In a move which sought to cap the fees received by agents, FIFA recently introduced new regulations in the form of the FIFA Football Agent Regulations (‘FFAR’). Unsurprisingly, the introduction of FFAR has drawn severe criticism from agents worldwide.
Legal actions have been brought before the Court of Arbitration for Sport in Lausanne (‘CAS’) (more on this below) and national courts around Europe to challenge the compliance of FFAR with EU Competition Law. Closer to home, sports agencies have recently commenced arbitration proceedings to challenge the implementation of FFAR in the UK, with a decision expected by 30 September 2023.
In fact, such has been the opposition and uncertainty regarding FFAR that the Regional Court of Dortmund in Germany recently issued an interim injunction against FIFA and the German Football Association (Deutscher Fuβball-Bund) (‘DFB’), prohibiting the implementation of FFAR in Germany.
Nevertheless, there was further confusion when the Professional Football Agents Association’s (‘PROFAA’) recent claim before CAS was dismissed after seeking legal clarity on FFAR prior to its enforcement on 1 October 2023. This decision was welcomed by FIFA and deals a hammer blow to football agents aspirations of having FFAR abolished or amended.
Football agents, FIFA and national football associations around the world are now awaiting the outcome of the European Court of Justice (‘ECJ’) decision on FFAR before going further.
This article examines FFAR in brief and why these new regulations have drawn such criticism from football agents. It also looks the recent decision of the German Regional Court as well as the subsequent CAS decision, and where this leaves football agents.
The stated aims of FFAR are to protect the interests of both players and clubs, ensuring transparency, fair representation, and ethical conduct throughout the transfer process. Its key elements are:
- Licencing requirement for agents: a licence is only granted upon application via the newly established FIFA Platform after successfully passing the FIFA agent exam and the payment of an annual licence fee (USD $600 in 2023).
- Multiple representation: is now prohibited with the only exception being the representation of both a player and the engaging (i.e. the buying) club.
- Fee cap:
(i) agent acting for the engaging club or player: 3 or 5% of the player’s annual remuneration;
(ii) permitted multiple representation: 6 or 10% of the player’s annual remuneration; and
(iii) agent acting for the releasing (i.e. the selling) club: 10% of the total transfer compensation.
- Market monitoring system: agents need to disclose details about their ongoing business conduct via a new market monitoring and clearance system to allow the enforcement of FFAR.
Whilst the new licence regime entered into force on 9 January 2023, the main elements of FFAR will come into effect on 1 October 2023.
As expected, FFAR was immediately condemned by football agents and legal actions have been brought throughout Europe based on non-compliance with competition law and abuse of a dominant position (amongst other claims) with many arguing that FIFA is trying to rein in the activities of agents.
It is widely acknowledged that football agents play a vital role in the world of professional football, and it is arguable whether clubs would have access to and be able to recruit talented players without the services provided by agents.
However, fees commanded by football agents for facilitating transfers can be eye-watering, and there is a perceived lack of transparency, integrity, and ethics within the football agent business. As an indicator, the fees generated by agents in 2022 for facilitating international transfers was a staggering US$ 622 million.
German Court Decision
FIFA argued that FFAR is exempt from the application of EU Competition Law because the regulation shall “ensure integrity and functioning of the transfer market, sporting competition and the professional football generally”. Moreover, it is asserted that both FIFA and the DFB are responsible for regulating the football agent market due to poor practices (i.e. fees, transparency, ethics, integrity, etc) by agents.
Whilst FIFA and the DFB’s defence was based on the application of the well-known Meca-Medina test established by the ECJ, the Regional Court of Dortmund explicitly rejected this.
The court further declared that the idea of FIFA’s and the DFB’s autonomy precludes the application of an exception to Article 101 Treaty on the Functioning of the European Union (‘TFEU’). Although organisations may manage their own affairs, the court found that this right does not cover the regulation on third parties outside of the respective association.
Given that clubs would be required to abide by these restrictions, the court believed that the fundamental components of FFAR constituted a so-called serious violation of Competition Law by object under Article 101 TFEU.
The court also found evidence that FIFA and the DFB had abused their dominant position in violation of Article 102 TFEU. As such, the court imposed an interim injunction to prevent FIFA and the DFB from enforcing FFAR before it became effective.
Nevertheless, the injunction, for now, is only within the German jurisdiction, and that FFAR are not to be implemented into German football until the ECJ has ruled on the matter.
The CAS decision
PROFAA proposed to FIFA that FFAR be assessed by CAS with the view to achieving legal clarity prior to the enforcement of FFAR in October 2023. Thereafter, and following extensive submissions by PROFAA and FIFA, the CAS published its decision on 23 July 2023.
Having considered PROFAA’s submissions in respect of Swiss law, Swiss Competition Law, EU law, EU Competition Law as well as Italian and French law, the CAS thereafter dismissed the PROFAA claims in their entirety.
As far as FIFA is concerned, the CAS award confirms FIFA’s regulatory authority to regulate the activity of football agents in the transfer system, as well as the validity of key provisions of the FFAR. As stated above, those provisions notably include the service fee cap, the prohibition of multiple representation, and the principle that only licensed football agents may provide football agent services, all of which (from FIFA’s standpoint) will enhance contractual stability, ensure that the interests of football agents are aligned with those of their clients, increase professional and ethical standards, and protect the smooth functioning of the player transfer system.
The European Court of Justice (‘ECJ’)
Notwithstanding the above, cases are gradually ascending through the national and international legal systems and, despite the recent ruling by CAS, most acknowledge the need to wait for the decision of the ECJ before a conclusive and universally binding ruling is given.
Unfortunately, the timeline for the ECJ’s decision is unclear. However, if the Piau vs. Commission decision is any indicator, the ECJ found that implementation of FIFA’s 2008 agent regulations was compliant with EU competition rules because of objectivity and transparency. Nevertheless, it remains uncertain how the ECJ will rule here given that FFAR goes far beyond the 2008 FIFA agent regulations.
The common ground so far is that national courts appear to be waiting for the decisions of the ECJ to give a more comprehensive and universally applicable ruling.
As such, FIFA has the upper hand in this dispute as it stands, with the CAS decision coming down firmly in its favour.
Nevertheless, the most obvious conclusion that can be drawn from the court rulings that have arisen so far is that there is a considerable degree of uncertainty as to whether FFAR ought to be deemed legally invalid and unenforceable, which might provide some comfort for agents.
However, until the ECJ provides a definitive conclusion (whenever that might be) the FFAR will be applied and enforced in many countries from October 2023.
This article is provided by Burlingtons for general information only. It is not intended to be and cannot be relied upon as legal advice or otherwise. If you would like to discuss any of the matters covered in this article, please contact David Winnie or write to us using the contact form below.