The Antitrust Case Against Europe’s Breakaway Soccer League

(Bloomberg Opinion) -- We’re used to the idea of sport sometimes being uncompetitive, where one or two teams dominate the proceedings. Think of Italy’s Serie A soccer league, which Juventus Football Club SpA has won nine years in a row, or France’s Ligue 1, which Paris Saint-Germain has won for seven of the last eight years.

But plans for a new European Super League, comprising 20 supposedly leading clubs, look actively anticompetitive, with business practices designed to reduce competition. That should give antitrust authorities the impetus to halt a move that will tear the fabric of the world’s most popular sport.

Any way you look at it, the European Super League reduces competition. The tournament will consist of 15 permanent teams and five rotating members who qualify each year based on their performance the previous season. So far, 12 of those core teams have been announced, including Manchester United Plc, Juventus and Real Madrid.

For the ever-present 15, it is a pretty shameless way of guaranteeing income irrespective of on-field performance. At the moment, revenue can fluctuate by hundreds of millions of dollars if a club fails to qualify for the Champions League, Europe’s premier club competition, in any given year.

The latest proposal hews more closely to the American model of sports, where the same teams compete for trophies year in, year out, and see steady income and higher valuations as a consequence. Five of the new league’s teams — Arsenal, Manchester United, Manchester City, Liverpool and AC Milan — are at least partly owned by U.S. investors. It appears designed to engage international fans and boost broadcast revenue. JPMorgan Chase & Co. is bankrolling the competition to the tune of 4 billion euros ($4.8 billion), Bloomberg News reported.

But the model may fall foul of European antitrust laws because it’s creating a protected market that restricts others from entering and may limit competition, according to Bloomberg Intelligence analyst Aitor Ortiz. There’s precedent in the European Commission’s case against Mastercard Inc., which dragged on for the best part of two decades.

The regulator fined the credit card provider 570.6 million euros ($686.7 million) for setting high fees with banks. It determined that those fees weren’t necessary for credit cards to work effectively and increased consumer prices, and were thus anticompetitive. Similarly, the barriers to entry to the Super League don’t appear necessary to ensure that it functions effectively, and may therefore also be anticompetitive.

The European Commission has said it doesn’t plan to investigate the Super League. You can see why — if the case fails, it would face a huge popular backlash, and be seen to have effectively given it the legal stamp of approval. It will instead leave the regulation up to FIFA and UEFA, the sport’s global and European governing bodies, as well as the national administrators.

Those organizations have intimated that they would ban participating teams from joining other competitions — domestic as well as European leagues. They worded the statement carefully, suggesting that players may also be prevented from representing their national teams, without saying so definitively. That’s likely because, in a case last year involving the world of iceskating, the European Court of Justice ruled in favor of a rival competition to the International Skating Union, on the basis that athletes should be able to take part in any competition they choose.

Soccer teams, however, are businesses rather than individual athletes, so the legal implications of the Super League are likely to be different. Regulators can more easily block teams than they can players.

Proponents of the new league will argue that it increases competition with the existing setup, the Champions League. But for that to be the case, conditions for admission to the Super League would have to be “transparent, objective and proportionate,” according to Nicolas Petit, professor of European competition law at the European University Institute in Florence. In other words, it would have to require full relegation and promotion for all constituent teams, meaning that all teams are eligible to fall out of the league if they underperform. That would undermine the clubs’ motivation for taking part, which is to de-risk their businesses.

The regulator that should step forward in this case is Britain’s Competition and Markets Authority, which is trying to forge a leading international reputation after Brexit. Half of the proposed new league’s announced participants are English. And the Premier League is also an important tool of British soft power globally. Should England’s top soccer competition be deprived of the most prominent clubs and players, it would harm British influence as a whole.

So there may be more political will in Britain to pursue a case against the Super League than elsewhere in Europe. The case would still, however, have to be built on solid antitrust arguments. The Mastercard case may prove the precedent.

In his televised tirade against the proposed league on Sunday, pundit and former Manchester United defender Gary Neville called for a new independent regulator to prevent the breakaway competition. The required mechanisms may already be in place. The monopoly police just have to be brave enough to use them.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.

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