFA regulation that provides for the limitation of football agents’ fees, entered into force on January 9, 2023 (although this provision is subject to a transitional period until October 1, 2023).

Specifically, the FFAR sets limits on the fees that agents may charge depending on the party they represent in the transaction, ranging between 3% and 10% of the player’s remuneration.

The response to this limitation was swift and agents from all over Europe took a stand against it. The regulation was challenged at national level, as in the case of two football agents’ associations (Pro Agent and the European Football Agents’ Association) in the Netherlands and several proceedings before German courts, as well as before the Swiss Court of Arbitration for Sport.

Generally speaking, agents argue that the FFAR regulations have an anticompetitive object, as they set the commercial conditions in the agents’ market. In addition, some associations also argue that this regulation constitutes an abuse of FIFA’s dominant position.

On May 24, 2023, the Dortmund Regional Court prohibited FIFA and the German Football Association from applying certain provisions of the FFAR, including the one relating to the limitation of football agents’ fees.

According to the Dortmund Court, the fee cap imposes on the agents’ clients a uniform behavior as to the maximum amounts to be paid and limits their bargaining power, which constitutes anticompetitive price fixing by object. In general terms, the Dortmund Regional Court emphasizes the restriction of the individual economic freedom of market participants.

Furthermore, the Court assesses whether the regulation could escape the scope of article 101(1) TFEU due to public policy considerations. In this regard, the FFAR does not qualify as a sports regulation. In other words, only regulations that directly affect what happens on the pitch should be exempted from competition law. If competition is restricted “off the pitch,” the Court considers that competition law should intervene. Furthermore, it holds that the restriction of competition is not intrinsically related to the proper functioning of the competition, as FIFA claims.

Almost four months after the adoption of the injunction, FIFA has issued a statement to give retroactive effect to the prohibition to apply certain provisions of the FFAR. FIFA stresses that its objective is to avoid any possible ambiguity or legal uncertainty for football stakeholders worldwide. The non-application of the FFAR provisions will take effect in respect of all transactions linked to the German market.

In its statement, FIFA stresses that while it respects the measure adopted by the Dortmund Court, it considers it incompatible with rulings in other European countries and with the recent award of the Court of Arbitration for Sport, which has found the agents’ fee cap to be compatible with competition law.

The dispute over the agents’ fee cap unfolds in the context of other issues concerning FIFA, such as the regulations on “home-grown players” (see this post) or the Super League case, pending interpretation by the CJEU (the preliminary ruling is available here).

These examples illustrate the legal implications of each of the regulations adopted by FIFA and their possible effects on markets adjacent to the organization of international football competitions. They also reflect the challenges faced by the organization to safeguard integrity and balance in the world of football at international level and to ensure respect for competition rules.