This blog examines the recent judgment of the CJEU in Case C-133/24 CD Tondela. The judgment is an important contribution to the vexed issue of how to identify an object infringement. It advocates an in-depth examination of certain agreements which promotes the relevance of market context and arguably blurs the lines between the analysis of object and effects infringements. It also suggests that the sporting context may save some prima facie anticompetitive agreements from being characterised as object infringements. Other aspects of the judgment, however, suggest a limited role for sporting considerations, as I explain below.
At the heart of the case was a “no poach” agreement which had been entered into by clubs in the top two tiers of Portuguese football in April 2020 in the context of the Covid-19 lockdown which suspended the progress of the league seasons. The intention of the agreement was, in essence, to hold the ring by preventing competing clubs from poaching each other’s players until the seasons could be completed. Following enforcement action by the Portuguese competition authority, a Portuguese court referred questions to the CJEU about whether the agreement in question was an object infringement and whether it could benefit from the defence in Case C-519/04 P Meca -Medina.
Although the CJEU left it to the referring court to determine whether the agreement amounted to an object infringement or not, it gave it extensive guidance. The thrust of which is that, although no-poach agreements look harmful to competition, context is key – and the context here was an attempt to preserve the integrity of the sporting competitions in unique circumstances. In that sense, the agreement had a procompetitive aspect as well as an anticompetitive aspect, which the referring court would have to weigh.
The emphasis on the importance of the legal and economic context in deciding whether an agreement is an object infringement is well-established (see e.g. Case C-501/06 P GlaxoSmithKline Services at [58)]). But what is new (or newer) is the CJEU’s suggestion that there are two different kinds of object infringements:
- First, “collusive conduct liable to constitute a type of coordination that is particularly harmful to competition such as horizontal cartels leading to market-sharing”. In these cases, the analysis of the legal and economic context can be limited to what is “strictly necessary”: [47].
- Second, “other types of conduct” which are less obviously harmful to competition and which therefore require “a more in-depth examination” of the context: [48]. That context includes “the nature of the products or services concerned, as well as the real conditions of the structure and functioning of the sector(s) or market(s) in question”: [45].
Interestingly, the specific formulation, “the nature of the products or services concerned, as well as the real conditions of the structure and functioning of the sector(s) or market(s) in question”, is one which the CJEU used in Case C-32/11 Allianz Hungária Biztosító at [36] and repeated in Case C-333/21 European Superleague SL at [166]. Allianz Hungária, however, was a case which was widely criticized as blurring the lines between object and effects infringements (see e.g. the opinion of Advocate General Wathelet in Case C-373/14 P Toshiba at [60]). The formulation in question was also said to have been wrongly imported from caselaw concerning effects rather than object infringements (see e.g. Case C-238/05 Asnef-Equifax at [49]).
Whatever the rights and wrongs of the CJEU’s use of this formulation, it now appears to be a well-established description of the context which needs to be considered. This means that the determination of the object infringement question may become more fact-heavy and detailed (particularly in the second category of agreements described above). It is not hard to see how this analysis might move closer towards a kind of effects analysis. Once you are analysing the structure and functioning of the markets in depth, you are doing much of the groundwork you will need to do to discern an agreement’s effects. Nor will this detailed analysis necessarily be reserved to the second category of agreements. Importantly, the CJEU thought the no-poach agreement before it was a manifestly harmful agreement, apparently falling within its first category – but nevertheless thought it capable of being saved by a detailed examination of the context: [88].
The possible complication of the object infringement analysis is therefore one key takeaway from the judgment. In my view, there are two more which are specific to competition law disputes in the sporting context.
The first is that the judgment does not necessarily signal a restriction in the scope of what amounts to an object infringement. It is possible to interpret Tondela as indicating that sporting context will be capable of “saving” prima facie anticompetitive agreements from characterisation as object infringements. There is some truth in this on the facts of Tondela itself. But it seems possible that an in-depth contextual analysis could equally lead to a wider class of agreements being characterised as object infringements. In principle, the judgment could cut both ways.
The second relates to the nature of the object infringement analysis in sports cases. This analysis is going to be the key question going forward because the Meca-Medina defence is only available for effects infringements (see e.g. European Superleague at [186]). Tondela makes it clear that this analysis is fundamentally “competition-based”: [78]. Whether the agreement has procompetitive aims will be relevant: [86]. But the CJEU hinted that other legitimate objectives which were “neutral from a competition standpoint” would not be or would be less relevant at least: [87]. This suggests that the object infringement issue remains conceptually distinct from and prior to the analysis of wider sporting justifications which may come in at the Meca-Medina stage. In other words, while some aspects of the sporting context may come in at the object infringement stage, they must fundamentally relate to competition. Other objectives, however legitimate, may be less relevant.
Sports governing bodies may therefore have some reasons for optimism that they will be able to pray in aid the sporting context to justify their rules. But it is equally clear that difficult competition-law issues will not be dislodged from sporting disputes, and that the analysis must remain fundamentally competition-based.
