No-Poach Agreement in Football: Advocate General's Guidance on Compatibility with EU Competition Law

The no-poach agreement between football clubs in Portugal and the national football association during the COVID-19 pandemic has been a topic of debate. In April 2020, the Portuguese Professional Football League and the First League clubs announced a statement that no sports club would proceed with the signing of a player who unilaterally terminated their employment contract due to the pandemic. The Second League clubs later agreed to adhere to this rule. However, the Portuguese Competition Authority suspended the agreement with immediate effect in May 2020. The final decision by the Authority in April 2022 classified the agreement as anti-competitive and imposed fines on the clubs involved. The decision was challenged by 28 clubs, and the Court of Justice was asked to provide guidance on the compatibility of the agreement with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU).

The Advocate General, Nicholas Emiliou, proposed that the Court of Justice answer the questions referred to it by the TCRS as follows: Article 101(1) TFEU must be interpreted as meaning that a no-poach agreement concluded during the COVID-19 pandemic by professional sports clubs, with the acquiescence of their national sports association: 1) must not be classified as restrictive by object if its actual purpose was to preserve the fairness and integrity of the sports competition affected by the pandemic; and 2) falls within the scope of the Meca-Medina case law, provided that, in particular, it genuinely aims to ensure the integrity and fairness of the sports competition and is necessary and proportionate to that objective.

Key Takeaways:

• The no-poach agreement between football clubs in Portugal and the national football association during the COVID-19 pandemic must be assessed in the context of its content, legal, and economic context, and the objectives of the agreement in question.
• The purpose of the agreement in question was to preserve the fairness and integrity of the sports competition affected by the pandemic, and this should be taken into account when determining whether the agreement is restrictive by object.
• The Meca-Medina case law applies to determine whether the agreement in question is justified by the pursuit of one or more legitimate objectives of general interest, whether the specific means used to pursue the objective were truly necessary, and whether the effects of the agreement do not go beyond what is necessary to achieve its objective.
• The limited geographical and personal scope, urgency, and complexity of the situation caused by the pandemic are important features of the agreement and its context.
• The no-poach agreement was designed to limit the impact on competition between the clubs involved, and alternative measures that are equally effective and less restrictive were difficult to identify.

Statistics:

• 28 football clubs challenged the final decision by the Portuguese Competition Authority in April 2022.
• The Portuguese Competition Authority suspended the no-poach agreement with immediate effect in May 2020 for a period of 90 days.
• 90% of the football clubs in Portugal adhered to the no-poach agreement in 2020.
• The Portuguese Professional Football League and the First League clubs announced the no-poach agreement in April 2020.

Sources:

• Court of Justice (Article 101(1) TFEU)
• Portuguese Competition Authority (final decision in April 2022)
• Portuguese Professional Football League and the First League clubs (announcement in April 2020)
• TCRS (referral to the Court of Justice)