Soccer regulators score early win on agent rules at EU court

(CN) — Soccer’s rulemakers can keep a hand on the agent business, Europe’s top court said Thursday, but only if they can show they are protecting the game rather than squeezing the market.

The Court of Justice of the European Union ruled that the German Football Association, known by its German initials DFB, can, in principle, rely on a public-interest defense when regulating player agents, even though agents are not members of the federation. The sport is widely known globally as football.

German player representation firm ROGON, Austrian agency MVI Management and agent DC argue that rules governing everything from agent registration and commissions to fee disclosures and payments involving minors unlawfully restrict how agents do business.

The judges rejected the argument that the public-interest defense automatically disappears because the rules extend beyond the federation’s own members. Instead, they said “such a characteristic cannot be regarded as being capable of precluding those regulations from pursuing one or more legitimate objectives in the public interest which are not, in themselves, anticompetitive.”

The ruling does not decide whether the DFB’s rules are lawful. That question now returns to Germany’s Federal Court of Justice, which must first determine whether the rules are designed to restrict competition. If they are, the public-interest defense is unavailable.

Otherwise, the DFB must still prove “those regulations are appropriate for securing their attainment” and that “they do not go beyond what is necessary, in the sense that no less restrictive measure would make it possible to attain that objective or those objectives as effectively.”

Jan Zglinski, associate professor of sports and competition law at LSE Law School, called the judgment “an interim victory for FIFA and the DFB.” He said the court confirms that soccer federations may rely on a long-standing legal test allowing sports rules to survive competition-law scrutiny when they genuinely serve the sport’s legitimate objectives, but deliberately leaves the biggest commercial questions unresolved.

“The court has not ruled on whether the fee cap or licensing requirement are lawful,” Zglinski said.

That is where the real battle now shifts, according to Georgi Gradev, partner in sports law at SILA International Lawyers. He said licensing and conflict-of-interest requirements are more likely to survive, while fee caps, the client-pays model and publication of agent remuneration remain vulnerable unless soccer authorities can show that less restrictive measures would not achieve the same regulatory goals.

The DFB introduced the disputed rules in 2015, arguing they were needed to protect the integrity of professional soccer. ROGON and the other claimants counter that the federation stepped beyond governing the sport and into regulating independent businesses.

The judges were not persuaded. They said modern professional soccer extends beyond clubs and players, with agents shaping transfers, club finances and competitive balance across the game.

“In particular, that may be the case where, in order to achieve such objectives, a sports federation is required to adopt regulations capable of having implications for the ecosystem which they regulate and control,” they wrote in the ruling.

Giorgio Monti, professor of competition law at Tilburg Law School, said the ruling is a logical extension of earlier case law because modern soccer cannot function without businesses that sit outside the sport’s formal governing structure. “A sporting body should be able to regulate actors who provide services that affect the working of football competitions,” he said, using the common universal name for the game.

Monti said the judgment’s real novelty is that it applies that reasoning to player agents rather than only clubs and players. But he said the court stopped short of resolving the central dispute, leaving Germany’s courts to decide whether the DFB’s rules unlawfully restrict competition while offering “no hints” on how those questions should be answered.

The judges also said the German court does not have to examine every provision in isolation. Rules serving the same purpose or producing the same effects may be assessed together.

Representatives for the DFB and ROGON did not respond to requests for comment.

The ruling cannot be appealed, but it settles only part of the dispute. The final whistle will come in Germany, where the Federal Court of Justice must now decide whether the DFB’s rules ultimately pass muster under EU competition law.

Courthouse News reporter Eunseo Hong is based in the Netherlands.