The sale of rights to broadcast sporting events under EC law.1 Introduction--the constitutional context Although it may be intuitively appealing to assume that an integrated market for Europe inevitably brings with it an integrated regulatory strategy underpinning that market, the EC Treaty does not provide for this. Article 5(1) EC declares that 'The Community shall act within the limits of the powers conferred upon it by this Treaty and of the objectives assigned to it therein.' This is commonly referred to as the principle of 'attributed competence'. It is constitutionally fundamental. Accordingly the EC possesses no general regulatory competence and it cannot 'self-authorise' an increase in its own competence. It may act only in the areas in which the Member States have granted it a mandate. Extension of the grant rests with the Member States acting at times of periodic Treaty revision. The principle, then, is that the EC possesses only limited powers. The practice, however, is that those limits are rather loosely drawn and tend to be stretched. The EC has a sphere of influence that extends considerably further than one may initially appreciate on an inspection of the formal text of the Treaty. This troubling trend is vividly captured by the catchphrase competence creep. (1) It is troubling because EU Treaty ratification is conducted in each Member State according to local constitutional requirements but it is performed everywhere on the basis that only a limited grant of power is being made to European level. Lawmaking excess at EC level represents a constitutionally illegitimate shifting of power to EU level which tends to weaken such controls over executive action as exist within national political cultures. So Article 5(1) does not state a technical rule. It states a rule that is fundamental to the chosen distribution of functions to different levels of democratic governance in Europe. Its violation is likely to induce protest from domestic constituencies such as national Parliaments and constitutional courts, and, perhaps in the long term most alarming of all, citizens are likely to suffer alienation from the complexity that flows from incremental drift in the growth of multilevel governance. Unwarranted or, at least, inadequately explained patterns of centralisation tend to generate resistance in any quasi-federal system. (2) This is why 'competence anxiety' emerged explicitly on to the reform agenda in the Treaty of Nice's Declaration on the Future of the Union and subsequently in the Laeken Declaration, and this is why the Treaty establishing a Constitution, endorsed by the Heads of State and Government in 2004 but unlikely now to be ratified, proposed to clarify and re-organise the Treaty rules governing competence, and additionally to freshen the system for monitoring the existence and exercise of competence by bringing in new actors from out-with the uncritical EU family--most of all, it is national Parliaments that are invested with the responsibility to stop creep according to a new ex ante monitoring system. (3) Pending such reforms, we must make do with the current system. And currently the principal motor of competence creep is the ambiguity and functional breadth of the relevant Treaty provisions, underpinned by a perceived readiness practised by the EU's institutions to exploit textual ambiguity in order to extend their sphere of influence beyond that foreseen by the Treaty. The argument, then, is that there is a structural weakness in the EC Treaty which tends to promote rising centralization at the expense of local autonomy. (4) As far as legal ambiguity is concerned, the principal issue is the poor way in which Article 5(1)'s principle of attribution is put into operation in the Treaty. The Treaty's general modus operandi is not to declare particular sectors off-limits the EC nor to reserve particular functions to the Member States. Instead Article (5) (1) EC is made specific in its application to particular sectoral competences by a chaotic pattern of provisions granting legislative authority to the EC scattered throughout the Treaty. These provisions vary in scope and intensity and they vary in their impact on residual national regulatory autonomy. They are the confused and confusing consequence of incremental Treaty revision. It is disturbingly difficult to set out clearly an account of the nature of EC competence and its effect on State competence 5. This is the fertile soil of competence creep: it is hard to marshal operationally useful constitutional arguments against EC intervention. This is most of all true of two Treaty provisions in particular: Articles 95 and 308 EC. These are not sector-specific competences of the type typically added in recent bouts of Treaty revision. (6) They instead envisage a broad competence to act in pursuit of the Community's objectives. The limits that are imposed--in short, a tie to market-making under Article 95 and a tie to the EC's objectives under Article 308--are limits that lack precision. And most significant of all they have been driven by a long-standing readiness among the Member States acting unanimously in Council to assert a broad reach to the EC's legislative competence. The growth of the programmes of consumer and environmental protection supply well-known examples of legislative activity pursued in the name of the harmonization programme and, in the latter instance, pursuant also to Article 308 (ex 235) at a time when the political will was firm, yet when the Treaty was deficient in explicit legislative competence to act in these realms. (7) The gulf between principle and practice in the assertion of legislative competence undermines the impression given by Article 5(1) EC of a sturdy defence of State autonomy from EC incursion beyond the limits authorised by the Treaty. It is Articles 95 and 308, the functionally broad legal bases, that lie at the heart of this intensification of regulatory ambition. So EC law reaches further than Article 5(1) EC might lead one to expect because the 'limits' to EC powers on which Article 5(1) insists are in fact ill-drawn and, for those opposed to proposed EC action, hard to rely on. But there is more to 'competence creep' than simply legislative (over-)ambition. EC law exercises supervision over policy choices within the Member States not simply in circumstances where it has adopted secondary legislation but also where those policy choices conflict with the achievement of the objectives mapped out in the Treaty, most prominently those connected with the construction of an integrated trading space across the territory of all the Member States. The centrally important Treaty provisions in this context are those concerning free movement and competition. The basic structure of the law governing free movement is readily described. National measures which obstruct inter-state trade are forbidden unless a justification for their continued application is shown to exist. This pattern is found in the EC Treaty--Articles 28/30 (goods), 39 (workers), 43/46 (right of establishment), 49/55 (services), 56/58 (capital)--but has been the subject of a vast body of case law in which the Court, while remaining true to this basic Treaty framework, has taken on the task of re-writing the law in terms that are far more elaborate than those found in the skeletal style of the Treaty. The competition rules are found in Article 81 and 82. They supplement the dedication of the free movement rules to the creation of an integrated trading space, while also serving to control other types of anti-competitive practices that stretch beyond market-partitioning. So Article 81, dealing with cartels and restrictive practices, and Article 82, dealing with dominant undertakings, control practices that tend to maintain the fragmentation of markets along national lines and other practices which harm the functioning of the market in other ways, such as price-fixing. In reflecting on the EC's capacity to exercise an influence that is a good deal broader than Article 5(1) EC might suggest, the crucial point about these Treaty provisions is their functional breadth. What is at stake in the application of the free movement rules and the competition rules is the achievement of the Treaty's economic objectives. That is how the provisions are structured, and accordingly any field of national policymaking which tends to come into conflict with the quest for market integration is subject to review in the light of its impact on the EC rules on free movement or competition. So even though the EC may lack a legislative competence in a particular field does not at all mean that the matter rests in the province of national regulatory autonomy. The matter may perfectly conceivably be influenced by the EC Treaty's provisions directed at economic integration. Accordingly internal market law has a wide functional sweep. For example the EC enjoys no general competence to legislate for the maintenance of press diversity or for a viable public health care system. Indeed, in the latter instance the relevant Treaty provision equipping the Community with a tightly confined legislative competence is explicitly deferential to Member State responsibilities to provide health care. (8) And yet in so far as national choices in such realms come into conflict with the drive to integrate markets, national measures fall within the scope of EC trade law and their permissibility falls for judicial determination pursuant to the Treaty. (9) National regulatory choices have to assessed in the light of their impact on wider processes of integration. One might, of course, object to the values that the Court attaches to particular interests when it makes these decisions; additionally, one might choose to reflect on whether a judicial forum is the appropriate place to make such choices. (10) The deeper such case law intrudes into national practices that reflect sensitive cultural, moral and social choices the more acute such anxieties become. But, as a general observation, the case law offers the Court the opportunity to weed out unrepresentative and outdated manifestations of national-level decision making that are hostile to, and inappropriate in, an integrating European market of the type to which the Member States have committed themselves under the EC Treaty. And the fact that the EC lacks legislative competence in an area is absolutely no bar to it becoming the subject of radical reform under the influence of the prohibitions imposed by the Treaty provisions on free movement and competition law. Even in the few instances where the Treaty seems to guard against disruption of national autonomy, such as Article 295 which rules out prejudice to systems of property ownership in the Member States, the reality is that the influence of the Treaty rules governing economic activity has been sufficient to exert significant influence over State choices. Areas of truly exclusive State competence are few and, were it otherwise, the achievement of the core objectives of the Treaty would be gravely imperilled. The conclusion, then, is that for those who would wish to keep the EC at bay, Article 5(1) offers a good deal less comfort than may first appear likely. Most of all, the 'limits' to EC powers to which reference is made is Article 5(1) are limits that are remarkably loosely fixed. The anxiety that Article 5(1) is taken less seriously in practice than its constitutional importance should demand is reinforced by appreciation of the surrounding institutional context. The current system of 'competence control' is founded on an assumption of ex ante restraint by the political institutions and ex post review by the Community judicature. So in principle an act should not be adopted if it trespasses beyond the scope of the mandate conferred by the Treaty and, if it is, it is susceptible to annulment by the Court. But the prevailing allegation is that the institutions do not offer a reliable checking mechanism. It has typically been Member State executives, acting in Council, that have been the primary actors in this centralising process of 'creeping competence'. Action has not infrequently been taken 'in Brussels' by national politicians as a rather convenient way to escape domestic constraints over policy reform--it is Article 5(1) EC and the very legitimacy of the EC that ultimately suffers from such opportunism. But neither Commission nor Parliament are regularly heard to raise audible voices of protest. The operational vagueness of Article 5(1) EC, and in particular the loose edges of the functionally broad competences provided by Articles 95 and 308, have been exploited by the EC's own institutions to strain the limits of the Treaty mandate. And did the Court adopt a disapproving tone? Rarely! Admittedly the vaguer the scope of an attributed competence, the tougher the Court's task in determining whether its bounds have been exceeded in the case of a particular challenged act but even so the 'competence sceptic' harbours deeper reservations about the Court's readiness to police the Treaty's limits. A dubious milestone is Procureur de la Republique v Adbhu (11) in which the Court famously hailed environmental protection as 'one of the Community's essential objectives' at a time when only legislative practice, and not the text of the Treaty itself, could justify such a claim. The case law is admittedly not one-dimensional. In Tobacco Advertising--more properly, Germany v Parliament and Council (12)--the Court for the first time annulled a Directive as lying beyond the competence attributed to the EC by the Treaty. The measure harmonised rules governing the advertising of tobacco products, but the Court found that it made an inadequate contribution to building the internal market and concluded that this was fatal to its validity as a measure of harmonisation. The judgment stands as an assertion of a constitutionalised reading of competence prevailing over purely political preferences. A connection should be made with Opinion 2/94 on Accession to the European Convention on Human Rights, in which the Court ruled that such accession falls beyond the current scope of the competence granted to the EC by its Treaty. This finding matches Tobacco Advertising for it too makes explicitly plain that there are judicially policed limits to the Treaty's functionally broad competences, in casu Article 308 (ex 235). (13) At their core these judgments assert fidelity to the principle of attributed competence in Article 5(1) EC. The legislature may not act in a manner that leads to amendment of the Treaty. But it is too soon to portray the Court as a consistently reliable guardian of 'State rights'. Tobacco Advertising establishes a test which is far from precise. (14). And in subsequent applications of the threshold test the Court has by contrast offered no relief to applicants seeking the annulment of measures in rulings including Netherlands v Parliament and Council (15), R v Secretary of State ex parte BAT & Imperial Tobacco (16), Swedish Match (17) and Alliance for Natural Health (18)--even though in some of these cases some powerful arguments were advanced against the validity of the adopted measures. The Court has also taken the opportunity in these rulings to emphasise that it will not lightly interfere with the exercise of legislative discretion in matters requiring complex assessment. So legislative harmonization is far from dead. Tobacco Advertising increasingly looks like a highly atypical case, and the recent case law deepens the concern that the Court cannot or will not effectively police the limits of legislative ambition in line with the dictates of Article 5(1) EC. Equally, in the trade law field, the allegation is commonly made that the Court is very quick to assert the functional reach of the Treaty provisions on free movement and competition law, while very slow to accept that there is any case for insulating particular activities at national level from the supervision of EC law. The ruling in ex parte Watts encapsulates the Court's approach in a number of fields where EC trade law sweeps far beyond the limits of EC legislative competence:
'... although Community law does not detract from the power of the
Member States to organise their social security systems and decide
the level of resources to be allocated to their operation, the
achievement of the fundamental freedoms guaranteed by the Treaty
nevertheless inevitably requires Member States to make adjustments
to those systems. It does not follow that this undermines their
sovereign powers in the field' (19)
This has become a standard formula in cases where the achievement of economic integration collides with Member States powers to act in realms where the Community is not competent to act as a substitute legislator. Social security is a common example (20); taxation is another (21); and even the maintenance of public order and the safeguarding of internal security have been revealed as matters of national competence that are nevertheless reviewable in so far as their pursuit impedes cross-border trade. (22) Free movement law stops States acting, in the absence of justification for chosen practices that impede cross-border trade. The Community cannot go further than this: it cannot set the ground rules for the organization of social security systems or taxation or for preserving public order. The EC does not become a substitute regulator, to the detriment of the autonomy of national choices, but it confines the exercise of that autonomy. Naturally one may argue that the Court is being disingenuous in declaring that the achievement of the fundamental freedoms requires legislative adjustment by the Member States while not undermining 'their sovereign powers in the field'. Surely the impact of free movement law is radically to circumscribe the scope of sovereign State choices? Perhaps so: and yet it is submitted that this is embedded deep in the structure of the Treaty. The Court is simply following the logic of the Treaty itself. The Treaty does not place particular sectors of economic activity beyond the reach of its basic rules. To interpret it in a way that manufactured such exclusions would subvert the whole aim of the Treaty. So, in order to make sense of the Treaty, the Court is correct to interpret the free movement and competition rules in an expansive manner. But those provisions do not automatically outlaw practices. Instead they put them to the test of justification. And it is in that process of justification that the Court is called on to recognize the particular features of each industry. This is where the Treaty often provides little help. It is here, then, where EC law intervenes in areas where the Treaty maps out no policy framework, nor even any legislative competence, where the need for an operationally useful 'EC policy' makes its sternest demands. 2 The nature and purpose of an 'EC policy' The purpose of this paper's Introduction, which presents the constitutional background, is to provide an insight into just how challenging the depiction of EC law governing the sale of rights to broadcast sporting events under EC law really is. The EC has no general legislative competence in these realms. The rights in question are property rights, and they initially fall to be determined under national law. Certainly they will differ State by State within the EU. Article 295 EC goes so far as to provide that 'This Treaty shall in no way prejudice the rules in Member States governing the system of property ownership'. Does this place matters pertaining to rights to broadcast sports events off-limits the EC, so that, for example, anti-competitive agreements between right-holders would not be subject to EC competition law? Absolutely not! In the field of free movement the Court has consistently subjected national laws on property ownership to review in so far as they involve nationality-based discrimination. For example in Albore 23 exemption of Italian nationals from the requirement of obtaining an authorisation to buy a property in certain parts of the national territory led to unjustified discrimination against nationals of other Member States and an impermissible restriction on capital movements between Member States. In similar vein the capital provisions of the Treaty preclude the application of national rules requiring a mortgage securing a debt payable in the currency of another Member State to be registered in the national currency. (24) The lesson here is that Article 295's statement that 'This Treaty shall in no way prejudice the rules in Member States governing the system of property ownership' refers to the autonomy of the Member States to structure their own chosen systems of property ownership. But the way in which those systems are operated is subject to review for compatibility with the basic expectations of EC trade law. 25 This is symptomatic of the EC's claim to assert a very broad functionally-based review of national law and practice pursuant to the Treaty provisions on trade law. It means that practices pertaining to broadcasting rights are subject to the Treaty competition rules, notwithstanding the terms of Article 295 EC. And that in turn means that the particular context of the marketing of sports rights must be taken into account against a rather thin and unhelpful Treaty background. For sport generally, the story of its subjection to EC law follows closely the narrative set out above. In short, the reach of EC trade law goes far beyond the limitations on the EC's legislative competence under the Treaty, and this brings in its wake the need to develop a 'policy' that is driven by the dictates of trade integration yet is also appropriately sensitive to the particular needs of sport. This is remarkably challenging--and frequently fiercely controversial. Famously the European Court confirmed in a pair of cases decided in the 1970s that EC law is in principle capable of application to sport. In both Walrave and Koch v Union Cycliste Internationale in 1974 (26) and Dona v Mantero in 1976 (27) the Court took the opportunity to explain that in so far as sport constitutes an economic activity, it falls within the scope of application of Community law. The Community lacks legislative competence in the field of sport. Indeed, even today, the word 'sport' is absent from the EC Treaty itself. But in so far as sport generates practices of economic significance, they are in principle subject to the control of EC law, most prominently the Treaty rules governing free movement and competition. This approach was triumphantly confirmed by the European Court in Bosman. (28) Sport, like other sectors such as education, taxation, environmental policy and consumer protection, demonstrates how the law of the EC may exercise a wider influence than a formal inspection of the text of the Treaty may lead one to expect, primarily because of the extended reach of the rules governing the building of an integrated, competitive market. This constitutional point underpins subsequent rulings of the Court in the field of sport and it also informs the Commission's batch of interventions into the sports field on the basis of the competition rules of the Treaty. The EC's institutions have been firm on this point. The economic implications of sporting practices are enough to bring them within the scope of the Treaty, even if their purpose may be not be profit-making, and, with isolated unfortunate exceptions (29), the main issues before the Court and Commission have concerned the question whether particular practices with an economic impact reflect permissible concern to secure the effective organisation of the game, rather than the question whether the EC can claim any jurisdiction in the first place. And therefore here too the EC has been forced to develop a means to understand how its trade law provisions--free movement and competition law--intersect with sport, an activity which is untouched by the explicit terms of the Treaty and for which the Treaty therefore offers no direction on how, and whether, to load in concern for its peculiar economic, social, and cultural features. This is fascinating, but it is awkward and controversial too. The landmark ruling in Bosman delivered in 1995 is vividly emblematic. Although, as explained, the Court had twenty years earlier identified that sport is in principle subject to EC law, it was only in Bosman that EC law was seen to have practical force. Famously, the consequences of the ruling were that nationality-discrimination in club football had to be eliminated and the transfer system had to be radically amended. EC law did not stipulate what replacement transfer system should be introduced, if any--that would overstep its mandate--but it did require the elimination of existing unlawful practices. (30) Sport was accordingly forced to undergo significant adjustment as a result of the demands of EC law. The vital point for present purposes is that the Court did not deny that football in particular, or sport in general, possesses unusual characteristics that distinguish it from 'normal' commercial sectors. Rather, the Court insisted only that the economic significance of sport secured its subjection in principle to EC law and that those unusual characteristics should then be taken into account in shaping the application of the law. There is, then, room for acknowledging that 'sport is special', but that room exists within the jurisdiction of the institutions of the EC. Is there an 'EC policy' to be discerned in such circumstances? The anxiety is that it may mislead to use a term such as 'policy' which suggests a degree of order and systematization that the EC may be constitutionally incapable of delivering. And yet it is not so misleading. In paragraph 106 of its Bosman ruling the Court remarked that: 'In view of the considerable social importance of sporting activities and in particular football in the Community, the aims of maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results and of encouraging the recruitment and training of young players must be accepted as legitimate.' The practices challenged in the case did not adequately contribute to these aims and they were judged to fall foul of Article 39 (ex 48) EC. But the Court's recognition in Bosman that sport has 'considerable social importance' and that it has two distinct legitimate aims set the scene for subsequent inquiry into exactly what type of practice might permissibly be pursued by governing bodies in sport in conformity with Community law in circumstances where 'normal' commercial actors would expect to be condemned for violation of the Treaty. The ruling in Bosman strongly supports the view that a policy of sorts may be shaped in the application of the trade law provisions of the Treaty which is sensitive to the particular context and the particular sector of the economy which is involved. One might, of course, dispute the particular choices made by the EC's institutions, most prominently the Court and the Commission. But Bosman shows that the case law of the Court embraces a certain vision of the nature and functioning of sport. So what is at stake in this paper is the exploration of an area of law in which the EC necessarily proceeds in an incremental manner. The opportunities for its institutions to shape a 'policy' is constrained both by the constitutional limitations on the matters to which they may pay attention--Article 5(1) looms large!--and also by the accidental patterns of litigation, which may cause practice to develop according to unexpected, eccentric rhythms. This concerns most prominently the Court and the Commission, both of whom are responsible for individual decisions applying the law, though the broader policy direction periodically offered by the Council, the European Council and the Parliament may also serve to embroider the tapestry. It is therefore of the highest importance to ensure that one does not over-state the possibilities of a systematic account of relevant EC law. The pattern of EC law cannot be systematic in the way that a national system may be, because of the limits set by Article 5(1), because of its inevitable entanglement with diverse national law and practice and also because of the accidents of litigation which rarely throw up the opportunity for the adjudicating institutions to handle easy cases that will make good law. On the other hand, this is not necessarily to concede that EC law is ripe for criticism. A qualitative account of its role is required. That the EC Treaty does not lends itself to the shaping of a comprehensive policy of the type that one would expect to find in a national setting does not entail that it is flawed, only that it is different. There is accordingly a rich literature exploring the concept of EC sports law and policy. (31) It explores inter alia how the institutions of the EU seek to piece together a coherent approach to the regulation of sport against a Treaty background which is not at all dedicated to elucidating the peculiarities of sport; how diverse public and private actors, at national, European and international level, seek to exploit EC law to achieve their objectives or to keep it at bay in order to protect their privileges; and generally how EC law erodes the self-regulatory paradigm which has for so long been dominant in sports governance. This is not a challenge that is in any sense unique. In fact, across a great many areas of EC law, policy and practice, one is confronted by the need to make some sort of systematic sense of a set of laws and practices that are not constitutionally dedicated to dealing with the particular subject matter of concern. Take EC consumer law. This comprises the application of the free movement rules of the Treaty to control national measures that impede consumer choice in the wider market--including national measures, as famously in the Cassis de Dijon case (32), that are themselves presented as measures of consumer protection; the body of measures that have promoted market integration by harmonising national consumer law and thereby creating a species of re-regulatory EC consumer law; a package of soft law measures and policy statements on the priorities to be pursued by EC consumer policy; and, last and certainly least, the tiny batch of binding EC measures that have been adopted under Article 153, the narrowly-drafted legislative authority granted to the EC in the specific area of consumer protection with effect from 1993 on the entry into force of the Maastricht Treaty. This package is not capable of being analysed as a pre-planned system of consumer law. For constitutional reasons, combined with reasons of political opportunism, the law has evolved in a much less rigorous fashion. But the product is not random. There are thematic connections that bind together the EC's interventions into consumer law. Commentators have debated the weight and merits of principles and techniques that pervade the acquis such as information disclosure, party autonomy and inquiry into substantive unfairness. They have sought to discover how much 'system' is at stake and to recommend ways to develop law and practice further. (33) This is typical of the search for an 'EC policy' in many areas. EC law and practice 'spills over' to provoke new academic sub-disciplines, as the 'Europeanisation' of many policy sectors that are in explicit terms subject to only a limited interventionist competence granted by the EC Treaty gathers pace. (34) The general lesson is that a programme presented as an exercise in securing market freedom inevitably involves a sustained commitment to rule-making within which a host of public and private actors jockey for position and influence. (35) And the EC has to shape a policy of sorts on all manner of things. Such is the practice of attributed competence, guaranteed as a principle of EC law by Article 5(1) of the Treaty. So now to consider the law governing the sale of rights to broadcast sporting events under EC law. The EC is not equipped with general competence in the field of property law. Nor is it so equipped in the field of sport. Here, then, is a gloriously illuminating case study into competence creep and policymaking in a constitutionally murky setting. What does it mean to speak of an 'EC policy' in such ambiguous realms? My argument is that simply to present the law--or still worse the rules--is to mislead. The ground is less stable than would be the case in a typically national system. But nonetheless my argument is that the EC's institutions deserve respect for creating something that is a good deal more valuable, coherent and reliable than mere case-by-case dispute resolution. The free movement rules are not without significance, but most of all this has occurred in the shadow of the Treaty competition rules. 3 EC competition law 3.1 The general purpose of competition law The market rarely functions perfectly. Producers and suppliers may be immunised from the discipline of competition and the consequent need to satisfy the consumer. As a general observation one may suppose that, in the absence of effective competition between producers and suppliers the 'invisible hand' of the market will be ill-directed. And, as an equally general observation, competition law is motivated by the objective of improving the functioning of the market as a whole. In modern economies competition law and policy is typically directed at the suppression of practices on the 'supply-side' that the market system, supported by private law, cannot root out unaided. Under a general (though not unconditional) assumption that competition is a desirable process, competition law and policy is aimed at ensuring the market is reshaped into a competitive environment. The restraints which would be removed by such laws could be behavioural or they could be structural. Behavioural restrictions would include cartels and restrictive practices agreed by producers and/or suppliers. Producers may prefer collusion to competition. Instead of trying to undercut each other's prices in order to increase sales, they may prefer to arrange a common selling price. This will make life altogether more comfortable for producers, but at a cost to the consumer: price competition will be suppressed. Such cartels appear antagonistic to the fundamental notion of the competitive market. Legal intervention may be justified as a method of correcting the imperfection introduced by producer collusion. Producers must be free to compete, but they are not free under the law to surrender that freedom. The regulatory authority charged with the supervisory task must therefore devise a legal response to the damaging effects of cartels on free competition. Horizontal agreements--those concluded between parties at the same stage of the production or distribution process, that is, firms who are supposed to be rivals--tend to be those which the law greets with most evident suspicion. Vertical deals tend to be far less pernicious and will often ostensibly improve distribution arrangements and, by injecting new sources of supply into a market, may frequently be pro-competitive (though careful case-by-case analysis is always required). So as a general proposition the law is much more permissive in its treatment of vertical agreements than it is of horizontal agreements. Here, however, is where sport may be special. 'The 'horizontal' relationships in organized sport are different in character from those which prevail--and are often anti-competitive--in 'normal' industries. Sports leagues are characterized by the unavoidable interdependence of the participants. This will be re-addressed below. Structural impediments would include monopolies where the pattern of the market is not competitive, irrespective of the behaviour of firms. Put simply, in a monopoly the price and quality of what is produced are dictated by the choice of the producer, not the operation of the market dictated ultimately by the consumer. The law could be used to forestall the creation of monopolies (for example, by forbidding mergers) or to destroy existing monopolies (for example, by forcing large firms to sell off assets). The law would thus root out inhibitions on free competition. But the conventional approach to monopolies is to regulate them--a middle way between preventing monopoly power from coming into existence and destroying it once it has: to accept the existence of dominant economic power but to regulate the firm so that it cannot behave independently. For example, the firm may be subjected to price control or quality standards; it may be obliged to deal equitably with customers, existing or prospective. The essential point is that, once a firm has crossed a threshold of economic power which renders it in part immune from the pressure of competition, it becomes liable to act inefficiently and/or unfairly. There is then a rationale for exercising regulatory control which would not apply if it were economically weaker. In fact such controls in one sense mimic the results which would obtain were a competitive market in operation. In that case, an individual firm's prices would be controlled by reference to those set by rivals, but in a monopoly a regulatory authority may assume that function. The question of the precise level at which prices should be set (in the absence of guidance from the operation of the market) then becomes a point of detail, but one which is itself likely to be controversial. In some areas, however, the purity of competition will not provide the best of all possible markets. Limits on competition may rationally be recognised as desirable. This compromise is often denoted by the comment that the law seeks 'workable' not 'perfect' competition. Desirable behavioural limitations on competition may include collaboration on research and development, where the pooling of resources may secure more effective research work carried out in common instead of duplication of superficial efforts. Desirable structural limitations may be observed in markets which are inappropriate for competition: 'natural monopolies' illustrate this phenomenon. In these circumstances there is a place for competition law, but its function will not be to insist on competition. Instead, the law may be employed to permit beneficial agreements among firms. This implies a need for legal tests apt to distinguish between desirable and undesirable agreements and for institutions charged with the function of making the appropriate assessments. 3.2 Competition law in Europe These general perceptions may be seen to underpin competition law throughout Europe. And they serve also to introduce the structure of Articles 81 and 82 EC, the twin pillars of EC competition law. In Europe competition law and policy have always held a high profile as part of the process of market integration and regulation. The first of the European Communities, the European Coal and Steel Community established in 1952 by the Treaty of Paris, included competition policy provisions. The European Economic Community came into existence in 1958 as the creation of the Treaty of Rome and was of much broader scope than the Coal and Steel Community. That Treaty also included a Chapter entitled 'Rules on Competition', comprising three sections, 'Rules applying to Undertakings', 'Dumping' and 'Aids Granted by States'. Enforcement powers were conferred on the Commission by Regulation. Some of the common policies of the Community emerged slowly over the later part of the twentieth century, with heavy reliance on the laborious development of secondary legislation; this is true of social policy and it is true of fields such as consumer policy and environmental policy. In sharp contrast, however, the fundamental principles of competition policy have always been firmly embedded in the very fabric of the Treaty. The main pillars are Articles 81 and 82 of the EC Treaty (ex 85 and 86), governing cartels and monopolies respectively. The competition rules act as a cornerstone of the activities of the EU, prominent among which remain the establishment of 'a system ensuring that competition in the internal market is not distorted'. (36) The European Court has gone so far as to describe Article 81 EC as 'a fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market.' (37) For the EU, it should also be borne in mind that competition policy operates to regulate a market which is not integrated after the fashion of a national market. This lends to it a special, interventionist flavour not found in a national system. (38) 3.3 European Community Law of Cartels and Restrictive Practices EC restrictive practices law is based on the overall perception that supply side collaboration carries the potential to damage the operation of the market. Article 81 (ex 85) is the relevant provision of EC law, which reads as follows: 1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: a directly or indirectly fix purchase or selling prices or any other trading conditions; b limit or control production, markets, technical development, or investment; c share markets or sources of supply; d apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; e make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of any agreement or category of agreements between undertakings; --any decision or category of decisions by associations of undertakings; --any concerted practice or category of concerted practices; which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: a impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; b afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question. Article 81(1) contains the basic prohibition. The application of Article 81(1) is based on the effects of an agreement. It does not matter what form the collaboration takes provided it has an effect which restricts or distorts competition (to summarise Article 81(1)). Article 81(2) contains the sanction for violation of the prohibition, namely the nullity of the agreement (though, as mentioned below, the perpetrators may also be fined). Article 81(3) sets out the criteria for exemption of an agreement falling within Article 81(1). It is here that the insight that not all collaboration is harmful is overtly reflected. Article 81(3) is more precisely drafted than a simple cost/benefit analysis, but its broad purpose is to permit the pursuit of agreements that, though restrictive of competition, are nevertheless beneficial. In practice, since the application of Article 81(3) solely through individualised decisions would be inefficient, the Commission has long found it prudent to issue Block Exemption Regulations. These govern particular categories of collaboration such as research and development (39) as well as providing a more general shelter for vertical agreements (between traders at different levels in the distribution chain). (40) The content of the Block Exemptions is drawn from Article 81(3); in relation to particular deals, they constitute the concrete clause-by-clause expression of the abstract requirements of the criteria for exemption in that Article. (41) Strictly, there is no obligation to adhere to a Block Exemption Regulation: firms may draft a novel agreement and seek to show it falls within Article 81(3). However in practical terms, it is common to choose the convenient route of compliance with the Block Exemption where that is available. At the institutional level within the EU, the administrative application of the prohibition on anticompetitive agreements affecting trade between Member States contained in Article 81 rests with the European Commission, specifically with the Competition Directorate General within the Commission. A supervisory jurisdiction is exercised, initially, by the Court of First Instance, with the possibility of an appeal to the European Court of Justice. The involvement of national bodies is also central to the practical administration of the rules. Both national courts and national competition authorities have responsibilities to apply the EC competition rules. (42) 3.4 Public and private enforcement of Article 81 All three paragraphs of Article 81 are susceptible to enforcement by both the Commission and national agencies. This has not always been so. Outside the sphere of Block Exemptions it used to be the case that the Commission enjoyed the exclusive right to decide whether or not to grant an exemption pursuant to Article 81(3). This meant that commercial parties were required to notify practices to the Commission in search of the protection of exemption. This was burdensome for all concerned. It made a bottleneck of the Commission. It was changed by Regulation 1/2003. (43) Exemption is no longer dependent on a Commission decision. Firms do not notify agreements to the Commission in the hope of securing exemption. Instead they make their own assessment of what is allowed and what is not. Mistaken choices are tackled ex post facto, by an investigation initiated by the Commission and/ or in proceedings before national courts or tribunals who, thanks to Regulation 1/2003, are equipped with the competence to apply Article 81(3) which was denied them for the first 40 years of the lifetime of EC competition law. This system decentralises the application of EC competition law, and increases the number of responsible authorities. The Commission's main preoccupation in devising the modernised system of decentralised enforcement recently instituted by Regulation 1/2003 has been to improve efficient use of enforcement resources. Exemption is no longer its task alone. It is able to rely on national agencies to judge whether the Article 81(3) criteria are satisfied. This allows the Commission to re-allocate the resources it previously spent on dealing with notification of (often benign, sometimes trivial) practices by firms in search of exemption. These resources will be re-routed to the front-line of the campaign to root out and eliminate hardcore hidden cartels, which would of course never have been notified anyway under the old system. (44) The Competition Directorate General in the Commission is powerfully equipped to pursue this quest. Powers conferred initially by Regulation 17/62, but now extended by and rooted in Regulation 1/2003, include powers to enter and to search premises and to seize documentation. Failure to cooperate may attract financial penalties which are independent of sanctions that may be imposed should a violation of the substantive rules come to light. The Commission also rules on whether a violation of Article 81 has occurred and is empowered to impose fines on the participants up to a ceiling of 10% of the firm's world wide turnover. (45) The Commission enjoys a considerable discretion in fixing an appropriate fine, although it is directed by Article 23 of Regulation 1/2003 to consider in particular the gravity and duration of the infringement. Guidelines on the Commission's method in setting fines have been issued (46) and they are supported by a 'Leniency Notice' (47), which, by offering partial or total immunity from fines, is designed to encourage 'whistle-blowing' by participants in unlawful anti-competitive practices. Secret cartels are often best destroyed from within. Fines imposed by the Commission have exceeded 50 million [pounds sterling] on occasion and although the principle of proportionality ensures that most fines are much less severe, the availability of such powerful investigative powers combined with potential penalties of such magnitude mean that taking EC competition law lightly is not a practical option for business. The principle of the direct effect of EC law has always meant that enforcement may be achieved through national courts in addition to activity by the Commission. This is blandly recited in Regulation 1/2003 which provides in Article 6 that 'National courts shall have the power to apply Articles 81 and 82 of the Treaty'. In principle the victim of a cartel incompatible with EC law could initiate proceedings at national level to secure an order that the practice should terminate. As a matter of Community law national courts must effectively protect Community law rights. The landmark ruling in Francovich v Italian State (48) established that in appropriate circumstances this may include an obligation to order compensation in the event of loss suffered as a result of breach of EC law. The case concerned liability incurred by the State. In Courage v Crehan (49) the European Court applied this principle in the sphere of competition law in a case involving two private parties. It observed that the practical enforcement of Article 81 would be promoted if it were accepted that an individual could claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition. The desire to maintain effective competition therefore prompted the Court to rule as a matter of EC law in favour of private actions for damages before national courts in the event of infringement of the Treaty competition rules. (50) An action at national level may be initiated in parallel with a complaint to the Commission. (51) As part of that package the Commission has developed a policy of pursuing complaints only where there is a Community interest in doing so, leaving other matters to be pursued by the complainant at national level. This attempt to organise enforcement priorities and to promote decentralisation has secured judicial support. (52) The Commission is eager to rely ever more heavily on national-level enforcement. To this end, for example, it recently issued a Green Paper to promote discussion of how to facilitate private actions for damages for breach of the competition rules. (53) Private enforcement of EC competition law before national courts is accordingly a practical feature of the system and although it used to be flawed by the inability of national courts to apply Article 81(3), that obstacle was lifted by Regulation 1/2003. National courts are now expected to apply Article 81 in its entirety. In this sense the ordinary courts of the Member States are also courts responsible for the application of EC competition law. As explained, Regulation 1/2003 was directed at 'decentralising' enforcement of EC competition law, thereby to improve its effectiveness. Not only national courts but also national competition authorities are intended to form part of this scheme. National competition authorities are also enabled to apply Article 81 in its entirety. The point of the pattern of enforcement crafted under Regulation 1/2003 is supposed to be that it will be tough to hide anti-competitive practices. There are many pairs of enforcement eyes and many places to challenge unlawful conduct. A solution had to be found for the risk of duplication of effort--or, worse, the risk that an agency in one Member State may go one way in enforcing the law, an agency elsewhere a different way and the Commission in a different direction again. The Commission, aware of these risks, has begun to establish a pattern of co-operation between responsible bodies pursuant to Articles 11--16 contained within Chapter IV of Regulation 1/2003. What is foreseen by these provisions is a 'network' of European competition agencies designed to encourage consistent application of the law within the newly decentralised system. The Commission has duly published a Notice on cooperation within the Network of Competition Authorities. (54) It is also explicitly provided that where the Commission initiates proceedings this shall 'relieve the competition authorities of the Member States of their competence to apply Articles 81 and 82.' (55) So the Commission can, in effect, pull rank. Moreover it is explicitly--and logically--stated that neither national courts nor competition authorities may take decisions which would run counter to a decision already adopted by the Commission. (56) In fact this makes concrete in a particular case the general consequences that flow from the European Court's celebrated insistence that within the scope of the EC Treaty EC law is supreme over national law and must accordingly be applied by national courts in preference to any conflicting national law. (57) Regulation 1/2003 also makes explicit the answer to the question whether a practice which may affect trade between Member States but which does not restrict competition within the meaning of Article 81(1) or which fulfils the conditions for exemption under Article 81(3) may be subject to prohibition based on national law. It may not. (58) So, in the particular context of competition law, the constitutional relationship between EC law and national law is such that it prevents Member States relying on domestic law to authorise practices which fall foul of Article 81 EC; and, moreover, it disallows stricter national approaches to practices that are within the jurisdictional reach of, but compatible with, Article 81. These constitutional rules have less overt practical significance than one might initially imagine, because in most parts of Europe domestic competition law today chooses to follow the EU's model (59), not least in order to reduce the costs that would be incurred by business in complying with the layers of diverse regulation. So clashes are rare in practice. (60) But in so far as they occur the constitutional primacy of the EC rules is guaranteed. Therefore understanding the treatment of sale of broadcasting rights under EC law is absolutely vital to any national competition lawyer in Europe. 3.5 Control of the abuse of a dominant position: European Community Monopoly Law Article 82 (ex 86) acts as the EC monopoly control provision, although the terminology used is prohibition of 'abuse of a dominant position'. Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: a directly or indirectly imposing unfair purchase or selling prices or unfair trading conditions: b limiting production, markets or technical development to the prejudice of consumers; c applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; d making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. Any control system must devote careful attention to the proper definition of a monopoly. Products may be interchangeable. The sole producer of widgets is not in a monopoly in economically meaningful terms if there are available sources of gizmos, a product that is readily interchangeable with widgets. If the widget producer hoists prices, consumers can switch to gizmos. There is no rationale for treating the market as a monopoly enjoyed by the widget producer. More subtly, even where a producer is the single source of widgets, for which there is no other interchangeable product, there is no monopoly if other producers are capable of altering their techniques in order to enter the market for widget production. In such circumstances, consumers have no immediate alternative supply source, but prices should nevertheless be held down to competitive levels because the sole active producer knows that price rises will attract new firms into the market, offering lower prices and consumer choice. Markets should therefore not be assessed as static. They should not be treated as monopolistic where they are in fact 'contestable'. The need to define markets with care applies equally to geography as to product. The only British producer has no monopoly if the British market is open to external competition from sources of supply based in other countries. Monopoly law, like competition law generally, deals with the state of markets, so that where those markets change shape, the application of the law too must adjust. These issues of market definition are critical in any policy of monopoly control. An underestimation of actual or potential competition will lead to an overestimation of market power. This in turn may prompt an intervention in the name of monopoly control where there is no monopoly. However, if a monopoly is identified, control may be judged appropriate in light of the potential damage caused by the absence of competition, ultimately to the detriment of the consumer. The chief relevant piece of evidence that a firm has sufficient economic strength to render it subject to the Article 82 obligation not to abuse a dominant position is its ability to act in the market independently of normal competitive pressures. Article 82 applies to firms able to ignore the demands of 'competitors and customers and ultimately of consumers'. (61) In this matter careful economic analysis of the state of the market is vital, lest intervention be over-hasty or, at the other extreme, unduly reluctant. In practice the Commission's Notice on market definition, published in 1997, is helpful in explaining the factors which the Commission takes into account in determining whether the structure of the market is tainted by dominance and therefore properly subjected to public intervention in the name of controlling abuse of market power. (62) The Notice offers as a guideline a test based on inspection of consumer behaviour. If a 5-10 per cent non-transitory change in the price of a widget does not lead to consumers switching to buying a gizmo instead, then the widget is not regarded as forming part of the same market as the gizmo. They do not compete with each other. So for example in 1998 Football World Cup (63) the Commission applied this test and found that consumers of tickets for the Finals of the Football World Cup did not treat that product as interchangeable with tickets for other football or sports events or other forms of entertainment. This analysis led the Commission to the conclusion that there was a separate market for the supply of World Cup tickets alone. The competition organisers were free of effective competitive constraints on that market. They enjoyed dominant market power and, by applying terms that discriminated on the basis of nationality, they had unlawfully abused it. Monopoly law is typically structured to tolerate the existence of monopolies while regulating the exercise of monopoly power. Article 82 bears precisely this stamp. Abuse is unlawful, dominance per se is not. The firm that is assessed to possess dominant market power is judged to fall under a 'special responsibility' (64) not to abuse that power. The organisers of the 1998 Football World Cup were fined not for holding monopoly power over distribution of tickets, but rather for using that dominant market power to discriminate in favour of purchase by French consumers. Dominant firms may not set unfair prices or act improperly to segregate the market. The most strikingly interventionist feature of Article 82 is that it may be applied in order to require a reluctant dominant firm to respond to consumer demand. In this vein, the Commission found a violation of Article 82 in ITP, RTE, BBC. (65) The three television companies printed separate guides to future programmes, using copyright which they held over their own listings to prevent the appearance of a single, integrated publication. A consumer of the information was thus forced to buy three separate guides. The Court of First Instance upheld the Commission finding that an abuse had occurred in RTE, BBC, ITP v Commission (66) and the European Court subsequently dismissed appeals by two of the television companies. (67) The firms were obliged to make their listings available to third parties, subject to payment of a reasonable fee. The protection of the consumer interest is explicit in this decision, which imposes consumer choice on unwilling firms. Both courts observed that the companies had abused the economic power they enjoyed under their copyright by unjustifiably preventing the appearance of a new product for which there was potential consumer demand. Admittedly the decision is exceptional. Were Article 82 routinely used to strip exclusivity out of the hands of holders of intellectual property rights, commercial incentives to invest in innovation would be diminished. This perception is plainer from subsequent case law. In Oscar Bronner GmbH v Mediaprint (68) Oscar Bronner claimed that Mediaprint was acting in breach of Article 82 by refusing to include Bronner's newspaper in its home-delivery delivery service (for which Bronner was prepared to pay). It failed. It had not been established that it was economically unviable to create a second home-delivery scheme for the distribution of daily newspapers with a circulation comparable to that of the daily newspapers distributed by the existing scheme. Mediaprint was entitled to keep Oscar Bronner out of the distribution network it had itself built up, even if that might diminish the consumer's opportunity of gaining ready access to Bronner's product. The exercise of an exclusive right may, in exceptional circumstances, involve an abuse condemned by Article 82, but that had not occurred in Oscar Bronner. So Article 82 is an important provision but holders of monopoly power are not reduced to the puppets of regulators. (69) Enforcement of Article 82 lies in the hands of the Commission and national courts and tribunals. Much of the comment above relating to Article 81 may be applied mutatis mutandis to Article 82. Violations of Article 82 tend to involve particularly large undertakings, and fines are commonly at the higher end of the scale. Article 82 is directly effective and may consequently be enforced before national courts at the suit of private individuals. And, consistently with the account given above of the constitutional relationship between EC and national law, it is not permitted that national law approve practices that are prohibited by Article 82. EC law must remain supreme over national law. However, a distinction from Article 81 applies here: whereas a practice which may affect trade between Member States but which does not restrict competition within the meaning of Article 81(1) or which fulfils the conditions for exemption under Article 81(3) may not be subject to prohibition based on national law, by contrast it is envisaged that a Member State may take stricter action against unilateral conduct which goes beyond that foreseen by Article 82. (70) These provisions apply to the sale of rights to broadcast sporting events. The detail is explored more fully below, after a brief portrayal of the economic context. 4 The economic context of sport and broadcasting Bosman (71) has been widely treated as a far more significant agent for change in sport in recent years than is realistic. Of course the judgment has brought to an end intra-EU/EEA nationality discrimination in club football, and, by generating adjustment of the scope of the transfer system, it has altered the nature of the relationship between player and club. (72) But the dominating issue in professional sport over the last decade and a half has been the transformation of the broadcasting sector. Sweeping deregulation and doses of privatisation have combined with extraordinarily rapid technological change affecting the delivery of media and audiovisual services to convert broadcasting into a fiercely competitive and volatile sector. (73) It is well known that broadcasting undertakings, and in particular new market entrants seeking to establish awareness of their presence among potential customers, have chased the acquisition of rights to transmit sports events with a zeal that reflects the intense appeal of sports coverage to viewers (and to advertisers). Football and Formula One motor racing sit in a lucrative position at the top of the European tree. Media companies have vigorously pursued the acquisition of contractual rights--most of all, new entrants want exclusive rights to broadcast the most popular events, where, in some cases, consumers have a 'must see!' attitude. (74) In some cases media groups have even tried to secure a controlling interest in sports clubs themselves (75) or, at least, a lesser stake that increases their influence on decisions to sell rights (76). Simple economics dictates that the explosion in the number of actors on the demand-side of the market combined with the relative difficulty in increasing the supply of truly attractive events leads to vast increases in the prices charged by the sports industry for broadcasting rights. Most recently the English Premier League was reported to have sold the rights to broadcast matches over a three-year period beginning in 2007 for a combined total of 1.7 billion [pounds sterling]. The cost to broadcasters of the three-year deal that stretched from 2004 to 2007 was only just over 1 billion [pounds sterling]. (77) It is plain that rights to broadcast sports events, as a saleable commodity, have become sufficiently lucrative in recent years to transform the whole structure of professional sport as a commercial enterprise. Opportunities to sell branded merchandise, such as club shirts, have provided another explosion of revenue, further enriched by the growing appreciation of the need to protect and exploit image rights. The fan who pays at the gate is no longer the main source of revenue for sports clubs. The alteration of the transfer system post-Bosman is frankly a sideshow compared with this cascade of commercialisation. (78) So the prominence of EC law's intervention in sport in recent years is above all the consequence of the 'commercialisation' of the sector, in particular as a result of its close association with the helter-skelter development of the broadcasting industry. In fact, much of the most economically significant sports-related material that tumbled into the Commission's in-tray in the late 1990s was concerned directly or indirectly with broadcasting. In some respects the Commission's recent preoccupation with sport has been driven by its need to monitor the commercially much more important broadcasting sector, in which it is profoundly anxious to forestall practices that will facilitate existing incumbents' anxiety to impede new entrants. And it is highly plausible that the pace of technological change will increasingly throw up new forms of rapid mass communication, generating intensified fragmentation in the pattern of supply of audiovisual services. This will fuel yet more demand for rights to broadcast sports events, and bring with it yet more challenges for EC competition law. (79) It is Article 81 that has been the main area of activity. As the case involving ticketing for the 1998 World Cup (80), the regulation of agents (81) and the ongoing Oulmers litigation (82) make clear one could certainly not exclude the possibility that Article 82 could play a role in review of sporting practices in cases of non-substitutable products and services. This is particularly pertinent in circumstances where a sports federation which enjoys monopoly power in making the rules that govern the sport makes decisions with direct commercial implications. This may apply in the case of sale of broadcasting rights. In FIA (Formula One) part of the Commission's objections related to rules that provided a financial disincentive for contracted broadcasters to show motor sports events that competed with Formula One. (83) The Commission was satisfied with a solution according to which the FIA retreated to a regulatory role, thereby releasing broadcasters to make their own commercial choices about which events to show. In principle then, the practices of sports governing bodies that have an impact on the broadcasting sector are subject to control under Article 82 EC where they go beyond what is necessary for the functioning of the sport. Put another way, in such circumstances a sports regulator becomes (also) a commercial undertaking. (84) However, most of the relevant activity has focused on control of selling of rights pursuant to Article 81. The selling of broadcasting rights in Europe takes many forms. One of the best known is the 'Eurovision' set of arrangements, which involve the collective buying and sharing of rights and which demonstrate the pressing commercial impetus towards cross-border collaboration in the European market for broadcasting services which has for regulatory, linguistic and cultural reasons long been fragmented along national lines. But how does Article 81 apply? The Eurovision system has been the subject of two favourable exemption Decisions by the Commission, both of which have been duly annulled by the Court of First Instance for want of accurate analysis. (85) This is doubtless rather embarrassing for the Commission, though the saga, which will be examined in depth below, is illuminating and emblematic of the complexity of the calculations at stake. However, as a general observation there is no automatic objection to such arrangements under the competition rules of the EC Treaty. In fact, it is entirely plausible that such arrangements are pro-competitive in so far as they group together operators who would not have the economic power to enter into the relevant transactions on an individual basis. However, the detailed way in which such schemes are structured, in particular in so far as they may damage the position of parties excluded from the arrangements, may generate anti-competitive concerns, and this has generated considerable activity at EC level. There are three issues which dominate the law governing the sale of broadcasting rights. First, exclusivity: what is the legal approach to the sale of rights to a buyer who acquires an exclusive right? Second, collective selling: what is the legal approach to the sale of rights in circumstances where the sellers join together, typically as members of a League operating collectively? Third, collective purchasing: what is the legal approach to the acquisition of rights in circumstances where the purchasers join together? There are also further issues concerning limitations on the disposal of broadcasting rights--by sports federations ('blocking rules') or by the EC regulator ('protected events' legislation). These matters are now examined in turn. 5 Exclusive selling 5.1 The scope of the prohibition Article 81 prohibits agreements which have as their object or effect the prevention, restriction or distortion of competition within the common market, subject only to the possibility of exemption in accordance with the criteria set out in Article 81(3). So one may suppose that where a seller agrees to supply a buyer with rights to broadcast sports events on an exclusive basis, Article 81 is engaged. After all, the exclusivity of the deal shuts out other would-be competitors who are unable to gain access to the content. And yet this would be to go too far. This approach, taken to its logical extreme, would mean any contract is subject to control under Article 81. This would be to extend the Treaty competition rules beyond their intended purpose. It is instead necessary to focus in a more economically informed manner on what should be the proper reach of Article 81. And simply because a seller grants exclusivity to a buyer of rights does not mean that Article 81(1) is automatically engaged. One of the Court's most important early examinations of the issue arrived in Nungesser v Commission. (86) The case involved the transfer of technical knowledge. The agreement conferred exclusive rights for Germany on Nungesser. The Court observed that a so-called open exclusive licence involved the owner undertaking not to grant other licences in respect of the same territory and not to compete himself with the licensee on that territory. Did this have the effect of preventing or distorting competition within the meaning of (what is now) Article 81 of the Treaty? The Court acknowledged that the grant of exclusive rights for a limited period is capable of providing a further incentive to innovative efforts. To prohibit an exclusive licence would cause the interest of undertakings in licences to fall away, which would be prejudicial to the dissemination of knowledge and techniques in the Community. So the Court concluded that 'the grant of an open exclusive licence, that is to say a licence which does not affect the position of third parties such as parallel importers and licensees for other territories, is not in itself incompatible' with the Treaty. So Article 81(1) does not automatically catch the sale of an exclusive right, even though such may initially appear to be a 'restriction' on trade. In fact it is no more than trade itself! But the implication is clear--this is not an unconditional exclusion of the application of Article 81. And in Nungesser the Court made clear that it would not countenance a licence which suppressed parallel trade: that is, one under which the parties to the contract propose, as regards the products and the territory in question, to eliminate all competition from third parties, such as parallel importers or licensees for other territories. As suggested above, vertical deals generally have pro-competitive implications because they inject fresh competition into the market. They deserve, and typically receive, positive regulatory treatment, albeit not unconditionally so. Exclusivity is commonly a necessary element in a successful vertical deal. The grant of exclusivity is hugely attractive to the buyer, who may thereby be induced to invest much more confidently in the quality of the product--itself a clear consumer benefit. In this vein the case law that has followed the Court's important lead in Nungesser is vast and is not usefully set out here at length. (87) Coditel should however be mentioned for its sector-specific relevance: it is one of the earliest cases in which the Court set out clearly that an exclusive licence for the distribution of films is not without more to be regarded as a violation of Article 81(1). (88) The important general point is that the Court is prepared to accept that some apparent restrictions on trade are immune from control under Article 81(1), provided that they are (loosely put) necessary as part of a package for securing the conclusion of desirable deals. Put another way, what may appear to be a constraint on competition is unaffected by Article 81 where it is unavoidably required to sustain the functioning of an arrangement which is unobjectionable in the light of EC law. 89 In this sense Article 81 must be interpreted in its true economic context. The Court of First Instance has helpfully captured what is at stake: '...it is not necessary to hold, wholly abstractly and without drawing any distinction, that any agreement restricting the freedom of action of one or more of the parties is necessarily caught by the prohibition laid down in Article 81(1) of the Treaty. In assessing the applicability of Article 81(1) to an agreement, account should be taken of the actual conditions in which it functions, in particular the economic context in which the undertakings operate, the products or services covered by the agreement and the actual structure of the market concerned ..... ' (90) In a similar vein of insistence on a realistic (and not unthinkingly broad) reading of Article 81(1) the Court of First Instance has recently explained that: 'The examination required in the light of Article 81(1) EC consists essentially in taking account of the impact of the agreement on existing and potential competition ... and the competition situation in the absence of the agreement ..., those two factors being intrinsically linked.' (91) So, adopting this line of analysis, the sale of rights on an exclusive basis does not necessarily fall within the scope of Article 81. It may not be a restriction on competition. One should consider inter alia what would happen without the exclusive deal; if the answer is 'no deal at all' then the conclusion may be that far from restricting competition the exclusive deal in fact would have helped to inject fresh competition into the market. But unduly tight or lengthy restrictions will not escape subjection to Article 81 in this way. Nor would the Court countenance a licence which suppressed parallel trade. And an agreement conferring exclusive rights should be assessed in the context of any 'network effects' that are involved if that is relevant in the particular market--that means, an agreement's impact on competition must not be assessed in isolation if the economic reality is that the agreement is not an isolated transaction. (92) So the sale of rights on an exclusive basis is not of itself subject to condemnation as a violation of Article 81(1). It depends on the precise terms and it depends on the particular market. This then translates into the detailed decision-making. Close attention to relevant market conditions is quite correctly the norm. (93) And this provides the key to determining what restrictions stretch beyond what is necessary for the protection of the seller's interests and what is therefore caught by the prohibition in Article 81(1). How to apply these principles of law to the sports sector? As already sketched above, technological change and ubiquitous deregulation has combined to ensure that the market to acquire rights to broadcast sports events on an exclusive basis has become hugely commercially significant. Under the pressures imposed by this volatile situation, the Commission's preoccupation with the need to set out a tolerable clear indication of its approach was manifest in an important and influential paper published in 1998 by an official in the Competition Directorate-General, Anne-Marie Wachtmeister. In that paper, crisply entitled Broadcasting of Sports Events and Competition Law (94), it is stated that 'Exclusivity is an accepted commercial practice in the broadcasting sector'. It maximises profitability for the buyer and is the key to building up a new audience. But 'duration, quantity and upstream and downstream market power need to be examined in order to assess whether the exclusivity seriously restricts competition'. Following the lead of the Commission's 1997 Notice on Market Definition (95), the paper is significant and valuable for its insistence on the central function of proper market analysis for these purposes. This allows assessment of the foreclosure effect of the exclusive arrangement--it is this that determines whether Article 81(1) bites. Appreciation of the structure of the demand-side of the market will condition the application of the rules. In Champions League 96 the Commission defined the market as one for the acquisition of television broadcasting rights for football events played regularly throughout the year. So international club competitions are part of the same market as national club competitions. Acquisition of exclusive rights to broadcast a popular football competition may be handled differently from acquisition of rights to broadcast a sport of interest only to a minority of viewers such as weightlifting or bog-snorkeling. The markets are different: so, for example, a 5-year exclusive deal would, it is submitted, be highly unlikely to escape the application of Article 81 in the former case but may conceivably do so in the latter. Seven years of exclusivity was provisionally reckoned by the Commission to be too long in Dutch football. (97) Similarly in FIA (Formula One) 98 broadcasters had exclusive rights for the contracted territory that were too long in the Commission's estimation. The agreed solution was to cap the length of new free-to-air broadcasting contracts at three years, albeit with exceptional provision for five-year deals where a particular need to encourage investment is present. The fundamental issue is whether broadcasters can access other sources of material that will allow them to compete effectively. The less plausible this is, the more serious the foreclosure effect. Some very popular events are, in the eyes of consumers, stand-alone events: they will not watch something else as a substitute. In such circumstances the supplier's market power is very strong. (99) An abiding regulatory concern in such circumstances is the damage done to the consumer by lengthy exclusive deals, which, moreover, have the capacity to shut the door on potential new competitors, who, though not in themselves the target of legal protection, are nevertheless important players in shaping a market that will fulfil the objectives of the Treaty. What this means in practice is that exclusive selling of rights to 'premium' sports events attracts close regulatory concern. The longer the grant of exclusivity, the more acute the regulator's scepticism. But this must be balanced against the perception that, as mentioned above, a grant of exclusivity is hugely attractive to the buyer, who may thereby be induced to invest much more confidently in the quality of the product--itself a clear consumer benefit. A balanced assessment of a deal is always vital. Licensing on a territorial basis is common in the sale of sports rights. However, this is not of itself treated as artificial market-partitioning which would be condemned as a violation of Article 81. Rather it reflects reality. Tastes and preferences do show divergences when one crosses a frontier. (100) Sub-licensing rights as a mitigation of an exclusive arrangement might be sufficient to win a green light. (101) The issue here is damage to competition: provision for sub-licensing lessens the risk. As ever, the assessment depends on the market conditions. In some circumstances, where the threat of market foreclosure is minimal, sub-licensing obligations will not be required. At the other extreme, where an exclusive deal threatens severe market foreclosure, even sub-licensing might not be enough to haul the arrangement out of the grip of Article 81(1)'s prohibition. Wachtmeister summarises the position in the following terms: 'Sublicensing should not be regarded as a solution to all the competition issues which arise. In most cases it will be necessary and sufficient to deal with, for example, exclusivity which is of an excessive duration or scope'. (102) The Commission has decided that Pay-TV constitutes a market that is separate from television funded by commercial advertising and public television financed through a combination of feed and advertising. (103) Because sources of funding are different the conditions of competition are different too. For advertising-financed television there is a direct commercial relationship between the supplier of the programme and the advertiser. On Pay-TV the relevant relationship is between supplier and viewer as subscriber. The point is that practices within one sector do not have an impact on the other, once one has concluded the absence of substitutability means that the markets are not the same, and that this therefore conditions the assessment under competition law. That means, more specifically, that anxieties about the acquisition of a high market share in one form of television by firm Z would not be alleviated by the fact that firm X has a high market share in another form of television. 5.2 Exemption If an agreement does not fall within Article 81, it is immune from intervention based on the relevant EC rules. If an agreement does fall within Article 81, this does not mean it is automatically prohibited. Article 81(1)'s prohibition is supplemented by Article 81(3) which gives scope for exemption. So sale of rights to broadcast sports events on an exclusive basis could conceivably fall within Article 81(1), yet secure an exemption pursuant to Article 81(3). Article 81(3) contains two positive and two negative criteria that must be satisfied by an agreement in order to secure entitlement to exemption. The practice must 'contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit'; and it must not 'impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives', nor 'afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question'. In the case of sale of rights to broadcast sports events on an exclusive basis, one could readily imagine that the deal could be presented as a contribution to improving the production or distribution of goods or to promoting technical or economic progress because of the incentives created by the grant of exclusivity to penetrate new markets and to improve the quality of the product in order to increase market share--all of which is perfectly conceivably in the interest to consumers. The precise conditions of the deal would need to be scrutinized in order to be satisfied that it is not marred by restrictions which are not indispensable to the attainment of its objectives. It would also be necessary to ensure that the parties to the deal are not afforded the possibility of eliminating competition in respect of a substantial part of the products in question, which plainly requires careful examination of the structure of the particular market in question. The Commission's Notice on market definition is helpful and influential on this point. 104 In fact, in all cases careful examination of the prevailing market structure is essential in determining the application of not only Article 81(1) but also Article 81(3). Accordingly existing decisions can be no more than illustrative of general approach and in no sense reliable 'precedents'. However, as a general observation, one could readily envisage that sale of rights of an exclusive basis could in appropriate circumstances--in particular where the market remains sufficiently competitive despite the exclusive tie-up--secure an exemption pursuant to Article 81(3) even if it falls within the scope of Article 81(1). There is little practice to report in the sports sector. On one of the very few occasions on which the Commission has entered these waters a 'comfort letter' expressing a favourable view of conformity with the requirements of Article 81(3) was issued in relation to a five-year exclusive deal to supply rights to broadcast football matches struck between BBC, BSkyB and the English Football Association. (105) A significant factor prompting the Commission's readiness to shine a green light was the concern to allow BSkyB, then a fledgling satellite broadcaster, a sturdy platform on which it could develop a durable presence in the market. Absent such special considerations which prompt benign regulatory scrutiny one would not normally expect to see such an extended period of exclusivity permitted in a market for such popular events. In the Commission's Helsinki Report on Sport, published in 1999 (106), a list of practices declared to be likely to be exempted from the competition rules included the sale of an exclusive right, limited in duration and scope, to broadcast sporting events. Of course, in strict jurisdictional terms, such practices may not even fall within Article 81 in the first place, in which case there is no need to address the question of exemption--and indeed it would be improper to do so. (107) But if exemption is required the Commission has here sketched the conditions for a favourable attitude. In law the key text is the Block Exemption Regulation on Vertical Restraints. This is Commission Regulation 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices. (108) Regulation 2790/99 is based on an assumption, amplified in its Preamble, that vertical agreements are apt to improve economic efficiency by facilitating better coordination between the participating undertakings. They tend to permit the reduction of transaction costs. Nonetheless such efficiency gains must be balanced against anti-competitive effects which may follow from agreed restrictions contained in vertical agreements. The cost-benefit calculation is heavily affected by the market power of the undertakings concerned: to what extent is their commercial freedom of action confined by competition from other suppliers? Article 3 therefore establishes a threshold based on market share. (109) The Regulation withholds the benefit of a block exemption from agreements where the share of the relevant market accounted for by the supplier exceeds 30%. Below that crucial market share threshold of 30%, exemption is permitted to vertical agreements falling within the scope of the Regulation--although even then, below the threshold, certain types of severely anti-competitive restraints are not granted the green light. Article 4 excludes from the scope of exemption vertical agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object: a the restriction of the buyer's ability to determine its sale price, without prejudice to the possibility of the supplier's imposing a maximum sale price or recommending a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties; b the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods or services, except: * the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer, * the restriction of sales to end users by a buyer operating at the wholesale level of trade, * the restriction of sales to unauthorised distributors by the members of a selective distribution system, and * the restriction of the buyer's ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier; c the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment; d the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different level of trade; e the restriction agreed between a supplier of components and a buyer who incorporates those components, which limits the supplier to selling the components as spare parts to end-users or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods. Article 5 supplements this. Exemption is not available in the case of any of the following obligations contained in vertical agreements: a any direct or indirect non-compete obligation, the duration of which is indefinite or exceeds five years. A non-compete obligation which is tacitly renewable beyond a period of five years is to be deemed to have been concluded for an indefinite duration. However, the time limitation of five years shall not apply where the contract goods or services are sold by the buyer from premises and land owned by the supplier or leased by the supplier from third parties not connected with the buyer, provided that the duration of the non-compete obligation does not exceed the period of occupancy of the premises and land by the buyer; b any direct or indirect obligation causing the buyer, after termination of the agreement, not to manufacture, purchase, sell or resell goods or services, unless such obligation: * relates to goods or services which compete with the contract goods or services, and * is limited to the premises and land from which the buyer has operated during the contract period, and * is indispensable to protect know-how transferred by the supplier to the buyer, and provided that the duration of such noncompete obligation is limited to a period of one year after termination of the agreement; this obligation is without prejudice to the possibility of imposing a restriction which is unlimited in time on the use and disclosure of know-how which has not entered the public domain; c any direct or indirect obligation causing the members of a selective distribution system not to sell the brands of particular competing suppliers. So there are clauses in such agreements which EC competition law will simply not tolerate. In particular, deep-rooted anxiety about territorial segmentation in the European market is visible in these provisions. There are several reasons--among them the rules concerning market share stipulated in Article 3 of the Regulation--why it will be abnormal for a contract for sale of rights to broadcast sports events on an exclusive basis to fit within Block Exemption Regulation 2790/1999. This does not mean that such arrangements cannot be exempted. An agreement that falls outwith a Block Exemption falls to be assessed on its own merits in the light of the criteria governing exemption contained in Article 81(3) EC. The approach found in the Block Exemption would, one would suppose, compare with the approach to assessing conformity with Article 81(3) on an individual basis. After all, Regulation 2790/1999 makes concrete the application of the Article 81(3) criteria to a particular type of deal. But, as mentioned, there is little regulatory practice to report in the sports sector. There might be an anxiety that the law is not very predictable. There is some truth in this. It has been suggested that a grant of three years' exclusivity should normally be permitted, even if the content is of premium quality. (110) This is probably about right. But markets differ and so therefore do legal assessments. 'Know your regulator' is good advice, although even here the elimination of the Commission's monopoly over the grant of exemption pursuant to Article 81(3) by the 'modernisation' Regulation 1/2003 (111), effective from 1 May 2004, means that proceedings before national courts and competition authorities are also features of the legal map where exemption is at stake. (112) Ultimately it seems correct to conclude that the law governing exclusivity in the selling of rights to broadcast sports events is an application of general EC competition law. Sport is a little bit special, in the sense that acquisition of exclusive rights to broadcast the top events is doubtless of unusually great commercial importance, but in law it is not so very special. Market analysis is of central importance, as is true in all cases involving the grant of exclusive rights. The next issue for consideration is potentially rather different. 6 Collective selling of rights to broadcast matches Rights to broadcast sports events are commonly sold on a collective basis. So it is typical, though not at all inevitable, that a sports league will sell rights to broadcast matches en bloc (perhaps on an exclusive basis, perhaps not), rather than leaving individual clubs to sell rights to broadcast individual matches. This is collective selling. It plainly raises questions about the application of the Treaty competition rules. Is this not a case of a restriction of competition? The collective arrangements replace the market that would otherwise exist for purchase of rights from the individual participants in the league. It is, in fact, a horizontal arrangement between operators at the same level of the market--the clubs, suppliers of rights to broadcast matches--and as explained above horizontal agreements are treated with great caution in orthodox thinking about competition policy. And yet--as also suggested above--horizontal agreements in sport require careful appreciation. The relationship between clubs in a sports league is not precisely the same as the relationship between producers of sausages or makers of tractors. There is a necessary interdependence between clubs in a sports league. Each participant needs the others to survive as credible rivals, against whom to compete. A market's sole producer of sausages or sole maker of tractors enjoys great economic power, for consumers have no choice. A solitary sports team is of no interest to anyone. It needs rivals. So in a sports league the horizontal relationship prevailing between the clubs is not that same as that which one finds in a normal market and the law must take account of that, or else risk mishandling the peculiar economic context in which the sports league operates. 6.1 The phenomenon of 'interdependence' in sports leagues As a general observation, one would expect the peculiar economic interdependence of clubs in a sports league to be reflected in rules which secure a certain equality between clubs designed to keep alive healthy competition. Systems of internal wealth distribution would not exist in 'normal' industries, but in sport they are indispensable, though, of course, fixing the desirable ambit of such intervention requires refined calculation. (113) One would suppose that the establishment of a 'solidarity fund' within a sport, to which wealthier clubs are required to contribute from the proceeds of, inter alia, the sale of broadcasting rights and ticket income and on which poorer clubs may draw for financial support, would escape supervision under EC competition law. It would not restrict competition within the meaning of Article 81(1) EC; rather, it is an arrangement that is inherent to the business of professional sport. And there are other matters that are agreed collectively between participants in a sports competition which are, loosely, the rules of the game, rather than restrictions on competition within the meaning of the EC Treaty. Examples include fixing the numbers of players per team (114) and the scheduling of fixtures. A similar approach has been taken to rules forbidding multiple ownership of football clubs. (115) Eliminating any suspicion of match-fixing is indispensable to genuine sporting competition, and therefore any consequent restriction on commercial opportunity to acquire football clubs could not be regarded as a restriction falling within Article 81(1) EC. Such arrangements do not fall within the scope of Article 81 at all. (116) My own view is that this is given a perfectly coherent legal explanation by the adoption of the Court's Wouters formula. In Wouters (117) the Court stated that in applying Article 81(1) account must be taken of 'the overall context in which the decision of the association of undertakings was taken or produces its effects. More particularly, account must be taken of its objectives .... It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives'. The case had nothing to do with sport. It concerned Dutch rules prohibiting multidisciplinary partnerships between members of the Bar and accountants. But the statement of principle that the notion of a restriction falling within Article 81(1) must be assessed in context is readily capable of general application. One would in this vein employ Wouters to underpin an argument that the overall context in which sports regulation occurs, built around pursuit of a broad objective of fair and balanced competition, produces effects which though apparently restrictive of competition are nonetheless inherent in the pursuit of those objectives. That means that a sports rule which exerts a restrictive effect which goes beyond what is needed to achieve its objectives is subject to control under EC law. (118) But what may appear to be a constraint on competition is unaffected by Article 81 where it is unavoidably required to sustain the functioning of an arrangement which is unobjectionable in the light of EC law. (119) 6.2 Collective selling--law and practice Collective selling of broadcasting rights is different. If rights are available only on a collective basis--so that a purchaser can buy only the output of the whole League--then a market for acquisition of rights belonging to individual clubs has been suppressed. Admittedly the precise nature of the legal right that is at stake is dictated by national law. (120) The Commission has tentatively decided to proceed on the basis that there is co-ownership of rights to broadcast matches held by a competition organiser and the clubs. (121) But the essential point is that even though EC law does not determine the ownership or content of such property rights, it does affect the way in which the rights are exercised. This illustrates the constitutional point made earlier that the Treaty competition rules have a much wider sweep than the EC's legislative powers. Sport escapes the latter but it does not escape the former. Under the collective system, broadcasters are forced to compete for one package, and are unable to deal with individual clubs, among whom there would otherwise be competition in selling. (122) It is admittedly plain that clubs would have nothing to sell unless other clubs agreed to play against them. Fixtures cannot be arranged unilaterally--this is the nature of sport. But once clubs agree to play against each other, the subsequent decision to sell rights to broadcast matches on a collective basis is restrictive of competition. And whereas it may well be convenient for sports leagues, and perhaps even for (some) broadcasters too, to arrange the sale of rights on a collective basis, it is by no means necessary to do so to make the league viable. (123) So collective selling restricts competition within the meaning of Article 81(1) EC, in so far as it has an effect on inter-State trade. It is unlawful unless it is justified. This preference normally to treat collective selling as a restriction falling within the scope of Article 81(1) is visible in the important Commission policy document published in 1998 under the name of Anne-Marie Wachtmeister and considered above. 124 This document connects the legal analysis to broader policy concerns by adding the warning that '[s]uch restrictions on output could in turn slow down the development of new broadcasting technologies at the national and cross-border levels'. And the subjection of collective selling to Article 81(1) is precisely the line of reasoning formally adopted by the Commission in Champions League, the most important decision dealing with collective selling of television rights (albeit not one that exhausts the interest in the matter for the future). In July 2001 the Commission sent a statement of objections to UEFA, European football's governing body, complaining that its arrangements for the sale of broadcasting rights to the 'Champions League', the principal (and hugely lucrative) European club football competition, infringe Article 81. (125) UEFA sells rights collectively on behalf of all participating clubs. It has preferred to sell to broadcasters on an exclusive basis, typically under arrangements covering a period of several years. The Commission is careful to observe that it does not object to collective selling of sports rights as such. (126) However, it states that it considers that UEFA's scheme constitutes a substantial restriction on competition, not least because of the foreclosure of the market to potential entrants into a sector capable of dynamic evolution, and that although it in principle recognises the need for wealth distribution and solidarity within the sport, the UEFA arrangements go beyond what is necessary to achieve these legitimate ends. UEFA duly responded by proposing an amended system involving, in short, an 'unbundling' of the package of rights available for purchase. More operators, including internet content providers as well as more traditional public and private broadcasters, will be able to acquire a degree of involvement in the coverage of the Champions League. This is an important point with obvious thematic connections to the general attitude of the Commission to the importance of ensuring that deals have the minimum effect of foreclosing the possibility of entry into developing markets. So much restriction is tolerated--only so much. The Commission expressed itself favourably disposed to this plan for competitive diversification which, it considered, would benefit football fans while also assisting the growth of new technology in the media sector. (127) The Commission concluded its investigation by adopting a formal Decision in the Champions League case in July 2003. (128) It concluded that the collective selling arrangements restricted competition within the meaning of Article 81(1). This was not a set of arrangements that were indispensable for the organisation of sport. Rather, this was a commercial choice, with significant implications for the competitive process. The Commission accepts that football clubs are bound to cooperate in organising a league, so, for example, agreeing fixtures would not be a 'restriction' on competition, but it concluded that recognition of this special relationship of interdependence does not justify treating an agreement to sell rights to broadcast matches in common as anything other than a restriction which can stand only if exempted according to the orthodox criteria set out in Article 81(3). (129) So could the deal be exempted pursuant to Article 81(3)? According to the Commission--yes! The system created a single point of sale for defined 'packages' of matches, which the Commission considered generated efficiencies that were of a particularly significant magnitude as a result of the elimination of the need for broadcasters to deal with many different clubs subject to different ownership structures in different jurisdictions throughout Europe. Transaction costs were kept relatively low. (Identification of this advantage was also a factor in the Commission's earlier favourable treatment of Eurovision (130)). Moreover, the joint selling scheme for the 'Champions League' tightened UEFA's grip on the competition's organisation and allowed the commercially advantageous 'branding' of the competition as an unfragmented European product. Media operators would share in the advantages and they would be duly transmitted to consumers. The restrictions on competition were judged indispensable to provide these economic gains and competition would not be eliminated in respect of a substantial part of the media rights in question. The Article 81(3) criteria for exemption were satisfied. In general Champions League demonstrates how the detailed application of Article 81 promotes the broader regulatory concerns of the Commission in its handling of the broadcasting sector. Collective selling has clear economic advantages, but it has costs too, specifically in the elimination of competition on the supply-side. At stake is a balance. The length of the contract is carefully scrutinised: the opportunities for new players to enter the market to acquire rights forms part of the assessment, especially where, as here, technological progress holds out the possibility of significant and rapid innovation that should yield benefits to the consumer. (131) This important Decision was widely expected to assume a high profile in future treatment of rights' selling arrangements within national sports Leagues under both EC and national competition law. For example, Herbert Ungerer, a senior official in the Competition Directorate-General, used it as a blueprint 132, providing a checklist of relevant factors emerging from the case. The Commission expects to see: An open tender An unbundling of the offer to allow more than a single buyer No excessive exclusivity--duration of the order of three years will often be acceptable No automatic renewal, which is often just a disguised extension of the duration of exclusivity. These are necessary elements in the quest to prevent vertical foreclosure, though Ungerer added that some markets may raise extra concerns where, for example, joint selling leads to excessive concentration in the downstream market. Where the single buyer can acquire the pool of matches, there may be regulatory concerns. 6.3 Champions League--application to collective selling at national level The expected powerful influence of Champions League has become reality. In fact, in advance of the Commission's Decision in 2003 on UEFA's arrangements for collective selling of rights to broadcast the Champions League, there had been some inquiry into selling by national leagues pursuant to national competition laws. In Germany, collective selling in the Bundesliga was condemned by the competition authorities but subsequently granted statutory approval. 133 The matter was also examined at the some length by the UK's Restrictive Practices Court in its 1999 ruling which found in favour of the legality of collective selling arrangements practised within the English (football) Premier League. (134) It is, of course, perfectly possible that national competition law shall pursue different objectives from those mandated for EC law by its Treaty, for good or bad reasons. The UK's Premier League case was decided under the antiquated and subsequently repealed Restrictive Trade Practices Act, which had little in common with the effects-based EC system and which was vulnerable to the criticism that it lacked economic nuance. (135) The UK has subsequently changed the law in order to establish a domestic model that is much more closely aligned with the EC model. (136) Indeed, as mentioned above (137), in most parts of Europe domestic competition law is largely a replica of the EU's model. However, this paper is concerned to examine EC competition law, not domestic competition law. So although approaches taken within the Member States may be of interest for the purpose of comparative reflection, the key practical point focuses on the relationship between EC competition law and national competition law. This was explained above. Within the scope of the EC Treaty EC law is supreme over national law and must accordingly be applied by national courts in preference to any conflicting national law. A national court may not rely on national law to permit a set of arrangements which are contrary to the prohibition contained in Article 81. This, of course, reveals the limits of concessions made to sport under national law, whether in statutory form or through judicial decision-making. A practice that, for example, did not affect trade between Member States would lie outside the scope of Community competition law. It could therefore be dealt with as the State authorities please, even according to assumptions that contradict those underpinning EC competition law. But, as this paper has explained, in practice the EC's jurisdictional reach is broad. It will be relatively uncommon for matters with an economic impact to be of purely local concern. Not only international sports events but also the more popular national competitions provide a particularly good example of products with growing transnational appeal. And once the matter falls within the scope of the EC Treaty, the doctrine of supremacy dictates that EC law must prevail over national law in case of conflict. So, notwithstanding the statutory approval granted to collective selling in Germany and the judicial green light allowed in the UK pursuant to the Restrictive Trade Practices Act, the Commission duly intervened and asked that the participants notify the agreements to it. In law the application of Article 81 cannot be undermined by diverse national regulatory preferences. In the case of the German Bundesliga commitments to loosen the prevailing form of collective joint selling were made legally binding by a Commission decision. Under the agreed new arrangements collective sale of broadcasting rights is not eliminated but it should occur in a manner which is open, transparent and non-discriminatory. In particular, the Bundesliga has undertaken to offer unbundled packages of rights for a duration not exceeding three seasons. The aim is plainly ensure that all rights are regularly offered to a large number of operators, in order to foster competition and choice in the market. Moreover, clubs are permitted to sell their own branded services to their fans, and there is provision for wider scope to sell new media products and services. This is plainly designed to stimulate innovation. (138) The Competition Commissioner Neelie Kroes's summary is illuminating in its depiction of the Commission's aspirations in the application of Article 81 in such circumstances: 'This decision benefits both football fans and the game. Fans benefit from new products and greater choice. Leagues and clubs benefit from the increased coverage of their games. Readily available premium content such as top football boosts innovation and growth in the media and information technology sectors. Moreover, open markets and access to content are an essential safeguard against media concentration.' (139) Joint selling of rights to broadcast matches in the English Premier League has similarly been handled in the light of Champions League. It was mentioned above that the English Premier League was reported to have sold the rights to broadcast matches over a three-year period beginning in 2007 for a significantly higher sum than that which it had extracted from broadcasting for the preceding three-year period--up from just over 1 billion [pounds sterling] to some 1.7 billion [pounds sterling]. (140) From the perspective of Article 81, the most striking point concerns the identity of the buyer. Under the 2004-2007 deal (and earlier ones) the purchasing broadcaster was Sky, a subscription channel. Its determination to acquire exclusive rights to show live Premier League matches was firmly in line with the perception that broadcasters desperately need exclusive access to 'premium' sports events in order to build up a profit-making base of subscribers. This, however, contradicted the Commission's general policy preference for wider involvement in downstream markets for the acquisition of rights to broadcast sports events and, more specifically, the Commission declined to accept that such arrangements could continue in England in conformity with Article 81. A statement of objections was issued by the Commission in 2002, declaring the Commission's concern that the arrangements for joint selling restricted competition contrary to Article 81. Eventually, after protracted and occasionally acrimonious negotiation (141), the Commission announced in March 2006 it had brought its investigation to an end, and that it had accepted binding commitments from the Premier League relating to future selling. (142) The core features of the agreed new system involve open and competitive bidding, and the availability of a wider range of rights, including those pertaining not only to television but also to mobile phones and the internet. For live television no fewer than six packages would be put on sale, with no buyer permitted to acquire all six. The anxiety to prevent a monopoly, albeit one limited in time, that will tend to make the market rigid is evident. In fact, Sky has retained its grip on the lion's share of matches, buying four of the six packages while two were acquired by an Irish based broadcaster, Setanta. It remains to be seen whether this system will really improve the consumer's lot. 143 Do consumers really want choice and price competition in this newly fragmented downstream market or would they prefer, as in the past, to be able to get all available matches from a single source at a single price? 6.4 Collective selling--unresolved questions about the place of 'solidarity' Champions League is an important but not exhaustive treatment of the legal issues at stake in the collective sale of rights to broadcast sports events. An open question is whether collective selling can be justified by reference to the need for organisational solidarity in sport. Consider resources raised from collective selling which are then distributed within the game in a fashion which reflects not only relative success and popularity but also the need to sustain lively competition--'horizontal solidarity'. Broader still, consider the use of resources raised by collective selling of rights to broadcast professional sport to nurture the 'grass roots' of the game--'vertical solidarity'. The basic point is that, in accordance with orthodox economic logic, the fact that the collective system of selling has restricted supply will ensure that the price paid by buyers will be higher than the (aggregate) price that would have been paid for rights sold on an individual basis by clubs. The losers are third parties--the purchasing broadcasters. From their perspective the restriction on competition caused by the collective agreement between clubs causes a diminution in choice and an increase in price. And although the system may indeed allow clubs to raise more revenue than would otherwise be possible and may also permit them to make administratively convenient arrangements to distribute that income among clubs and to the grass roots, the fundamental question is just why the sports industry should be permitted to improve its position at the expense of third parties, a category here covering both existing broadcasters and potential broadcasters kept out of the market by the restrictions imposed on supply. Champions League does not address this issue. In pursuit of exemption UEFA advanced an argument founded on solidarity. (144) It argued that raising revenue in this way enabled it to share income for the general benefit of the game. The Commission accepted the desirability of promoting a balance between clubs playing in a League. It also accepted the value in encouraging the supply of young players. These objectives may be realised by cross-subsidy from rich to poor. This, of course, loudly echoes Bosman. The Commission expressed itself in favour of the 'financial solidarity' principle, and referred to its endorsement in the Nice Declaration on Sport, examined further below. But-crucially--could such desiderata suffice to outweigh the restrictions on competition inherent in a system of collective selling? In Champions League the Commission skipped clear of this point. It did not need to decide it. The criteria for exemption were already made out as a result of acceptance of the contribution of joint selling to delivering efficiencies, suppressing transaction costs and improving the brand. The issue avoided by the Commission is of great legal and political delicacy. It is one to which the Commission has been gently and cautiously drawing attention for some time. In its Helsinki Report on Sport, published in 1999 (145), the Commission sketched its view of the role of a "European Sports Model". This possesses a number of features, most prominently grouped around the contrasts drawn with North American sports practice. (146) For the Commission, European sport is characterised by, among other features, the notion of solidarity, stretching from the apex of the sport to the "grass roots". This has a direct connection with the question of the permissibility of collective selling of broadcasting rights. The Commission commented in the Helsinki Report that any possible exemption granted to collective selling arrangements would have to take account of the benefits for consumers and the proportionate nature of the restrictions in relation to the end in view. This is orthodox fare under Article 81(3) EC. It observed that it is therefore appropriate "to examine the extent to which a link can be established between the joint sale of rights and financial solidarity between professional and amateur sport, the objectives of the training of young sportsmen and women and those of promoting sporting activities among the population". In similar vein Commissioner Monti has cautiously suggested that "financial solidarity between clubs or between professional and amateur sport" could be a relevant factor in assessing whether to grant an exemption to collective selling. (147) This is strikingly less orthodox as an articulation of the matters that are properly taken into account under Article 81(3). This line of thinking hints intriguingly at use of the power to exempt restrictive practices as a method for insisting that fostering the social and educational function of sport is a condition for giving a green light to collective selling. The cartel is permissible provided its proceeds are shared throughout the sport for the sake of its general health. (148) Is this sound as a matter of law? It is submitted that the orthodox approach under Article 81 would be to condemn collective selling as an unlawful restriction on competition between clubs and broadcasters and to expect clubs to sell rights on an individual basis. Only then, once this has occurred, would the issue of sport's need for internal organisational solidarity be properly invoked. It would be permissible and plausibly rational (in the service of an interesting competition) for participant clubs to work together to distribute proceeds from these individual sales in a manner which reflects the collective need to sustain healthy competition. One may also suppose that the clubs have some incentive to water the grass roots of the game with part of the income generated. That is to say, the sports-specific anxiety to sustain an attractively competitive league would be reflected only after third party broadcasters have enjoyed the right to participate in a 'normal' competitive market for sale of rights. The question whether there any room for sport to argue that its special interests should prevail over those of broadcasters--that collective selling should be permitted, despite its detrimental impact on broadcasters, because sport is entitled to maximise its revenues and/or entitled to raise money collectively so as to facilitate its ready internal distribution, is unresolved. I am sceptical. The approach to be found in the Commission's 2004 guidelines on the application of Article 81(3) is committed to preventing any stretching of the criteria for exemption beyond those found in Article 81(3). 149 Objectives identified elsewhere in the Treaty may play a part in the appreciation of whether an apparent 'restriction' really constitutes a practice falling within Article 81(1): what may appear to be a constraint on competition is unaffected by Article 81 where, analysed in its proper context, it is required to sustain the functioning of the activity in question. 150 However, as explained above, collective selling may be appealing to those running a sports league but it is not an indispensable element in its functioning. As a restriction on competition it therefore falls within the scope of Article 81(1). This then places the focus on the possibility of exemption pursuant to Article 81(3). Arguments designed to justify the restriction on competition must be apt to be routed through one of the criteria set out in Article 81(3). The Commission's 2004 Guidelines seem to reveal a preference to barricade Article 81(3)'s walls against incursion by what may loosely be termed 'non-economic' factors. On this reading, if a practice is incapable of exemption pursuant to Article 81(3) it cannot be saved by reference to horizontal Treaty provisions such as Article 151(4). And if it merits exemption under Article 81(3), it cannot be denied it for neglect of other interests. 151 This implies that the promotion of cultural objectives which are not congruent with decisionmaking orthodoxy under Article 81 is possible only under other Treaty provisions. It cannot yet be stated with confidence that the Commission has got this right, although this line of reasoning does bear some resemblance to the Court's attitude to the relevance of the horizontal provisions of the Treaty in the exercise of the competence to harmonise under Article 95. The conditions for recourse to Article 95 must first be satisfied before any question of the impact of the horizontal provisions can arise. (152) My suspicion is that the defence of collective selling that falls within Article 81(1) by resort to arguments of solidarity (rather than the essentially economic arguments which prevailed in Champions League) is weak. Sport should find other means to promote solidarity which do not impose costs on third party broadcasters and ultimately on consumers, such as internally-arranged sharing of income. 7 Collective Purchasing The matter of collective purchasing of rights also requires attention. As a general observation there is no automatic objection to such arrangements under the competition rules of the EC Treaty. In fact, it is entirely plausible that such arrangements deserve favourable treatment in so far as they group together operators who would not have the economic power to enter into the relevant transactions on an individual basis; and/or because they permit the economically efficient reduction of transaction costs. However, the detailed way in which such collective purchasing schemes are structured, in particular in so far as they may damage the position of parties excluded from the arrangements, may generate anti-competitive concerns, and this has generated activity at EC level. One of the best known features of the European broadcasting sector is the 'Eurovision' set of arrangements. These involve both the purchasing and the sale of rights. This system has over time been handled rather awkwardly, even ineptly, by the Commission, but nevertheless it is possible to glean from the decision-making practice and its judicial scrutiny a tolerably clear impression of what is permitted and what it not. The background to 'Eurovision' is provided by the European Broadcasting Union, an association of radio and television organizations set up in 1950 and based in Switzerland. It represents its members' interests in the field, including by the promotion of exchanges of radio and television programmes. Reflecting the history of the European broadcasting sector, most members had traditionally been public-sector organizations or bodies entrusted with the operation of a public service and commonly enjoying a monopoly. Times change: so too does technology. In 1984, the EBU for the first time admitted as a member a private television organization, the French company Canal Plus. In general the pattern of the sector began thereafter rapidly to change--to fragment--as ownership structures and regulatory patterns altered and technological development occurred. The tensions involved in these changes are visible in the interventions of the Commission, supervised by the Court of First Instance, into Eurovision. Through 'Eurovision' itself, which has been in existence since 1954, the EBU organises the exchange of television programmes. Members offer to the other members, on the basis of reciprocity, their news coverage of important events and their coverage of current affairs and of sports and cultural events taking place in their countries. This, of course, is generally helpful in enabling all members to provide a high quality service in the relevant fields to their own viewers. And, as part of this scheme, members of the EBU are able to participate in a system of joint purchasing of television rights to international sports events, also embracing the sharing of rights once acquired. Originally the benefit of the services of the EBU and Eurovision was exclusively reserved to their members. However, from 1988 the governing statutes envisaged that contractual access to Eurovision could be granted to associate members and non-members of the EBU. The Commission's investigation into the Eurovision system began in the late 1980s, as the wave of change broke over the broadcasting sector. It was prompted in particular by complaints by third parties about their inability to extract sub-licences to broadcast material acquired by the collective action of the members of the 'Eurovision' scheme. In 1993 the Commission issued its first Decision. (153) It found that the joint purchasing arrangements struck between the members of EBU restricted competition within the meaning of Article 81(1). However, it concluded that the system yielded significant economic benefits. This was sufficient to persuade the Commission that an exemption pursuant to (what is now) Article 81(3) should be granted. Its duration was five years. The Commission's green light was conditional upon the acceptance of sub-licensing of rights to third party non-members as an element in the Eurovision scheme. This, however, was an outcome that did not satisfy some third parties. The matter was brought before the Court of First Instance in search of annulment of the Commission Decision. The applicants before the CFI had, in differing ways and for differing reasons, found themselves unable to gain the level of access to the EBU's services that they desired. Their application was successful. (154) The Court of First Instance focused in particular on the EBU's exclusion of purely commercial channels. In its Decision the Commission had found this to be a distortion of competition within the meaning of Article 81(1) which was nonetheless indispensable within the meaning of Article 81(3). But the Court considered the Commission had failed adequately to demonstrate that the EBU membership rules were objective and sufficiently clear so as to enable them to be applied uniformly and in a non-discriminatory manner. Therefore, in the absence of such analysis, the rules, as restrictions on competition, could not be deemed 'indispensable'. The EBU reconsidered its position and prepared a revised set of rules. The Commission subsequently adopted a further exemption Decision in favour of Eurovision. (155) It found a restriction of competition between members who would, without the collective purchasing scheme, have competed against each other to acquire rights, but it found that collective purchasing reduced the transaction costs that would have been associated with a plethora of separate negotiations. In general, the arrangements ensured that more sporting events were broadcast by a larger number of broadcasters. The Article 81(3) criteria were met. This favourable treatment was based on significantly adjusted arrangements making the jointly purchased rights more readily available to non-members, including pay-TV operators. (156) As the Commission recognises in its Decision this is a matter of huge commercial sensitivity given the surrounding environment of escalating prices of rights to broadcast major sports events. (157) And accordingly the temptation to proceed once again to litigation was irresistible. The matter was once again the subject of judicial review initiated by broadcasters aggrieved at their position 'on the outside' of the EBU. Once again the Commission Decision was declared unlawful. (158) The Court of First Instance objected to the rules governing the sub-licensing scheme and also to the thoroughly unhelpful way in which they were applied in practice. The Commission had contended that the sub-licensing scheme guaranteed that live transmission rights which were not used by EBU members would be made available to their non-member competitors. The CFI examined the system and it did not agree. This meant that the Commission's view that the sub-licensing scheme prevented the elimination of competition in the relevant market was not well-founded and that therefore the Commission had made a manifest error of assessment in the application of Article 81(3). The background to this litigation is, of course, provided by the increasing ferocity of competition in the market for rights to broadcast major sporting events. What conclusions should be drawn from this saga about the expectations of EC law in the shaping of collective purchasing arrangements in the broadcasting sector? First of all, accurate economic analysis is vital. It must be demonstrated that there is a violation of Article 81(1). This is not inevitable. (159) In particular where individual operators would lack the necessary economic strength to enter relevant markets to purchase rights, a collective system may be viewed as a means to promote new competition and therefore, examined in its proper economic context, not as a restriction on trade within the meaning of Article 81(1) at all. Market analysis in the Eurovision cases revealed, however, that a sufficient degree of restriction of competition was the product of the collective purchasing scheme and that therefore in that case Article 81(1) was triggered. Even if a deal is caught by Article 81(1), it may be eligible for exemption pursuant to Article 81(3). This requires compliance with the four criteria, two positive, two negative, contained therein. It is perfectly conceivable that such criteria could be satisfied by a collective purchasing agreement--just as in Champions League the Commission came to the conclusion that collective selling generated economic benefits to the sellers in the shape of improved branding of the product and reduction of transaction costs. (160) Collective purchasing, as a general observation, goes some way to tackling the costs generated by the fragmentation along national lines of much of the European broadcasting sector. As the Commission accepted in Eurovision--and on this point it was not contradicted by the CFI--collective purchasing is capable of reducing transaction costs by eliminating the need for multiple individual negotiation and it can promote the wider distribution of programmes. But any restriction on competition must be carefully scrutinized--in the terms of Article 81(3) it must be 'indispensable' to achieve the claimed economic benefits of the practice. The principal lessons of the Commission's travails in Eurovision involve understanding the importance of paying attention to the impact on third parties of the arrangements under scrutiny. It is here that objectionable anti-competitive features are most likely to arise. And the CFI twice refused to accept the Commission's view that as much as possible had been done to alleviate the damaging effect of the Eurovision scheme on the competitive position of non-members. So the Decision granting an Article 81(3) exemption was not upheld. There is no necessary objection to membership rules per se. But they must be objective and sufficiently clear so as to enable them to be applied uniformly and in a non-discriminatory manner. Rules which do not meet these criteria cannot be treated as 'indispensable' and so cannot be exempted under Article 81(3). Moreover, sub-licensing arrangements are clearly treated as a necessary element in any possible exemption under Article 81(3), given the market power exercised by the members of the EBU acting collectively through Eurovision. The CFI insists that the rules governing sub-licensing as well as their practical management should form part of the examination into whether the Article 81(3) criteria are satisfied. 8 Blocking rules A Commission Decision of April 2001 addressed UEFA's rules permitting national football associations to prohibit the broadcasting of football matches within their territory during a two-and-a-half hour period on a Saturday or Sunday corresponding to the normal time at which fixtures are scheduled in the relevant country. This, one would suppose, impedes the commercial freedom of broadcasters to conclude deals to show matches at designated 'blocked'times, but it serves the end of sustaining a lively atmosphere in stadia by encouraging spectators to attend matches 'live' rather than merely fester in front of a television set. The Commission concluded that the rules fell outwith the scope of application of Article 81. In the Press Release concerning this matter Mr Monti is quoted as observing that the decision "reflects the Commission's respect of the specific characteristics of sport and of its cultural and social function" (161). However, the text of the formal Decision published by the Commission reveals a different, narrower story (162). The Decision is in fact based on routine market analysis. The Commission finds that the UEFA rules do not appreciably restrict competition within the meaning of Article 81(1) (163). It explicitly states that it therefore need not assess the extent to which the televising of football exerts a negative impact on attendance at matches (164). The Decision is, admittedly, built on appreciation of the specific nature of the market for rights to broadcast football matches, just as all competition decisions take proper account of applicable market conditions, but it is to go too far to make Mr Monti's breezy claim that it reflects the Commission's respect for sport's "cultural and social function". It would be more accurate to state that market analysis conducted under Article 81 has led to a conclusion which does not assert a basis for interference with the autonomy of football governing bodies to choose to 'block' the broadcasting of matches. It is not the Commission's business to embark on an assessment of sport's cultural and social function, except in so far as it may be relevant under Article 81(3), and, even though the criteria governing exemption are not necessarily wholly incapable of influence by what may be loosely termed 'cultural factors', as discussed above, such broader considerations are scrupulously excluded from the formal Decision on UEFA's blocking rules, which is confined to Article 81(1) alone. 9 Burdens imposed because of the distinctive nature of sporting competition: 'protected' or 'listed' events Legislation governing "protected" or "listed" events is popularly supposed to have been introduced in order to ensure that particularly high-profile sporting fixtures are available to the general public without the need to pay a subscription to the broadcaster, but, at least in its EC dimension, this is in fact a misleadingly inflated view of the degree of legal intervention that exists. The relevant legislation at EC level is a good deal less interventionist, and a good deal more ambiguous, than the common misperception holds. 9.1 'Listed events' under the 'Television without Frontiers' Directive The so-called "Television without Frontiers" Directive, Directive 89/552, was amended by Directive 97/36 (165), and it is the latter Directive that provides the source of the relevant provisions. The Directives are based on the Treaty provisions governing co-ordination of laws in the establishment and services sectors (166) and are accordingly measures of market integration, operative in a sector technologically well suited to transfrontier growth. Because several Member States have regimes which, in differing ways, involve some degree of intervention into the manner of broadcasting major sporting events, it was decided that some attempt be made to supply an EC-level framework for resolving the collision between such regimes and the quest for an integrated European market. This, of course, is a classic example of the endemic tendency of a policy of trade integration to spill over into other sectors. Because States have taken a stance on patterns of intervention designed to limit market freedoms, the EC, devising a regulatory framework for a broader European market, must respond by making its own choices about the content of the regime that shall be adopted at European level. So co-ordination and harmonisation is much more than a technical process of fixing a framework of common rules for a common market; instead it involves inevitable and sensitive selections of regulatory style and philosophy. So, in this instance, questions of sport and culture, in respect of which the EC lacks any general legislative competence, are nevertheless drawn on to its legislative agenda as a result of the wide-ranging functional impact of the programme of harmonisation and co-ordination of laws. In this vein, recital 25 of Directive 97/36 observes that Article 128(4) EC (now Article 151(4)) "requires the Community to take cultural aspects into account in its action under other provisions of the Treaty". Harmonisation is permissible only provided a sufficient contribution to market-building is demonstrated, but in shaping the content of the harmonised regime it is perfectly proper for cultural policy to be taken into account, just as consumer policy and public health policy affect the shaping of market-integrative rules at EC level (167). So, offering a fine illustration of these regulatory ripples, the opportunity was taken on the amendment effected by Directive 97/36 to include new provisions on "protected events" in the EC regime. 168 But, as one may have anticipated, given the sensitivity of the issues at stake, there is no question of the matter being dealt with exhaustively at EC level. In fact, the EC rules governing protected events are a very strange beast indeed. Of particular relevance to the current paper, they illustrate the point that the EC's policy on sport is extraordinarily ill-defined to the point of challenging the very validity of the claim to constitute a 'policy' at all. The relevant provision is Article 1(4) of Directive 97/36, which among other things provides for the insertion of a new Article 3a into Directive 89/552. Article 3a provides that "Each Member State may take measures in accordance with Community law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis events which are regarded by that Member State as being of major importance for society in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such events via live coverage or deferred coverage on free television". The underlying anxiety is plainly that broadcasters to whom a fee must be paid by viewers to secure access to transmissions will acquire exclusive rights to major events with the consequence that the general population will be deprived of the opportunity to view such events for free 169, but the word "may", the fourth word in this extract, is vital to grasping the nature of the regime. There is no obligation imposed on Member States. The Commission has properly emphasised that this is a "voluntary provision". (170) The issue is national choices, not EC requirements. Article 3a of Directive 89/552 does not define more precisely the circumstances in which the power conferred may or should be exercised. Having introduced the notion of events of "major importance for society", the provision proceeds simply to require a Member State which choose to exercise this power to draw up a list of events which it considers to fall into this category, and then to notify the Commission of measures taken or to be taken to protect them from falling into the hands of broadcasters who will act in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such event on free television. These measures are to be scrutinised by the Commission and published in the Official Journal. A complementary transnational dimension is added by Article 3a(3) of Directive 89/552. This provides that Member States shall ensure that broadcasters under their jurisdiction do not exercise the exclusive rights purchased by those broadcasters in such a way that a substantial proportion of the public in another Member State is deprived of the possibility of following events which are designated by that other Member State as carrying major importance for society. This is, of course, necessarily a mandatory rather than voluntary provision as far as Member State authorities are concerned; were it otherwise, one State's choices would be readily undermined by another's lack of concern in so far as broadcasters established in the latter State had acquired rights "listed" by the former State. The event of "major importance for society" is a category which is amplified in the Preamble (171), but which is nevertheless inevitably subjectively defined. As one would have readily predicted, State practice varies. The majority of States have designated no events as carrying major importance for society pursuant to Directive 89/552 (as amended). Those that have exercised the available power have made very different choices. (172) It comes as no surprise that no Member State apart from the United Kingdom reckons the televising of Test match cricket to fall within the preferred scope of protection; nor that Italy alone lists the San Remo music festival. But there is wide variation even in connection with events which one would suppose would be of more-or-less equally powerful interest State by State. The Finals of Football's World Cup, staged every four years and won by a European country as often as not, are "listed" in their entirety in the United Kingdom, whereas as far as Germany, Austria and Ireland are concerned only the Final, Semi-Finals, Opening Match and matches of the respective national team are included on the list, while Italy lists only the Final and matches of the Italian national team. Moreover, the lists change. Denmark notified the Commission of its list in 1999 but withdrew this with effect from the beginning of 2002 and it now operates no list of the type recognised by Directive 89/552. (173) As yet there has been little relevant litigation. In Infront WM AG v Commission the applicant (formerly the Kirch Media Group) objected to the UK's list, which affected rights which it owned and which consequently affected its commercial position. (174) However, the decision of the CFI casts no light on the regime generally. Infront challenged the letter sent by the Commission to the British authorities advising them that it had no objections to the notified measures. The CFI concluded that this letter was susceptible to judicial review because, by triggering the mechanism of mutual recognition foreseen by the Directive, it was endowed with binding legal effect and it also found the applicant to possess the necessary standing for the purposes of Article 230(4). (175) The CFI then annulled the decision for procedural reasons. The College of Commissioners had not been consulted. The ruling demonstrates that access to the Community courts for disgruntled rights-holders is possible, but the decision reveals nothing about more profound questions concerning the willingness of the Community judicature to inquire into the Commission's role under Article 3a of the Directive and/or the choices made by Member States. However, the Directive appears to establish a relatively loose set of discretionary rules. One would not imagine a court would lightly interfere with decisions taken within its framework, even though it is plain that the decisions in question are likely to have considerable commercial impact. 9.2 The nature and purpose of the regime In commercial terms this type of legislation, introduced at national level and reflected in the EC's Directive, has the potential to be very significant indeed. Technological growth and, in particular, the rise of privately-owned broadcasting companies, a sector that has flourished since deregulation became fashionable beginning in the late 1980s, has injected a great many more players on to the demand-side of the market and, with supply of major sporting events incapable of parallel increase because of consumer attachment to the existing small pool of established major events (176), the cost of acquiring rights to major sporting events has accordingly increased dramatically in recent years. Indeed, as addressed earlier, it is well known that broadcasters seeking to enter new markets regard acquisition of exclusive sports rights as the pre-eminent method for rapid acquisition of a viable market share. This characteristic has further contributed to the race upwards in pricing. Traditional "free" public broadcasters now find themselves operating in a much less cosy competitive climate than that which prevailed twenty years ago. In so far as this legislation governing "protected events" enshrines a priority for such broadcasters it may be thought beneficial to consumers for it improves the chances of popular events being available for free viewing. From the perspective of the sports industry, by contrast, direct or indirect interference with the right to sell to the highest bidder is commercially alarming, and may call into question the opportunity fully to exploit an extraordinarily lucrative market. And this may diminish the level of investment in the quality of the product, which is likely to be to the detriment of consumers. So this is a complex situation. At the very least, one cannot avoid the conclusion that rules requiring the availability of sports events on 'free' television do not offer the consumer a free lunch. An appetite for litigation is one likely outcome of this commercially sensitive yet loosely defined set of rules (177), but at a deeper policy level it is far from clear quite why this type of regime exists. Some--a minority (178)--of Member States have chosen to adopt relevant legislation, and this, in Directive 89/552 (as amended), has then become the subject of 're-regulation' undertaken by the EC as part of the process of building an integrated EU-wide broadcasting market. But why protect sports events in this way? A troublingly unbalanced 1996 Resolution of the European Parliament considers "it essential for all spectators to have a right of access to major sports events, just as they have a right to information" while paying no attention to the costs that right-holders incur as a result of the legal safeguarding of such a "right". (179) Recital 18 to Directive 97/36 refers to a "right to information" and to ensuring "wide access by the public to television coverage" of events of major importance to society. Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms provides that the right to freedom of expression shall include the right to "receive and impart information without interference by public authorities and regardless of frontiers". This formulation is now also to be found in Article 11 of the EU Charter of Fundamental Rights of the European Union, proclaimed at Nice in December 2000 (180), which is to be interpreted to conform with the Convention (181). True, Article 10 of the ECHR adds that States are not to be prevented from requiring the licensing of broadcasting or television enterprises, a proviso absent from Article 11 of the EU Charter. But in any event this seems to bear no relevance to the specific issue of 'protected' or 'listed' events. Information is power and the discourse of fundamental rights is deservedly prominent in analysis of law and policy in the broadcasting sector. (182) The promotion of pluralism in media markets has an initimate connection with sustaining the vibrancy of our democracies. (183) Nevertheless it is a strenuous effort to devise an intellectually satisfying and rational basis for this particular piece of legislation. The Commission's April 2003 Discussion Paper (184) understandably attempts no such thing, confining itself to seeking views on whether the procedures governing protected events should be more tightly defined. Several responses to the Discussion Paper advocated a clarification of the purpose of the system but most--again, understandably--exhibited a primary interest simply to defend their own interests. For example, both the BBC and ITV praised the regime, while by contrast UEFA criticised the legislative favouritism of one type of broadcaster over another. What seems to be at stake here is some notion of citizen entitlements. But can one truly consider that the watching of doubtless exciting and interesting sports events properly engages the language of fundamental rights? Such a proposition exceeds what is currently recognised as the scope of the right to information under the law of the European Convention. (185) One may go so far as to condemn such an approach as apt to demean the quality and dignity of rights discourse. And, moreover, the card of fundamental rights is a trump, but not one held by only one player. The rights to freedom of expression of broadcasters are in no small measure damaged by these interventionist provisions, whereas both the EC legal order and that of the European Convention recognise that commercial parties fall within the personal scope of this regime, albeit that their rights are not absolute. (186) The obscurity of the regime's objectives is matched by its textual lack of lucidity. Given this huge commercially sensitive issue, it is astonishing that the provisions of the EC Directive are so imprecise, yet that imprecision is testimony to the awkward issues that arise when sport as commerce and sport as hot topic in society merge and, in the melee, public and private actors scramble to promote their particular interests. Once a State draws up the list of events that it perceives as being of "major importance for society" it is entitled to take measures to ensure that broadcasters do not broadcast those events on an exclusive basis "in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such events via live coverage or deferred coverage on free television". That may be interpreted to cover intervention that requires coverage on free television. That would plainly severely reduce the price that any other broadcaster would be willing to pay; exclusivity is worth a large premium to the commercial broadcaster eager to increase its portfolio of subscribers and interested advertisers. This would also involve a profound interference with the exercise of the property rights of sporting bodies (187). But is the Directive properly interpreted in this way? Might it be that the public broadcaster is guaranteed access only to the bidding process on a non-discriminatory and transparent basis, so that there is a "possibility" for the general population to have the opportunity of viewing the event on free television, but that it has no legal basis for complaint if exclusive rights are ultimately awarded to a broadcaster with a smaller audience and access to the services of which is dependent on payment by viewers? That would not simply be a question of price, for a free broadcaster may be able to promise a larger audience which may be more attractive to a sporting body aiming to enhance its long-term popularity and to satisfy its sponsors than the short-term profit represented by a higher fee paid by a broadcaster whose services are not available free of charge to the viewer. But, admittedly, according to this interpretation, economic gain not access of the general population would be the key factor in the awarding process. There is no ruling of the European Court on this point. In R v Independent Television Commission, ex parte TV Danmark 1 Ltd (188) the English House of Lords concluded that a Member State in which a broadcaster is based is required to prevent the exercise by that broadcaster of exclusive rights in such a way that a substantial proportion of the population in another Member State would be deprived of the possibility of watching a listed event on television. Regrettably no reference to Luxembourg was made under Article 234 EC. The Commission for its part has done no more than briefly mention this case in its fourth report on the application of Directive 89/552 in the context of a broad comment that application of Article 3a in the period under review had been "satisfactory" (189), an approval repeated in the Discussion Paper released in April 2003 as part of the Commission's consultation exercise on the Directive (190). My conclusion is that the combination of national and EC legislation governing "protected events" diminishes the commercial value of the rights to broadcast such events by interfering in the ability of the holder of the rights to extract the highest price the market would yield. The advantages generated by this intervention, and the rationales for legislating in this way, are remarkably under-explained. What is required is a balancing of the competing interests. If this has been done by the EC legislature, then it has been kept very quiet. The impression is that sport is subjected to a 'special' regime without any sufficiently careful examination of what is and should be at stake. 10 What is the EC's 'policy' on the sale of right to broadcast sports events? This paper began by situating the examination of the EC's treatment of the sale of rights to broadcast sports events not only in the wider context of EC law's treatment of sport and of broadcasting but also, broader still, in a context which questioned the extent which it is really helpful to discuss such matters under the ambitious label of a 'policy'. Given the constitutional limits of EC action, of which Article 5(1) EC represents the key assertion, and given, in addition, the incremental nature of the development of EC intervention in the field (principally involving the Court and the Commission presiding over the application and interpretation of the Treaty competition rules), one might be sceptical of any claim to a 'policy' which is even modestly coherent. The 'protected events' legislation simply adds to the impression of incrementalism. It is far from clear how, if at all, matters such as cultural concerns, and vertical redistribution of wealth--which form part of the European Model of Sport envisaged by the Commission (191)--are properly seen as part of EC law's permitted concerns. This is the consequence of the EC's confinement to pursuit of objectives for which it is given authority by its Treaty, as well as use of only the means with which it is equipped by the Treaty. This, in short, is the effect of Article 5(1) EC. And it is the source of the criticism regularly levelled at the EC by those involved in sport: not simply that it 'doesn't understand sport' but that its Treaty constitutionally disables it from appreciating the breadth of sport's impact, concerns and activities. I would accept that there are legitimate sources of concern here. And the institutions of the EU have attempted to bridge this perceived gap--in my opinion not always happily. Neither the Declaration on Sport attached to the Amsterdam Treaty nor the Declaration on 'the specific characteristics of sport and its social function in Europe, of which account should be taken in implementing common policies' annexed to the Conclusions of the Nice European Council would win awards for legal precision. Nor were they so designed. They are essentially political statements, with no pretence to subvert the Court's determination to apply the fundamental Treaty rules governing free movement and competition law to sport. Indeed this was expressly acknowledged by the European Court in Deliege (192) and in Lehtonen (193). And yet such 'soft law' commitments, even drafted in the brittle style favoured at Amsterdam and Nice, carry weight. The lawyer should not discard such pronouncements without appreciating their capacity to generate a political dynamic to embed the discourse of a 'European Model of Sport' in institutional practice. It is here that the EU commits itself to a political recognition of the social and cultural virtues of sport which transcends its legal mandate; and it is here that one may identify how the evolution of policy (of a sort) is driven by a much broader pattern of sources than binding rules alone. (194) This is 'task expansion' or (more pejoratively) 'competence creep'. (195) The problem is that in so far as such policy statements promise a good deal more than the EU can deliver, they may be damaging to the EU's legitimacy. If the EU is constitutionally unable to address matters lauded in the Nice Declaration such as respect and nurturing of 'the code of ethics and the solidarity essential to the preservation of ' sport's social role and sport's contribution to 'integration, involvement in social life, tolerance, acceptance of differences and playing by the rules, and /or if lacks the material resources to promote such virtues, then it is unwise to raise citizens' expectations in this manner. The Commission's Helsinki Report on Sport might be vulnerable to similar criticism. (196). After all, it begins by vaingloriously claiming that it 'gives pointers for reconciling the economic dimension of sport with its popular, educational, social and cultural dimensions.' Ultimately the problem is that there are severe constitutional limits on what the EC can achieve in defence of the 'European Sports Model' should the richer clubs choose to abandon all or part of it, and yet, by suggesting otherwise, the Commission is already setting itself up for criticism of its weakness should developments such as 'breakaway' closed competitions occur. And periodic support for initiatives such as the 'European Sports Forum' again lend an impression of a Commission ready to embrace the whole social and cultural baggage of sport despite its thin legal competence and its inadequate human and material resources. I think this is dangerous! Is the EC really capable of adding value by developing general policies in this area? And in any event is 'sport' really a sufficiently homogenous phenomenon to attract a 'policy' anyway? Professional sport and recreational sport are different worlds. My case is not at all that it is irredeemably false to talk the language of an 'EC policy on sport', but my case is that one needs to be appropriately modest in choosing such a mode of discourse for fear that the gulf between breadth of the EU's stated political aspirations and its more limited legal competence and material resources generates disenchantment. (197) After all, if the 'European Model of Sport' in football collapses under the pressure of the voracious commercial appetite of the major clubs it will not be the Commission's fault, so why court danger by embracing so vividly an endangered species which the Commission cannot protect? However, in the particular case of the sale of broadcasting rights to sports events it is, in my view, appropriate to good deal more positive about the shape of EC law. I believe that the competition rules have been used in a sensitive way that meets the assumptions of EC law and the aspirations of sporting bodies and federations. What are the relevant themes that help to understand the nature and purpose of the EC rules governing the sale of rights to broadcast sports events? Sport is special in the need for internal organisational solidarity and this provides an economic incentive to pursue, and a legal reason to authorise, the agreed distribution of wealth between participant clubs in a league. The issue of collective selling of broadcasting rights pitches this legitimate objective of sports clubs against the expectation of third party broadcasters that output shall not be restricted in this fashion. The Commission's apparent willingness, aired in its Helsinki Report, to link exemption of collective selling to wealth distribution throughout the sport, from top to bottom, represents an attempt to offer inducements to sustain the pattern of vertical solidarity within a sport that it regards as characteristically European. However, its legal competence to insist on even this as a condition of exemption is far from clear and it has chosen cautiously to evade the issue in Champions League. 198 As explained above, that Decision emphasises economic reasons for exempting collective selling arrangements based principally on reducing transaction costs. It chooses to circumvent the question of whether arguments founded on the promotion of (vertical or horizontal) solidarity are within the scope of Article 81(3) EC. Certainly the application of such rules should pay due regard for the peculiar characteristic of mutual interdependence which marks the relationship between participants in a professional sports league. This is a sports-specific issue, but it is perfectly capable of forming part of appropriately nuanced economic and legal analysis. After all, the application of Article 81 is always conditioned by the particular context in which arrangements are struck. The Court's fundamentally important decision in Wouters should increasingly serve as the starting point in determining whether an apparent restriction on competition is properly pulled within the grip of Article 81(1) (199). The Court stated that "account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces its effects. More particularly, account must be taken of its objectives .... It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives". This observation was delivered in the context of rules prohibiting multi-disciplinary partnerships between members of the Bar and accountants but can readily be transplanted to underpin an argument that the overall context in which sports regulation occurs, built around pursuit of a broad objective of healthy equality of competitive opportunity, produces effects which though restrictive of competition are nonetheless inherent in the pursuit of those objectives. (200) Only if a restriction on competition within the meaning of Article 81(1) is at stake does the inquiry move to the possibility of exemption pursuant to Article 81(3). (201) This is sports law and sports economics, and it is central to deciding how to control governing bodies whose regulation of sport has a spillover impact on commercial activities. In sum, I consider that the EC's approach to the regulation of rights to broadcast sports events under EC competition law reveals an emphasis on market analysis which is not blind to the particular characteristics of professional sport. 11. Conclusion Article 5(1) EC confines the Community to action 'within the limits of the powers conferred upon it by this Treaty'. It enjoys no explicit power to regulate sport. However, sporting practices may collide with the realisation of the EC Treaty's economic objectives, and accordingly the central trade law provisions, most of all those concerning competition law, have been used to induce significant change in European sport. The functional breadth of EC law has as an inevitable consequence the shaping of a type of 'EC sports policy', within which a range of public and private actors, at national, European and international level, seek to exploit the possibilities provided by the existence of an EC tier of governance in order to achieve their objectives. EC law, in short, does not stipulate a form of governance into which sporting bodies must fit, but it does break open some of sport's often long-standing assumptions. This interventionist capacity creates a complex mix and, given the constitutionally ambiguous background and the incremental pattern of decision-making, it cannot be expected to yield a 'policy' that is wholly coherent or satisfying. One may indeed go further and wonder whether a European policy on sport is ever likely to display a compelling coherence, given the diversity of aspirations and structures that characterise sport in its professional, amateur and recreational forms. And yet there is a degree of order that one can identify in the EC's approach, and the case of the sale of rights to broadcast sports events offers an illuminating case study into the way in which EC law is able to secure the application of its fundamental economic law provisions without disregard for the sector-specific concerns of the industry subject to the rules. Bosman (202) remains centrally important. The Court ruled that existing practices in sport--the player transfer system and nationality-based discrimination in club football--were incompatible with EC law. It did not--it could not--dictate what should be introduced to replace the unlawful rules. That was a choice belonging to the sports authorities, acting in the shadow of the control exercised over their autonomy by the EC Treaty. But the Court did not simply treat football as an industry like any other. It accepted the salience of its legitimate interests in 'maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results' and 'encouraging the recruitment and training of young players.' This is the model used in this paper to examine EC law governing the sale of rights to broadcast sporting events. EC law does not require that private or public actors behave in a pre-determined manner. But its rules confine the scope of their permitted autonomy to arrange their affairs. So EC law, most of all EC competition law, has an impact on sporting practices, even without any explicit mandate to legislate granted by the Treaty. EC law governing the sale of rights to broadcast sporting events has four principal concerns. The first addresses the control of sale of broadcasting rights on an exclusive basis; the second addresses the collective selling of broadcasting rights; the third addresses the collective purchasing of broadcasting rights; the fourth deals with the restrictions that may be placed on sale of broadcasting rights by national governments, which are then reflected at European level in the 'protected events' provisions of Directive 89/552 (as amended). With respect to the first of these concerns, this paper has made the case that the emphasis on market definition and market power which lies at the heart of the normal approach under EC competition law to assessing the compatibility of exclusive deals with Article 81 is perfectly appropriate in its deployment in the case of sale of rights to broadcast sports events. There are no issues which are unique to sport, though it is certainly true that the Commission's sensitivity to the acquisition of exclusive rights to 'premium' events for an extended period reflects the profound concern about damage to market flexibility in the technologically and commercially volatile broadcasting sector which may be inflicted in such circumstances.With respect to the second of these concerns, the Commission in Champions League refused to accept the claim that collective selling is a necessary element in the organization of a professional sports league. Instead it treated it as a restriction on competition between suppliers of broadcasting rights. Rightly so, it is submitted. Collective selling is a commercial choice designed to strengthen the grip of suppliers at the expense of choice enjoyed by buyers. As is true of any restriction on competition caught by Article 81(1), exemption remains possible pursuant to Article 81(3) and the Commission's Decision in Champions League demonstrates that sport, like any other industry, is able to secure exemption provided that adequate consequent economic benefit is shown. Similarly, in dealing with the third of the concerns, the treatment of collective purchasing in Eurovision reveals that such arrangements will fall within Article 81(1) where they cause a sufficient degree of market foreclosure, but that their economic benefits may justify the grant of an exemption, albeit that effective provision for sub-licensing is likely to be a pre-condition to reliance on Article 81(3) for fear that otherwise there will follow an unacceptable elimination of competition in relevant markets. The issue left untouched in Champions League is one that may in future test the receptivity of EC competition law to the special expectations of sport--could an agreement to sell rights on a collective basis, falling within Article 81(1), secure exemption pursuant to Article 81(3) even where economic benefits of the type identified in Champions League are missing but where the income is used to strengthen vertical and/or horizontal solidarity within the sport? I have doubts whether Article 81(3) can be stretched in this way. However, I consider that there are other ways in which sport can promote its interest in vertical and/or horizontal solidarity without the need to distort the market for sale of broadcasting rights by maintaining collective arrangements that fail to meet the criteria for exemption stipulated by Article 81(3). Most of all leagues could commit to more vigorous internal distribution of wealth. On the fourth and final concern of Ec law in this area, that pertaining to restrictions to sale of 'protected' or 'listed' events, I confess that I find the relevant provisions hard to understand and generally unhelpful. In this instance the combination of interested national and European actors--most prominently headline-seeking politicians--has created an intervention that is hard to explain on any rational commercial or cultural basis. [ILLUSTRATION OMITTED] * Jacques Delors Professor of EC Law, Somerville College, Oxford University, United Kingdom. (1) Cf. M. Pollack, 'Creeping Competence: The Expanding Agenda of the European Community' (1994) 14 Journal of Public Policy 95; S. Weatherill, 'Competence creep and competence control' (2004) 23 YEL 1. (2) For comparative inquiry see e.g. K. Nicolaidis and R. Howse (eds), The Federal Vision: Legitimacy and Levels of Governance in the United States and the European Union (Oxford: OUP, 2001) especially Ch.3, J. Donahue and M. Pollack, "Centralization and its Discontents: The Rhythms of Federalism in the United States and the European Union", and Ch.4, D. Lazer and V. Mayer-Schoenberger, "Blueprints for Change: Devolution and Subsidiarity in the United States and the European Union"; E. Young, "Protecting Member State Autonomy in the European Union: Some Cautionary Tales from American Federalism" (2002) 77 N.Y.U.L.Rev. 1612; D. Halberstam, "Of Power and Responsibility: The Political Morality of Federal Systems" (2004) 90 Virginia Law Rev. 731. (3) Cf. e.g. S. Weatherill, 'Better Competence Monitoring' (2005) 30 ELRev 23; G. Davies, 'Subsidiarity: the wrong idea, in the wrong place, at the wrong time' (2006) 43 CMLRev 63; I. Cooper, 'The Watchdogs of Subsidiarity: Natioanl Parliaments and the Logic of Arguing in the EC' (2006) 44 JCMS 281. (4) Cf. e.g. A. Von Bogdandy and J. Bast, 'The European Union's Vertical Order of Competences: the Current Law and Proposals for its Reform' (2002) 39 CMLRev 227; A. Dashwood, 'The Relationship between the Member States and the European Union/ European Community' 41 CMLRev (2004) 355; D. Hanf & F. Baume, 'Vers une Clarification de la Repartition des Competences entre l'Union et ses Etats Membres?' 38 CDE (2003) 135. (5) Cf A. Von Bogdandy and J. Bast, op cit, esp 239-250; G. de Burca and B. de Witte, 'The Delimitation of Powers between the EU and its Member States', Ch 12 in A. Arnull and D. Wincott (eds), Accountability and Legitimacy in the European Union (Oxford: OUP, 2002); F. Mayer, "Die Drei Dimensionen der Europaischen Kompetenzdebatte" WHIPaper 2/02 (Walter Hallstein Institut, available via http://www.whi-berlin.de); V. Michel, "Le Defi de la Repartition des Competences" (2003) 38 C.D.E. 17. (6) Cf eg Art 152 on public health, Art 153 on consumer protection, Arts 174-176 on environmental policy. (7) See S. Weatherill, "Consumer Policy", in P. Craig and G. de Burca (eds.), The Evolution of EU Law (Oxford, OUP, 1999); J. Scott, EC Environmental Law (Harlow, Longman, 1998). (8) Art 152(5) EC. (9) Onpress diversity see Case C-368/95 Vereinigte Familiapress Zeitungsverlagsund vertriebs GmbH v Heinrich Bauer Verlag [1997] ECR I-3689; on health care see Case C-157/99, B.S.M. Geraets-Smits v Stichting Ziekenfonds VGZ, H.T.M. Peerbooms v Stichting CZ Groep Zorgverzekeringen [2001] E.C.R. I-5473; Case C-372/04 ex parte Watts judgment of 16 May 2006. (10) Cf e.g M Poiares Maduro, 'Striking the elusive balance between economic freedom and social rights in the EU', Ch 13 in P Alston (ed), The EU and Human Rights (Oxford, OUP, 1999); R Craufurd Smith, 'Community Intervention in the Cultural Field', Ch 2 in R Craufurd Smith (ed), Culture and European Law (Oxford, OUP, 2004); P Oliver, 'Competition and Free Movement: Their Place in the Treaty', Ch 10 in P Tridimas and P Nebbia (eds), European Union Law for the 21st Century--rethinking the new legal order (Oxford, Hart Publishing, 2005). (11) Case240/83 [1985] E.C.R. 531. (12) Case C-376/98 [2000] E.C.R. I-8419. (13) Opinion2/94, Accession by the EC to the ECHR [1994] E.C.R. I-1759. (14) See for example use of imprecise adjectives and adverbs in the judgment such genuinely, likely, probable, appreciable and "remote and indirect" in paras. 84, 86, 97, 108, and 109 of the judgment respectively. Cf. J. Usher, "Annotation" (2001) 38 C.M.L.Rev. 1519. (15) Case C-377/98 [2001] ECR I-7079. (16) Case C-491/01 [2002] ECR I-11543. (17) Case C-210/03 [2004] ECR I-0000. (18) Cases C-154/04 & C-155/04 [2005] ECR I-0000. (19) Case C-372/04 note 9 above, para 121. (20) Cf eg Case C-512/03 J E J Blankaert judgment of 8 September 2005. (21) Cf eg Case C-446/03 Marks and Spencer v Halsey judgment of 13 December 2005. (22) Case C-265/95 Commission v France [1997] ECR I-6959. (23) Case C-423/98 Albore [2000] ECR I-5965. (24) Case C-222/97 Trummer and Mayer [1999] ECR I-1661, Case C-464/98 Westdeutsche Landesbank v Stefan [2001] ECR I-173. (25) Cf eg E-M Kieninger, 'Securities in movable property within the Common Market' (1996) 4 ERPL 41; J Rutgers, 'The Rule of Reason and Private law or the Limits to Harmonization', Ch 9 in A Schrauwen (ed), Rule of reason: rethinking another classic of European Legal Doctrine (Europa Law Publishing, Groningen 2005); U Drobnig, H J Snijders and E. Zippro (eds), Divergences of Property Law, an Obstacle to the Internal Market (Sellier, Munich, 2006). (26) Case 36/74 [1974] ECR 1405. (27) Case 13/76 [1976] ECR 1333. (28) Case C-415/93 [1995] ECR I-4921. (29) In Case T-313/02 David Meca-Medina and Igor Majcen v Commission [2004] ECR II-0000 the Court of First Instance allowed itself to be lured down the misleading path of uncritically separating out sport from its commercial impact: see further S Weatherill, 'Anti-doping rules and EC Law' [2005] European Competition Law Review 416. The case is pending on appeal before the Court: Case C-519/04 David Meca-Medina and Igor Majcen v Commission. (30) Cf. B. Dabscheck, 'The Globe at their Feet: FIFA's New Employment Rules' (2004) 7 Culture, Sport and Society 69; J.-C. Drolet, 'Extra Time: Are the New FIFA Transfer Rules Doomed?' [2006] 1-2 International Sports Law Journal 66. See also A. Egger and C. Stix-Hackl, 'Sports and Competition Law: a Never-Ending Story?' [2002] European Competition Law Review 81. (31) E.g. R. Parrish, Sports law and policy in the European Union (Manchester University Press, 2003); S. Greenfield and G. Osborn (eds.), Law and Sport in Contemporary Society (Frank Cass Publishing, London, 2000); H.-E. Meier, 'The Rise of the Regulatory State in Sport', conference paper available via http://regulation.upf.edu/ecpr-05-papers/hemeier.pdf (2005); L. Barani, 'The Role of the European Court of Justice as a Political Actor in the Integration Process: The Case of Sport Regulation after the Bosman Ruling' (2005) 1 Journal of Contemporary European Research 42; S. Van den Bogaert and A. Vermeersch, 'Sport and the European Treaty: a Tale of Uneasy Bedfellows' (European Law Review, forthcoming). (32) Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649. (33) E.g.--and by no means adopting the same outlook--S. Weatherill, EU Consumer Law and Policy (Cheltenham, Elgar, 2005); N. Reich and H.-W. Micklitz, Europaisches Verbraucherrecht (Baden-Baden, Nomos, 2003); S. Grundmann, W. Kerber and S. Weatherill, Party Autonomy and the Role of Information in the Internal Market (Berlin, de Gruyter, 2001); H. Rosler, Europaisches Konsumentenvertragsrecht (Munich, CH Beck, 2004); K. Riesenhuber, Europaisches Vertragsrecht (Berlin, de Gruyter, 2003). (34) E.g. on environmental law see J. Scott, EC Environmental Law (Harlow, Longman, 1998), J. Jans, European Environmental Law (Groningen, Europa Law Publishing, 2000), esp. Chs. I and III; on labour market regulation and social policy more generally see J. Kenner, EU Employment Law: From Rome to Amsterdam and Beyond (Oxford, Hart Publishing, 2003), C. Barnard, EC Employment Law (Oxford, OUP, 2000); on family law see E. Caracciolo di Torella and A. Masselot, 'Under construction: EU family law' 29 ELRev (2004) 32; on health care law see T. Hervey and J McHale, Health Law and the European Union (CUP, Cambridge 2004). (35) M. Egan, Constructing a European Market (Oxford, OUP, 2001). (36) Art.3(g) EC. (37) Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV [1999] ECR I-3055. (38) See e.g A. Albors-Llorens, 'Competition Policy and the shaping of the Single Market', Ch. 12 in C. Barnard and J. Scott (eds), The Law of the Single European Market (Oxford, Hart Publishing, 2002). (39) Reg. 2659/2000 OJ 2000 L304/7. (40) Reg. 2790/1999 OJ 1999 L336/21. (41) For a detailed examination, see R. Whish, Competition law (London, Butterworths, 5th ed, 2003), pp.168-174, Chs. 15 & 16. (42) See for detail Whish note 41 above Chapters 7 and 8. (43) OJ 2003 L1/1. (44) Cf e.g. H. Gilliams, 'Modernisation: from policy to practice' (2003) 28 ELRev 451; J. S. Venit, 'Brave new world: The modernization and decentralization of enforcement under Articles 81 and 82 of the EC Treaty' (2003) 40 CMLRev 545. (45) Article 23 Reg 1/2003. (46) OJ 2006 C00/00, available via http://ec.europa.eu/comm/competition/ antitrust/legislation/fines_en.pdf. (47) OJ 2002 C45/3. (48) Cases C-6, C-9/90 [1991] ECR I-5357. (49) Case C-453/99 [2001] ECR I-6297. (50) Cf. A. Komninos, 'New prospects for private enforcement of EC competition law' (2002) 39 CMLRev 457; G. Monti, 'Anticompetitive agreements: the innocent party's right to damages' (2002) 27 ELRev 282; and, more generally, C. Jones, Private Enforcement of Antitrust Law in the EU, UK and USA (OUP, 1999). (51) Art.7(2) Reg. 1/2003 confers standing for these purposes on 'natural or legal persons who can show a legitimate interest'. (52) Case T-24/90 Automec v Commission [1992] ECR II-2223. (53) COM (2005) 672. (54) OJ 2004 C101/43. (55) Article 11(6) Reg. 1/2003. (56) Article 16 Reg. 1/2003. (57) The landmark decision was Case 6/64 Costa v ENEL [1964] ECR 585. In the competition law field the best-known decision is Case 14/68 Walt Wilhelm [1969] ECR 1, although, as mentioned in the text above, Reg 1/2003 has now addressed some relevant outstanding issues, cf Whish note 41 above, pp.75-77. (58) Art 3(2) Reg. 1/2003. (59) Cf G. Dannecker and O. Jansen, Competition Law Sanctioning in the European Union (Kluwer Law International, 2004). (60) But see further below for different approaches to collective selling of broadcasting rights. (61) E.G. Case 322/81 Michelin v Commission [1983] ECR 3461. See also Whish note 41 above, Chs. 1 & 5; W. Bishop and M. Walker, 'The Economics of EC Competition Law: Concepts, Application and Measurement' (2nd ed, 2002), esp Chs 3, 4. (62) Commission Notice on market definition OJ 1997 C 372/5. (63) Decision 2000/12/EC [2000] OJ L5/55. For comment see S Weatherill, '0033149875354: Fining the Organisers of the 1998 Football World Cup' [2000] European Competition Law Review 275. (64) Case 322/81 note 61 above. (65) Decision 89/205 OJ 1989 L78/43, [1989] 4 CMLR 757. (66) Cases T-69, T-70, T-76/89 [1991] ECR II-485, 535, 575. (67) Joined Cases C-241/91P and C-242/91P RTE and ITP v Commission [1995] ECR I-743. (68) Case C-7/97 [1998] ECR I-7791. (69) See in similar vein Case C-418/01 IMS Health [2004] ECR I-5039. (70) Art 3(2) Reg. 1/2003. (71) Case C-415/93 note 28 above. (72) See e.g. J.-P. Dubey, La libre circulation des sportifs en Europe (Staempfli Bern/ Bruylant Brussels, 2000). (73) Relevant documents on the Commission's quest for 'modernisation' of the regulation of the sector may be accessed via http://ec.europa.eu/comm/avpolicy/reg/tv wf/modernisation/index_en.htm. (74) On inelasticity of demand for major events see Comm. Dec. 2000/400 Eurovision OJ 2000 L151/18 (annulled, but not on the point of market definition, in Cases T-185/00 et al M6 and others v Commission [2002] ECR II-3805); Comm. Dec. 2000/12 1998 Football World Cup OJ 2000 L5/55. (75) E.g. in 1999 the UK competition authorities blocked a proposed merger between BskyB, a satellite broadcasting company, and Manchester United, a football club, on the basis that it would operate contrary to the public interest; Cm 4305, 1999. Among other factors it was thought that competition in the market for acquisition of broadcasting rights would have been restricted by BskyB's more intimate involvement with the supply-side and that the gulf between rich and poor football clubs would be widened. For comment see F. Tassano, 'Are Vertical Mergers Harmful?' [1999] European Competition Law Review 395; D. Harbord and K. Binmore, 'Toeholds, takeovers and football' [2000] European Competition Law Review 142. (76) E.g. in the UK the consequence of the blocking of the BskyB/ Manchester United merger, supra note 75, has been the acquisition by media companies of minority but not insignificant stakes in football clubs; see A. Brown, 'Sneaking in through the back door? Media company interests and dual ownership of clubs', Ch. 8 in S. Hamil, J. Michie, C. Oughton and S. Warby (eds.), Football in the Digital Age: whose game is it anyway? (Edinburgh, Mainstream Publishing, 2000). (77) 'Sky retains Premiership title after [pounds sterling]1.7 bn TV rights auction', The Independent Saturday 6 May 2006. (78) See generally e.g. S. Morrow, The People's Game? Football, Finance and Society (Macmillan, 2003); Hamil et al note 76 above; I. Blackshaw and R. Siekmann (eds), Sports Image Rights in Europe (Cambridge University Press, 2003). (79) Cf D Geradin, 'Access to content by new media platforms: a review of the competition law problems' (2005) 30 ELRev 68. (80) Dec 2000/12 note 63 above. (81) Cf Case T-193/02 Laurent Piau v Commission [2005] ECR II-000 (Article (82) applicable in principle but no breach). An appeal against the CFI decision was dismissed in Case C-171/05P Laurent Piau v Commission judgment of 23 February 2006. 82 Pending Case C-000/06, referred to the European Court by Tribunal de Commerce de Charleroi in May 2006. For background see S. Weatherill, 'Is the Pyramid Compatible with EC Law?' 2005/3-4 International Sports Law Journal 3. (83) COMP 35.163, Notice published at OJ 2001 C169/5. (84) Fixing the limits of the notion of the 'undertaking' for the purposes of determining the limits of the application of the Treaty competition rules is an awkward problem that extends far beyond sport: see e.g. Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK [2004] ECR I-2493; Case C-222/04 Cassa di Risparmio di Firenze judgment of 10 January 2006. (85) Dec. 93/403 Eurovision OJ 1993 L179/23 granting exemption under (what is now) Art 81(3) was annulled in Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Metropole Television and Others v Commission [1996] ECR II-649; and the subsequent exemption granted by the Commission in Dec. 2000/400 Eurovision OJ 2000 L151/18 was annulled in Cases T-185/00 et al M6 and others v Commission [2002] ECR II-3805. See further below. (86) Case 258/78 [1982] ECR 2015. (87) See, for exhaustive treatment, Whish note 41 above, Chapter 16. See also R. Subiotto and T. Graf, 'Analysis of the Principles applicable to the Review of Exclusive Broadcasting Licences under EC Competition Law' (2003) 26(4) World Competition 589. (88) Case 262/81 [1982] ECR 3381. (89) Cf e.g. Case C-250/92 Gottrup Klim v DLB [1994] ECR I-5641; Cases T-374/94 et al European Night Services v Commission [1998] ECR II-3141. For an account of the nuances in the relevant case law see Whish note 41 above pp. 106-131. (90) Case T-112/99 Metropole television (M6), Suez-Lyonnaise des eaux, France Telecom v Television francaise 1 SA (TF1) [2001] ECR II-2159. (91) Case T-328/03 O2 (Germany) GmbH v Commission judgment of 2 May 2006, para. 71. (92) Case C_234/89 Delimitis [1991] ECR I_935; Case C-306/96 Javico et al v Yves St Laurent Parfums [1998] ECR I-1983; and case C-214/99 Neste Markkinoiniti Oy [2000] ECR I-11121. (93) Although this is not to say that decision-making practice is completely internally consistent: cf Subiotto and Graf note 87 above; H. Fleming, 'Exclusive Rights to Broadcast Sporting Events in Europe' (1999) 20 European Competition Law Review 143. (94) A.-M. Wachtmeister, Broadcasting of Sports Events and Competition Law, Competition Policy Newsletter (Brussels, European Commission, number 2 of 1998 (June), available via.http://ec.europa.eu/comm/competition/ speeches/index_1998.html. (95) Note 62 above. (96) Dec 2003/778 OJ 2003 L291/25 para. 79. See further below. (97) IV/36.033 KNVB/ Sport 7 OJ 1996 C228/4. (98) COMP 35.163, Notice published at OJ 2001 C169/5. (99) On inelasticity of demand for major sports events see Comm. Dec. 2000/400 Eurovision OJ 2000 L151/18 (annulled, but not on the point of market definition, in Cases T-185/00 et al M6 and others v Commission [2002] ECR II-3805); Comm. Dec. 2000/12 1998 Football World Cup OJ 2000 L5/55. In the case of films, cf Case IV/36.237 TPS 1 OJ 1999 L90/6. (100) Cf Case 262/81 note 88 above. (101) Cf Eurovision, note 85 above, and more fully below in connection with collective purchasing. (102) Note 94 above. (103) Case IV/M469 MSG Media Service OJ 1994 L364/1; COMP/38.287 Telenor/ Canal + (2004). (104) Note 62 above. (105) OJ 1993 C94/6. (106) COM (1999) 644 and/2. For comment see S. Weatherill, 'The Helsinki Report on Sport' (2000) 25 ELRev 282. (107) Cf Case T-328/03 note 91 above, paras. 109-116: the CFI was unconvinced by the Commission's preference to treat such matters in the light of Art. 81(3) instead of Art. 81(1) and annulled the Exemption Decision. See similarly Cases T-374/94 note 89 above. Embedded in these detailed disputes is a larger issue about the precise relationship between analysis conducted under Article 81(1) and under Article 81(3): for recent exploration see R. Nazzini, 'Article 81 EC between time present and time past: a normative critique of "restriction of competition" in EU law' (2006) 43 CMLRev 497. (108) OJ 1999 L336/21. (109) Article 9 amplifies the method of calculation. (110) J Taylor and A Lewis, Sport: Law and Practice, Butterworths 2002, p.414, para. B2.290. (111) OJ 2003 L1/1. (112) As mentioned above, Regulation 1/2003 foresees a pattern of co-operation within the 'network' of European competition agencies designed to encourage consistent application of the law within the newly decentralised system: see Arts 11-16 Reg 1/2003 and the Commission Notice on cooperation within the Network of Competition Authorities, OJ 2004 C101/43. (113) For economic analysis, see e.g. J. Quirk and R. Fort, Pay Dirt: the Business of Professional Team Sports (Princeton University Press, 1997); S. Dobson and J. Goddard, The Economics of Football (Cambridge U.P., 2001); S. Rosen and A. Sanderson, "Labour Markets in Professional Sports" (2001) 111 The Economic Journal F47; L. Buzzacchi, S. Szymanski and T. Valletti, "Equality of opportunity and equality of outcome: open leagues, closed leagues and competitive balance" (2003) 3 Journal of Industry, Competition and Trade 167. (114) Cf Cases C-51/96 & C-191/97 Deliege v Ligue de Judo [2000] ECR I-2549. (115) COMP 37.806 ENIC/ UEFA, IP/02/942, 27 June 2002. (116) Cf summary in P. Roth (ed.), Bellamy and Child's European Community Law of Competition (Sweet and Maxwell, 5th ed., 2000), para. 4-150; also J.-F. Pons, "Sports and European Competition Policy" and S. Weatherill "Sports under EC Competition Law and US Antitrust Law", Ch. 6, pp.75-92, and Ch. 8, pp. 113-126, respectively in B. Hawk (ed.), International Antitrust Law and Policy: Annual proceedings of the Fordham Corporate Law Institute for 1999 (Yonkers, New York, USA: Juris Publishing Inc., 2000); K. Mortelmans, 'Towards Convergence in the Application of the Rules on Free Movement and on Competition?' (2001) 38 CMLRev 613. See also Parrish note 31 above, esp Chapter 5 on competition law, building an analysis on a separation between 'a territory for sporting autonomy and a territory for legal intervention' (p.3). (117) Case C-309/99 J.C.J. Wouters, J.W. Savelbergh, Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten [2002] E.C.R. I-1577. (118) The CFI's failure to appreciate this is the principal source of my criticism of Case T-313/02 David Meca-Medina and Igor Majcen v Commission note 29 above. Para 55 of the judgment is especially unfortunate. (119) A decision such as Case C-250/92 Gottrup Klim v DLB [1994] ECR I-5641 should therefore be seen as running in the same direction as Case C-309/99 Wouters note 117 above. For an account of the nuances in the relevant case law see Whish note 41 above, pp.106-131; cf also Nazzini note 107 above. AG Lenz's Opinion in Bosman carries traces of this approach, Case C-415/93, note 28 above, esp. paras. 262-276. Also relevant in insisting on a contextual appreciation of the scope of Article 81(1) is Case C-67/96 Albany International BV [1999] ECR I-5751 (esp paras. 59-60). The Court accepts that a restriction of competition is inherent in collective agreements between organisations representing employers and workers, but is prepared to place the matter beyond the reach of Article 81(1). The reason lies in the need to interpret the provisions of the EC Treaty as a whole. The social policy objectives pursued by such agreements and recognised by the Treaty would be seriously undermined if Article 81(1) caught such arrangements. (120) Cf M. Beloff, T. Kerr and M. Demetriou, Sports Law (Oxford, Hart Publishing, 1999), pp.134-6, 153-6; D. Brinckman and E. Vollebregt, "The Marketing of Sport and its Relation to EC Competition Law" [1998] ECLR 281; I. Nitsche, "Collective Marketing of Broadcasting Rights in Europe" [2000] ECLR 208; J Taylor and A Lewis, Sport: Law and Practice, Butterworths 2002, pp.404-406. This aspect is also emphasised by Wachtmeister note 94 above. (121) Paras 118-124 of Dec 2003/778 Champions League OJ 2003 L291/25, considered more fully below. (122) The collectively sold package may be (and increasingly is) broken down into constituent units--live matches, recorded highlights, etc--but this does not affect the basic issue, which is the suppression of sales by individual clubs. Moreover, rights may be, but need not be, sold exclusively--exclusivity is a matter that is distinct from collectivity. (123) Cf M. Cave and R. Crandall, 'Sports Rights and the Broadcast Industry' 111 The Economic Journal F4 (2001), esp. at F18. (124) 'Broadcasting of Sports Events and Competition Law' note 94 above. (125) IP/01/1043, 20 July 2001 (126) "Background Note", Memo 01/271, 20 July 2001. (127) IP/02/806, 3 June 2002; O.J. 2002, C196/3. (128) Dec 2003/778 OJ 2003 L291/25. (129) Dec 2003/778, paras. 125-131. (130) Note 85 above, and see more fully below on collective purchasing. The CFI annulled the Commission's Decisions in Eurovision but did not take issue with the identification of these economic benefits flowing from the arrangements. (131) On this aspect of Champions League in particular see N. Petit, 'The Commission's Contribution to the Emergence of 3G Mobile Communications: an Analysis of Some Decisions in the Field of Competition Law' [2004] ECLR 429, 436-437. See subsequently the Commission report of 21 September 2005 into the provision of sports content over third generation mobile networks, available via http://ec.europa.eu/comm/competition/a ntitrust/others/sector_inquiries/new_me dia/3g/final_report.pdf. (132) Speech delivered in Barcelona, 'Commercialising Sport: Understanding the TV Rights Debate', 2 October 2003. (133) s31 Gesetz gegen Wettbewerbsbeschraenkungen as amended with effect from 1 January 1999. (134) Re the supply of services facilitating the broadcasting on television of Premier League football matches [1999] UKCLR 258. (135) Cf S. Szymanski, 'Hearts, minds and the Restrictive Practices Court case', Ch. 23 in Hamil, et al note 76 above; also P. Spink and P. Morris, 'The battle for TV rights in professional football' pp.165-196 in A. Caiger and S. Gardiner (eds), Professional Sport in the EU: Regulation and Re-Regulation (TMC Asser Press, 2000). (136) The Competition Act 1998 is the key statute. (137) Cf note 59 above. (138) COMP/C.2/37.214, OJ 2005 L134/46. (139) IP/05/62, 19 January 2005. (140) 'Sky retains Premiership title after [pounds sterling]1.7 bn TV rights auction', The Independent Saturday 6 May 2006. (141) Eg 'Sky and Brussels at war over Premiership rights', The Observer 11 September 2005 (Business Section, p.1). (142) IP/06/356 22 March 2006. (143) For criticism of the Commission's assumptions see D. Harbord and S. Szymanski, 'Football Trials' [2004] ECLR 117; D. Geey and M. James, 'The Premier League-European Commission Broadcasting Negotiations' (2006) 4 ESLJ, available via http://www2. warwick.ac.uk/fac/soc/law/elj/eslj/issues /volume4/number1. (144) Paras 164--167 of the Decision, note 128 above. (145) COM (1999) 644 and/2. For comment see S. Weatherill, 'The Helsinki Report on Sport' (2000) 25 ELRev 282. (146) Cf L. Halgreen, European Sports Law: a Comparative Analysis of the European and American Models of Sport, (Copenhagen, Forlaget Thomson, 2004); S. Weatherill, 'Resisting the Pressures of Americanization: the influence of European Community Law on the 'European Sport Model", pp.155-181, in Greenfield and Osborn note 31 above. (147) Speech delivered in Brussels at a conference on "Governance in Sport", 26 February 2001, available as Speech/01/84 via http://europa.eu.int/comm/sport/key_fil es/comp/a_comp_en.html. (148) Support for this approach is expressed by the Committee of the Regions, Opinion on the European Model of Sport, OJ 1999 C374/56, para. 3.8. (149) OJ 2004 C101/97. See esp. para 42. Cf also Wachtmeister note 94 above who states that 'Competition law is not the right instrument for achieving cultural or regulatory aims' but also tentatively raises the same possibility in connection with solidarity as Commissioner Monti note 147 above. (150) Cf discussion of Case C-309/99 Wouters note 117 above; and also Case C-67/96 Albany International BV note 119 above. (151) For a summary of the unclear scope of 'non-economic' aspects to Article 81(3) see Whish note 41 above, pp125-128; see also O. Odudu, The Boundaries of EC Competition Law: the Scope of Article 81 (OUP, 2006), Chapter 7; E. Psychogiopoulou, 'EC competition law and cultural diversity: the case of the cinema, music and book publishing industries' (2005) 30 ELRev 838. Neither Commission nor Court has yet offered satisfactory explanation of the impact of Article 151(4) EC on Article 81 EC. (152) Case C-376/98 Germany v Parliament and Council [2000] ECR I-8419, Tobacco Advertising. (153) Dec. 93/403 Eurovision OJ 1993 L179/23. (154) Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Metropole Television and Others v Commission [1996] ECR II-649. (155) Dec. 2000/400 Eurovision OJ 2000 L151/18. (156) See paras 28-37, 106-110 of Dec. 2000/400 note 128 above. (157) Paras 50-58 of Dec. 2000/400 note 128 above. (158) Cases T-185/00 et al M6 and others v Commission [2002] ECR II-3805. For comment see A. Herold, 'Rules governing the acquisition by third parties of television rights for sporting events under Eurovision in breach of the European competition law' International Journal of Communications Law and Policy Winter 2002/2003 Issue 7, 1. (159) See in particular para 64 of the judgment in Case T-185/00 et al note 158 above, citing the seminal Case 262/81 note 88 above. (160) Dec. 2003/778 note 128 above. (161) IP/01/583, 20 April 2001. (162) Comm. Dec. 2001/478 OJ 2001 L171/12. (163) Paras. 49-61 of the Decision. The Commission will monitor change in market structure, particularly in the wake of the "Internet revolution", para. 56. (164) Para. 59. (165) OJ 1989 L298/23, OJ 1997 L202/60 respectively. See generally on this regime C. A. Jones, "Television without Frontiers" (1999-2000) 19 YEL 299. (166) Articles 47(2) and 55 (ex 57(2) and 66) EC. (167) Articles 153(2), 152(1) EC. Cf Case C-376/98 note 152 above; for discussion of the impact of this case on cultural aspects of harmonised laws see I. Katsirea, "Why the European broadcasting quota should be abolished" (2003) 28 ELRev 190. (168) See R. Craufurd Smith and B. Boettcher, "Football and Fundamental Rights: Regulating Access to Major Sporting Events on Television" (2002) 8 European Public Law 107. (169) "Free" television for these purposes means "broadcasting on a channel, either public or commercial, of programmes which are accessible to the public without payment in addition to the modes of funding of broadcasting that are widely prevailing in each Member State (such as licence fee and/ or the basic tier subscription fee to a cable network", Recital 22. (170) Third Report on the application of Directive 89/552, COM (2001) 9, p.8. (171) They should be "outstanding events which are of interest to the general public in the European Union or in a given Member State or in an important component part of a given member State ..", Recital 21; Recital 18 refers non-exhaustively to the "Olympic games, the football World Cup and European football championship". (172) The most recent consolidated list of measures may be found at OJ 2003 C183/03, and includes measures notified by Italy, Germany. Austria, Ireland and the United Kingdom. This is, however, out-of-date. The Commission's Fifth Report on the application of the Directive reveals that in 2004 Belgium notified measures and in 2005 France did so: COM (2006) 49, para.3.3. For a full list, see http://ec.europa.eu/comm/avpolicy/reg/ tvwf/implementation/events_list/index_ en.htm. (173) The list was an 'utter failure', Halgreen note 146 above p.131. (174) Case T-33/01 judgment of 15 December 2005. (175) The Commission has brought an appeal before the Court on this point: Pending Case C-125/06P Commission v Infront WM OJ 2006 C108/7. (176) This is discussed above: on inelasticity of demand for major events see Comm. Dec. 2000/400 Eurovision OJ 2000 L151/18 (annulled, but not on the point of market definition, in Cases T-185/00 et al M6 and others v Commission [2002] ECR II-3805); Comm. Dec. 2000/12 1998 Football World Cup OJ 2000 L5/55. (177) Case T-33/01 note 174 above. (178) Note 172 above. (179) Resolution on the broadcasting of sports events, OJ 1996 C166/109. (180) OJ 2000 C364/1. (181) Article 52 EU Charter. (182) See generally R. Craufurd Smith, Broadcasting Law and Fundamental Rights (Clarendon Press, Oxford, 1997). (183) See e.g., with particular emphasis on the EU context, M. Arino, 'Competition Law and Pluralism in European Digital Broadcasting: Addressing the Gaps', (2004) 54 Communications and Strategies 97. (184) Available via http://ec.europa.eu/comm/avpolicy/reg/ tvwf/modernisation/consultation_2003/ index_en.htm (185) Cf more fully Craufurd Smith and Boettcher note 168 above. (186) E.g. Case C-260/89 ERT v Dimotiki [1991] ECR I-2925; Case C-368/95 Vereinigte Familiapress Zeitungs--und vertriebs GmbH v Heinrich Bauer Verlag [1997] ECR I-3689; Informationsverein Lentia and others v Austria A No 276 (1993). See D Wyatt, "Freedom of Expression in the EU Legal Order and in EU Relations with third countries"in J Beatson and Y Cripps (eds), Freedom of Information: Essays in Honour of DGT Williams (Oxford: Clarendon Press, 2000); Craufurd Smith note 182 above esp. Ch. 7. (187) Cf Jones note 165 above 326-336. (188) [2001] 1 WLR 1604. (189) COM (2002) 778, p.10. The fifth--and most recent--Commission Report, note 172 above, is similarly anodyne. (190) Available via http://ec.europa.eu/comm/avpolicy/reg/ tvwf/modernisation/consultation_2003/i ndex_en.htm. As one might expect, the BBC response to the Commission is warmly supportive of the House of Lords ruling. (191) See in particular the Helsinki Report note 145 above. (192) Cases C-51/96 & 191/97 note 114 above, paras 41-42 of the judgment. (193) Case C-176/96 [2000] ECR I-2681, paras 32-33 of the judgment. (194) This dealt with at some length by Parrish note 31 above, esp in Chapter 2 and, with particular reference to the Amsterdam Declaration e.g. at pp.15-16, 19, 104, 176, 196; cf also Halgreen note 146 above pp.56-64. (195) Cf note 1 above. (196) Note 145 above. (197) I have made this argument in particular in S. Weatherill, 'Sport as Culture in European Community Law', Ch. 4, pp.113--152, in R. Craufurd Smith (ed), Culture in European Union Law (Oxford University Press, 2004). For general discussion see K. Foster, "How can Sport be Regulated?" Ch. 14 in Greenfield and Osborn note 31 above; R. Parrish, "Reconciling Conflicting Approaches to Sport in the European Union", pp.21-42, and K. Foster, "Can Sport be Regulated by Europe? An Analysis of Alternative Models", pp.43-64, both in A. Caiger and S. Gardiner (eds), Professional Sport in the EU: Regulation and Re-Regulation (TMC Asser Press, 2000); S. Weatherill, "'Fair Play Please!': Recent Developments in the Application of EC Law to Sport" (2003) 40 CMLRev 51. All the sources cited at note 31 above are relevant. (198) Note 128 above. (199) Case C-309/99 note 117 above. Strains of this approach are evident in AG Lenz's Opinion in Bosman. (200) The Commission's decision in ENIC/ UEFA note 115 above cites Wouters. For its invocation in relation to salary caps see S. Hornsby, "The harder the cap, the softer the law?" (2002) 10 Sport and the Law Journal 142. (201) As in Champions League note 128 above and in Eurovision note 85 above. (202) Case C-415/93 [1995] ECR I-4921. |
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