Article 82 EC and sporting 'conflict of interest': the judgment in MOTOE.

• Author: Weatherill, Stephen
• Position: ARTICLES - Motosykletistiki Omospondia Ellados NPID (MOTOE - Report

1. Introduction

   The decision of the Grand Chamber of the European Court of Justice in Motosykletistiki Omospondia Ellados NPID (MOTOE) v Elliniko Dimosio (hereafter: MOTOE) (1) is striking for its refusal to Allow a sporting body that mixes regulatory functions with economic Activities to claim immunity from the Application of EC law. Article 82 EC prevents the Abuse of a dominant position held by a sporting body and this may Affect decisions about whether or not to sanction the staging of new events, which was the issue in the litigation in MOTOE. The subjection of such decisions to the requirements of the EC Treaty is not in itself surprising or new. Case law which stretches back some 35 years, from Walrave and Koch through Bosman to Meca Medina (2), demonstrates the Court's consistent view that sport, in so far as it constitutes an economic Activity, falls within the scope of Application of the EC Treaty, Albeit that it is open to sport to explain and justify its practices in so far as they Are necessary for its proper organisation. In short, EC law Accepts that sport is 'special'-it has features, such as the need for balanced competition and uncertainty as to outcome, which Are not found in typical industries-but it is not so 'special' that it can be granted a blanket exemption from the rules of the EC Treaty. MOTOE, which concerns the sport of motorcycling in Greece, follows this well--established Approach. However, the ruling in MOTOE is of interest for three reasons in particular. First, it concerns the Treaty competition rules, specifically Article 82, whereas most (though not All) previous sports cases before the Court have involved the free movement provisions in the EC Treaty. Second, the clarity of expression in the judgment is unusually vigorous, in particular in its concern to Assert legal control over the consequences of a conflict of interest between a sporting body's regulatory and commercial motivations. Third, MOTOE, as a decision of the Grand Chamber, carries particular weight, and it confirms that the Third Chamber's readiness in Meca Medina to subject detailed Aspects of sports governance to the scrutiny of EC (competition) law was not simply an oddity created by the five judges who comprised the Third Chamber in Meca Medina.

2. The litigation

   The decision in MOTOE is a preliminary ruling delivered in response to a reference made by the Diikitiko Efetio Athinon in Greece, seeking an interpretation of Articles 82 and 86 EC in the particular context of the sport of motorcycling. (3) It Arises from proceedings brought before the Greek courts by MOTOE-the Greek Motorcycling Federation, a non--profit--making Association governed by private law-Against the Greek State seeking compensation for the pecuniary damage which MOTOE claims to have suffered in consequence on the State's refusal to grant it the authorisation required under Greek law to organise motorcycling competitions.

   Greek law provides that such authorisation would be granted only After consent had been secured from the official representative in Greece of the Federation Internationale de Motocyclisme (the International Motorcycling Federation). That official representative was ELPA (Elliniki Leskhi Aftokinitou kai Periigiseon, Automobile and Touring Club of Greece) and it too organises sporting competitions in Greece. ELPA entered into negotiation with MOTOE, providing MOTOE with informAtion about a number of regulations which had to be observed in the planning of competitions and Asking for a range of details about MOTOE's planned events. But ELPA did not give its consent and the Greek State Accordingly did not Authorise MOTOE to proceed.

   MOTOE claimed it had been treated unlawfully by the Greek State. It sought GRD 5 000 000 as compensation. Its Argument based on EC law was that a violation of Articles 82 EC and 86(1) EC had occurred. The Greek law in question conferred on ELPA a position of monopoly power over the organisation of motorcycle events in Greece which, MOTOE claimed, ELPA had Abused by withholding consent to MOTOE's plans. Article 82 EC does not forbid the grant or existence of a dominant position or monopoly, but it does forbid Abuse of that position and it therefore provides a basis for reviewing the lawfulness of decisions taken by the sports regulator which is typically placed in that position of monopolist. The thematic Approach of EC law persists: an extreme Approach, whereby the challenged sports rule would be treated as necessarily unlawful because of its economically damaging effect, is excluded, but so too is an Approach at the other extreme, whereby the mere fact that the rule Arises in the context of sport would immunise it from legal supervision. Instead EC law operates by putting the rule to the test in so far as it has an economic effect. What is it for? Is it necessary for the organisation of sport? In this way, the EC develops a sports law and a sports policy, even in the Absence of Any concrete depiction of the role of sport in the Treaty itself. (4) This is characteristic of the expansionist dynamic of EC trade law.

3. Legal Analysis

   ELPA's role and functions Are clearly important in the legal Assessment. Only an 'undertaking' is subject to the Treaty rules on competition. The concept of 'undertaking' goes undefined in the Treaty but it has been consistently interpreted to require engagement in an economic Activity, and neither legal form nor the method of financing is of importance. It is, then, a functional test. (5) The most important and Awkward case law on this point has tended to deal with bodies equipped with important public functions and fulfilling (more or less well) defined social tasks which nonetheless Also perform Activities with economic implications. Consider, for example, institutions responsible for social security (6) or those dealing with Air traffic control (7). They fall outwith the category of 'undertakings' for the purposes of EC competition law where the Activity is not pursued in the market in Actual or potential competition with other economic operators-where the Activity lacks an economic nature of the type required to bring it within the scope of the EC Treaty.

   It is Admittedly not Always easy to determine when a body counts as an 'undertaking'. a 'pure' regulator may escape subjection to the Treaty. The Bar of the Netherlands occupies an influential position of power but it is not an 'undertaking' since it does not carry on an economic Activity. (8) So naturally this is the preferred status for sports bodies-to Avoid being classified as an 'undertaking', thereby to Avoid subjection to control under the Treaty competition rules. But the key is 'economic Activity'. and the reference made by the Diikitiko Efetio Athinon stated that ELPA's Activities Are not limited to purely sporting matters, but that it Also engages in Activities classified as 'economic', which consist in entering into sponsorship, Advertising and insurance contracts. These Activities generate income for ELPA. and it organises its own sporting events. This made it rather easy for the Court.

   ELPA may be vested with public powers for the purposes of some of its functions but this 'does not, in itself, prevent it from being clAssified as an undertaking for the purposes of Community competition law in respect of the remainder of its economic Activities'. (9) ELPA is engaged in 'the organisation and commercial exploitation of motorcycling events'. (10) It is an undertaking for these purposes. and nonprofit making though its objectives might be, its Activities potentially co--exist with those of other operators which do seek to make a profit. There is therefore the necessary commercial Aspect to ELPA's Activities which brings it within the scope of the EC Treaty.

   The Court is not twisting the law to catch a sports federation. Its Approach is perfectly consistent with its orthodox Approach in EC competition law. For example, an entity responsible for Air traffic control...