Doyen (aka Doyen Sports Investment Limited) is nothing short of heroic in its fight against FIFA’s TPO ban. It has (sometimes indirectly through RFC Seraing) attacked the ban in front of the French courts, the Belgium courts, the European Commission and the Court of Arbitration for Sport. This costly, and until now fruitless, legal battle has been chronicled in numerous of our blogs (here and here). It is coordinated by Jean-Louis Dupont, a lawyer who is, to say the least, not afraid of fighting the windmills of sport’s private regulators. Yet, this time around he might have hit the limits of his stubbornness and legal ‘maestria’. As illustrated by the most recent decision of the saga, rendered in March by the Court of Arbitration for Sport (CAS) in a case opposing the Belgium club RFC Seraing (or Seraing) to FIFA. The arguments in favour of the ban might override those against it. At least this is the view espoused by the CAS, and until tested in front of another court (preferably the CJEU) it will remain an influential one. The French text of the CAS award has just been published and I will take the opportunity of having for once an award in my native language to offer a first assessment of the CAS’s reasoning in the case, especially with regard to its application of EU law.

I.               The facts and procedure of the case

To cut a relatively long story short, RFC Seraing [the variation of the name of the club remains a disturbing mystery in the various proceedings in Belgium and at FIFA] entered a TPO agreement with Doyen on 30 January 2015, stipulating that the club transfers the economic rights of three players to Doyen against a sum of €300.000. At that time the transitory phase of FIFA’s TPO ban enshrined in art. 18ter RSTP was already in force and the FIFA TMS, tasked with monitoring the enforcement of the RSTP, quickly jumped on the matter. The issue was referred to FIFA’s Disciplinary Committee, which opened on 2 July 2015 proceedings against RFC Seraing for breaching arts. 18bis and 18ter RSTP. Additionally, on 7 July 2015, Seraing introduced in the TMS a request to recruit a Portuguese player, to which it attached an ERPA (on Doyen’s ERPAs see our blog here) attributing 25% of the economic rights attached to the player to Doyen against a payment of €50 000. A few days after, the FIFA TMS started another investigation into the transfer and on 21 July 2015 the FIFA Disciplinary Committee extended the existing proceedings to also cover this matter.

On 4 September 2015, the Disciplinary Committee rendered its (unpublished) decision finding that ‘FC Seraing’ breached arts. 18bis and 18ter RSTP. Consequently, it banned the club from recruiting players (at national and international level) for the next four transfer windows and handed out a fine of CHF 150.000. Seraing challenged the decision with FIFA’s Appeal Committee, which decided on 7 January 2016 to reject the appeal and confirmed the original decision. Eventually, Seraing appealed this decision to the CAS, leading to the latest award. As a side note, it feels like the disputes involving RFC Seraing (or FC Seraing or Seraing United) are a set-up prompted by Doyen to be able to challenge the validity of art. 18ter RSTP in various jurisdictions. If it were true it should not affect the question of the legality of the ban, but it is probably not of great support to the credibility of some arguments raised by Doyen, or its alter ego Seraing, in these proceedings.

II.             The CAS’ assessment of the compatibility of FIFA’s TPO ban under EU law

As the competence of CAS in this matter was not contested, the key question was against which law(s) should the compatibility of FIFA’s TPO ban be assessed. Due to the history of RFC Seraing’s key lawyer, it is no surprise that much of the award is spent assessing the EU law compatibility of the ban. In the past, as I have argued elsewhere (my CAS and EU law article is accessible for free here, download it now!), the CAS has been rather reluctant to apply EU law rigorously. This case is therefore a great opportunity to assess whether it has raised its standards in this regard.

a.    The applicability of EU law

First, is EU law applicable to the case? The CAS has rarely applied EU law (the exception confirming the rule being the rather old CAS 98/200 case, which was later challenged in front of the EU Commission leading to the ENIC decision), an absurdity in light of the Bosman (and prior Walrave) case law of the CJEU, which made clear that EU law is applicable to the regulations of Sports Governing Bodies (SGBs), even when seated outside of the EU. Additionally, in light of the centrality of the free movement rights in EU integration, it is to be expected that like the EU competition rules they be considered part and parcel of a European public policy with which arbitral awards must comply to be recognized and enforced by national courts in the EU.

Thus, the less spectacular, but probably more important, aspect of the award is the clear affirmation that EU law is applicable because it constitutes a “mandatory provision of foreign law” in the sense of art. 19 of the Swiss Federal Act on Private International Law (PILA).[1] Mandatory provisions of foreign law must be taken into account when three cumulative conditions prevail:

1. Such rules belong to a special category of norms which need to be applied irrspective of the law applicable to the merits of the case;
2. there is a close connection between the subject matter of the dispute and teh territory where the mandatory rules are in force;
3. in view of Swiss legal theory and practice, the mandatory rules must aim to protect legitimate interest and crucial values and their application must lead to a decision which is appropriate.[2]

In this case, the Panel considers that the three cumulative conditions are fulfilled because:

1. EU competition law and EU provisions on fundamental freedoms are largely regarded as pertaining to the category of mandatory rules by courts and scholars within the EU;
2. the close connections between (a) the territory on which EU competition law  and EU provisions on fundamental freedoms are in force and (b) the subject matter of the dispute results from the fact that the challenge against the legality of the RSTP has an obvious impact on the EU territory. Indeed, the RSTP aims to regulate the activity of football clubs, many of which are European. Furthermore, the particular decision affects the participation of RFC Seraing to competitions taking place on the European soil.
3. Finally, the Swiss legal system shares the interests and values protected by EU law, specifically by the EU competition rules and EU fundamental freedoms.[3]

This is a strong confirmation that EU law (mainly EU free movement rights and EU competition law), which applies almost naturally to decisions and regulations of the SGBs[4], will always be deemed applicable if invoked in front of the CAS to challenge their legality. This, as Seraing has learned in the present instance, does not mean that the SGBs rules will be automatically found incompatible with EU law. Instead, it merely subjects them to a duty of justification and proportionality, which will be assessed on a case-by-case basis.[5] The message for sports lawyers appearing in front of the CAS is then: Work hard on your EU law! But don’t get your hopes up too high… 

b.    The compatibility of FIFA’s TPO ban with EU law

The rest of the CAS award is mainly dedicated to assessing the compatibility of the TPO ban with EU law.[6] In doing so, the CAS, rightly in my view, considered that the conditions regarding the compatibility, or not, of a private regulation of an SGB with the EU free movement rights and competition rules overlap with regard to the key question: the proportionality of the rule.

The legitimacy of the objectives of the TPO ban

The Panel’s assessment focuses firstly, and therefore mainly, on a possible disproportionate restriction of the free movement of capital guaranteed under art. 63 TFEU. The Panel decides to assume, without addressing it, that article 63 applies horizontally. This is still a widely uncharted territory and the CJEU has yet to take a clear stand on it. However, the CAS decided to be better safe than sorry and, thus, followed a maximalist interpretation of the scope of application of the article by applying it horizontally to the rules of FIFA. From the outset, it is uncontested that articles 18bis and 18ter RSTP constitute a restriction to the free movement of capital in the EU.[7] Yet, as emphasized by the Panel, a restriction does not entail an automatic incompatibility with EU law. Instead, the restrictive effect might be justified by a legitimate objective and compatible with EU law if the rule or measure is a proportionate mean to attain that objective. In the present case, FIFA invoked a number of potential legitimate objectives underlying the TPO ban:

• The preservation of the contractual stability;
• The preservation of the independence and autonomy of clubs in the management of their recruitment policy;
• The securing of the integrity of football and preservation of the loyalty and equity of competitions;
• The prevention of conflicts of interests and the securing of transparency in the transfer market.[8]

Those objectives remained uncontested by Seraing and the Panel concluded that they could be deemed legitimate in the sense of the CJEU’s jurisprudence.[9] Instead, Seraing tried to argue that the ‘real’ objective of FIFA in adopting the TPO ban was to ensure that the clubs monopolize the financial streams generated by the transfers of players.[10] Yet, it failed to provide the necessary evidence to convince the Panel, which insisted that “TPO has triggered amongst many commentators and inside the various instances and organisations of football intense worries to which the objectives invoked by FIFA are a response”[11]. Additionally, the Panel considers “that this practice gives way to numerous risks, in particular: risks linked to the opacity of investors escaping the control of football organizations and who are able to freely sell-on their investment; risks of a restriction of the economic freedom and rights of players, through the influencing with a speculative interest of their transfer; risks of conflicts of interests, or even of rigging or manipulation of games, contrary to the integrity of competitions, as the same investor can have TPO deals and multiples clubs involved in the same competition; risks linked to the ethics of sport because the objective pursued by investors is purely a financial and speculative one, to the detriment of sportive and moral considerations”.[12] Hence, the arbitrators buoyed the legitimacy of FIFA’s objectives in adopting the TPO ban.

The proportionality of the ban

The key question is then whether the FIFA ban can be deemed a proportionate means to attain its legitimate objectives. It is at this most crucial stage of the evaluation of the compatibility with EU law that a number of academic commentators have denied the ban’s proportionality.[13] It is the most important part of the award, which will be most likely scrutinized and attacked in follow-up cases in front of national or European courts. It is important to note that SGB regulations have never failed in front of the CJEU because they were lacking a legitimate objective, but rather because they were not considered adequate or necessary to attain their objectives. This stage of the analysis entails political considerations and a comparative analysis of the policy alternatives (and their feasibility) available to tackle a specific problem. In other words, it is not sufficient to claim that you can think in the abstract of a less restrictive alternative, you need to factually demonstrate that this less restrictive alternative is a credible candidate to attain the objective. This is obviously a difficult task for a lawyer. Furthermore, procedural considerations connected to the rulemaking process will come into play. If a sporting rule has been devised via an inclusive legislative procedure and finds broad support amongst the affected actors, then it will in turn be more likely to be deemed proportionate. Instead, if a rule is the result of a secretive, exclusive and authoritarian procedure, then it will be easier to challenge its proportionality. Thus, both substantial (effects-based) and procedural (legitimacy-based) considerations are key to evaluate the proportionality of the TPO ban.

The Panel insists first that the TPO ban has limited effects on the freedom to invest in football. Indeed, it finds that investors are not barred from investing in clubs or to finance specific operations (such as transfers), the ban is devised only to exclude certain types or modalities of investing.[14] On the procedural/legislative side, the Panel notes that the ban has been introduced after a broad consultation and on the basis of numerous, though unpublished, expert reports.[15] This positive assessment of the adoption process could be contested, especially because FIFA did not release the expert reports to the public, which were therefore not subjected to the critical scrutiny of their peers.  Moreover, the Panel takes due note of the relatively long experimentation of a lighter measure (article 18bis RSTP), which has proven inefficient to control the widespread recourse to TPO.[16] The question was then whether Seraing would be able to come up with a credible less restrictive alternative to rein the anarchic use of TPO in football. The Belgian club claimed that FIFA’s legitimate objectives could have been attained through regulation and measures improving transparency (very similar to La Liga’s argument here).[17] Nonetheless, the arbitrators noted that Seraing failed to specify the alternative measures it envisaged.[18] Instead, the Panel sided with FIFA in finding that it lacks the capacity and legal competence to properly police investors which are not subjected contractually to its disciplinary power.[19] In such a context, the Panel finds that the risks of conflicts of interests stemming from TPO contracts cannot be properly controlled by FIFA and the national federations, and the alternative measures proposed by Seraing are bound to fail.[20] Finally, the Panel also referred to the previously existing bans in France, England and Poland, insisting that FIFA was also aiming at harmonizing the rules applicable to the transfer market in Europe to alleviate any potential discrimination.[21] Hence, the arbitrators conclude that the ban is a proportionate restriction to art. 63 TFEU and compatible with EU law. While the Panel doubts that the TPO ban has substantial restrictive effects on the free movement of players and on the freedom to provide services of agents,[22] in any case it refers to its findings under art. 63 TFEU to conclude that it must be held proportionate.[23]

Regarding the compatibility of the ban with EU competition law, Seraing argued that it constitutes an unlawful restriction to free competition under article 101 TFEU and an abuse of a dominant position under article 102 TFEU. The CAS deemed (uncontroversially) FIFA an association of undertaking for the purpose of article 101 TFEU and recognized that the TPO ban affects trade between the Member States.[24] However, the arbitrators emphasized that Seraing bears the burden of proving that the ban constitutes a restriction by object or effect of free competition in the internal market.[25] In that regard, the CAS referred to the CJEU’s analytical framework developed in its Wouters case.[26] It concluded, referring to its previous holdings, that the ban had legitimate objectives and was necessary to attain them, and therefore did not constitute a restriction in the sense of article 101 (1) TFEU. As far as the abuse of a dominant position is concerned, after criticizing the lack of serious economic analysis by the appellant,[27] the Panel simply reiterated its previous findings regarding the legitimate objectives and proportionality of the ban.[28] 

The CAS swiftly rejected all the other arguments raised by Seraing on the basis of the EU’s Fundamental Rights Charter,[29] the European Convention of Human Rights,[30] and Swiss law.[31] Nonetheless, it did held that the sanction imposed on Seraing by the FIFA Disciplinary Committee was too stringent in light of the proportionality principle and reduced Seraing’s transfer ban to three windows and a fine of CHF 150.000.[32]

III.           Conclusion

Doyen lost a new battle and, while the war is still raging on, the controversial company is slowly starting to run out of legal ammunitions to challenge FIFA’s TPO ban. I have explained elsewhere why I believe the ban to be compatible with EU law and many of the arguments of the CAS in this award resonate with my own views.  Yet, though I think banning TPO is a step in the right direction to a healthier transfer market, I also believe that FIFA is artificially sustaining a transfer market that leads to the shadowy financiarization of football brutally exposed in the recent football leaks. In other words, the fact that a challenge against articles 18bis or 18ter fails does not mean that the whole RSTP is compatible with EU law, and for various reasons I believe that the current article 17RSTP is likely to fall foul of the EU internal market rules.[33]

The broader lesson of this TPO saga is that EU law is (at last) becoming a potent tool to challenge SGBs and their rules at the CAS. However, EU law is not blind to the necessary regulatory function they exercised vis-à-vis transnational sporting activities. What EU law targets is the SGBs’ illegitimate, disproportionate, and abusive regulatory behaviour to the detriment of the affected actors. When invoking EU law, sports lawyers must be aware of the need to show concretely the disproportionate nature of the rule or decision challenged. This is a heavy evidentiary burden. In other words, one cannot be satisfied with simply pointing out a restrictive effect, instead an interdisciplinary engagement with the economic and social effects of a regulation as well as with its legislative process is in order.

On a final note, I am truly pleased to see that the CAS is finally taking EU law a bit more seriously. This is a giant step forward, which will protect its awards from challenges in front of national courts, foster its reputation in Europe’s legal communities, and empower it as a counter-power inside the system of the lex sportiva. I urge the CAS to fully embrace this change and to continue to thoroughly assess the EU law compatibility of the sporting rules challenged in front of it. In this regard, it should keep in mind that the more these rules are the result of a deliberative and inclusive (in a way democratic) transnational legislative process, the more they can be deemed legitimate in the eyes of EU law…and vice versa.

[1] TAS 2016/A/4490 RFC Seraing c. FIFA, 9 mars 2017, para. 73 : « La Formation arbitrale considère que le droit de l’Union Européenne (« droit de l’UE »), dont notamment les dispositions des traités en matière de liberté de circulation et de droit de la concurrence, doivent être prises en compte par la Formation arbitrale, dans la mesure où elles constituent des dispositions impératives du droit étranger au sens de l’article 19 de la Loi fédérale sur le droit international privé du 18 Décembre 1987 (« LDIP »).

[2] This English translation is taken from CAS 2016/A/4492 Galatasaray v. UEFA, 23 juin 2016, para. 43.

[3] TAS 2016/A/4490 RFC Seraing c. FIFA, para. 76. The French version reads as follows :

i.       Les dispositions de droit européen, concernant notamment le droit de la concurrence et les libertés de circulation, sont communément considérées comme des règles impératives par les juridictions de l’Union et la doctrine ;

ii.     Les relations étroites entre (a) le territoire sur lequel le droit européen est en vigueur et (b) l’objet du litige, tiennent au fait que la mise en cause de la légalité du RSTJ a un impact évident sur le territoire européen. En effet, le RSTJ vise à réguler l’activité des clubs de football, dont de nombreux clubs européens. De plus, la Décision attaquée affecte notamment la participation du RFC Seraing à des compétitions se déroulant sur le sol européen.

iii.    Enfin, l’ordre juridique suisse partage les intérêts et valeurs protégées par le droit européen et notamment les dispositions de droit européen en matière de droit de la concurrence et de libertés de circulation.

[4] See B. van Rompuy, The role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations. In general, see S. Weatherill, European Sports Law, Asser Press, 2014. For my take on the centrality of EU law to exercise a ‘counter-democratic’ check on the lex sportiva, see my PhD thesis (in French) available here.

[5] See crucially CJEU, Meca Medina, 18 July 2006, ECLI:EU:C:2006:492, para.42.

[6] See TAS 2016/A/4490 RFC Seraing c. FIFA, paras 90-144

[7] Ibid., para.97.

[8] Ibid., para 101. En l'espèce la FIFA invoque plusieurs objectifs poursuivis par les mesures en cause, et qu’il convient de reprendre : la préservation de la stabilité des contrats de joueurs , la garantie de l'indépendance et l'autonomie des clubs et des joueurs en matière de recrutement et de transferts, la sauvegarde de l'intégrité dans le football et du caractère loyal et équitable des compétitions, la prévention de conflits d'intérêts et le maintien de la transparence dans les transactions liées aux transferts de joueurs.

[9] Ibid., paras 102-104.

[10] Ibid., paras 105-106.

[11] Ibid. para. 107.

[12] Ibid., para.108.

[13] See J. Lindholm, Can I please have a slice of Ronaldo? The legality of FIFA’s ban on third-party ownership under European union law and S. Egger, Third-party Ownership of Players’ Economic Rights und Kartellrecht, in K. Vieweg, Inspirationen des Sportrechts, Duncker & Humblot, Berlin, 2016, pp.307-331.  

[14] TAS 2016/A/4490 RFC Seraing c. FIFA, paras 109-112

[15] It refers to “une phase significative d’étude, de consultation, de travaux et discussions à laquelle ont participle de nombreux interlocuteurs”, at Ibid., para.113.

[16] Ibid., para.114.

[17] Ibid., para. 116.

[18] Ibid.

[19]“La FIFA ne peut pas contrôler les intérêts de personnes qui ne lui sont pas affiliées, ni les contrats qui sont conclus à l'occasion ou à la suite de transferts par d'autres personnes que les clubs, joueurs et agents et dont la déclaration est obligatoire via le TMS.” Ibid., para.117.

[20] Ibid., para.118.

[21] Ibid., para. 120.

[22] Ibid., paras 125-127.

[23] Ibid., para. 128.

[24] Ibid., para. 135.

[25] Ibid., para. 137.

[26] Ibid., para. 138.

[27] Ibid., para. 142.

[28] Ibid., para. 143.

[29] Ibid., paras 145-148.

[30] Ibid., paras 149-151.

[31] Ibid., paras 152-161.

[32] Ibid., paras 167-179.

[33] On this see R. Parrish, Article 17 of the Fifa Regulations on the Status and Transfer of Players : Compatibility with EU Law and G. Pearson, Sporting Justifications under EU Free Movement and Competition Law: The Case of the Football ‘Transfer System’.

Editor’s note: Josep F. Vandellos is an international sports lawyer associated to RH&C (Spain). He is also a member of the Editorial Board of the publication Football Legal and a guest lecturer in the ISDE-FC Barcelona Masters’ Degree in Sports Management and Legal Skills.

Article 6 of Annexe IV (Training compensation) of the FIFA-RSTP (Ed. 2016) contains the so-called “Special Provisions for the EU/EEA” applicable to players moving from one association to another inside the territory of the European Union (EU) or the European Economic Area (EEA).
The provisions regarding training compensation result from the understanding reached between FIFA and UEFA with the European Union in March 2001[1], and subsequent modifications introduced in the FIFA-RSTP revised version of 2005 to ensure the compatibility of the transfer system with EU law.[2]
This blog will focus on the exception contained in article 6(3) Annexe IV of the FIFA-RSTP. According to this article, when “the former club” fails to offer a contract to the player, it loses its right to claim training compensation from the players’ new club, unless it can justify that it is entitled to such compensation. Instead, the right of “previous clubs” to training compensation is fully preserved irrespective of their behaviour with the player.[3] From a legal standpoint, such discrimination between the “former club” and the “previous clubs” raises some questions that I will try to address in this paper.
For that purpose, the author will depart from the restrictive interpretation of article 6(3) adopted by the FIFA Dispute Resolution Chamber (DRC) and continue with a substantive assessment of the rule, firstly by looking at its purposive aim and secondly, by evidencing the potential negative impact on players’ mobility and its inherent anticompetitive effects. 

A. Article 6(3) Annexe IV of the FIFA-RSTP (Ed. 2016)

Article 6(3) of the FIFA-RSTP reads as follows: “3. If the former club does not offer the player a contract, no training compensation is payable unless the former club can justify that it is entitled to such compensation. The former club must offer the player a contract in writing via registered post at least 60 days before the expiry of his current contract. Such an offer shall furthermore be at least of an equivalent value to the current contract. This provision is without prejudice to the right to training compensation of the player’s previous club(s).”[4]
In summary, as a general rule, the former club of the player loses its right to claim training compensation if it fails to offer the player a contract in the terms described by the article, or cannot demonstrate a legitimate interest.
So far, the DRC has been consistent in interpreting that the obligation to offer the player a contract lies exclusively with the former club of the player as opposed to the previous clubs. In other words, the previous club is entitled to ask for training compensation when the player signs the first professional contract[5] no matter whether they offered the player a contract or showed bona fide interest in retaining him.
At first glance, this rigid interpretation might appear controversial in light of the more pragmatic approach towards the formal requirements of article 6(3) adopted in the CAS award 2009/A/1757 between MTK Budapest v. FC Internazionale Milano SpA[6]. In this case, in order to conclude that MTK Budapest was still entitled to request training compensation despite not having offered the player a contract in the terms indicated in the regulation, the adjudicating Panel emphasized that “[the] aims of sporting justice shall not be defeated by an overly formalistic interpretation of the FIFA Regulations which would deviate from their original intended purpose”.[7]
The DRC has thus systematically admitted claims of previous clubs against clubs that have registered professional players for the first time (e.g. DRC decision of 17 May 2016[8]) without delving into whether such clubs are indeed entitled to training compensation or not.
In an attempt to defy such dogmatic approach to the issue, I question whether the different references made in Annexe IV of the FIFA RSTP to the “former club”[9] could and should instead be interpreted more extensively, so as to include all former clubs (thus including previous clubs) where a player has been registered. Firstly, by having a look at the systematic context of the rule and its purposive interpretation[10], and secondly, by taking into consideration the potential competitive disadvantages between European clubs resulting from the regulation.
As to the rationale of the rule, the FIFA DRC jurisprudence (vid. e.g. DRC Decision of 27 April 2006 ref. no. 461185[11]) indicates that “the spirit of and purpose of article 6 para 3 of Annexe 4 of the RSTP, 2016 edition, is to penalise clubs which are obviously not interested in the players’ services as a professional, no matter if the club would have to offer the player an employment contract for the first time or a renewal due to the expiry of an already existing contract.”[12]
It appears therefore, contrary to the spirit of the rule that a club that has shown no interest in keeping the player as a professional, a roster or for its academy, can at a later stage request to be rewarded for the training of that player, irrespective of whether it was the former club, strictly speaking, or the former former club, so to speak (i.e. the previous club in the RSTP exact wording).
One could easily argue at this point, and I would subscribe to it, that at very young ages it is either legally prohibited for training clubs to offer a contract, or unreasonable to require clubs to offer contracts to all its players in order to safeguard their potential right to training compensation.  This was highlighted by the CAS Panel in the CAS award 2006/A/1152 ADO Den Haag v. Newcastle United FC[13] which was the appeal against the above cited DRC Decision of 27 April 2006.
However, nothing prevents training clubs to at least show a genuine interest in retaining the player as an amateur by formally offering him to continue training with them or even through a simple positive evaluation of the player. In order to alleviate the unreasonable burden that such obligation would suppose on training clubs, a solution could be to require the genuine interest at least, for players as from the season of their 16^th birthday. This would coincide with the age when in most EU countries players are legally allowed to sign employment contracts, and form a strict sportive perspective, the age from when training compensation is calculated in full according to article 5(3) of Annexe IV.
The final reference in article 6(3) (i.e. “This provision is without prejudice to the right to training compensation of the players’ previous club(s)”) helps to ground this interpretation. It is difficult to justify from a legal standpoint, why previous clubs should be exempted (as they, in fact, are) from observing the same rules and obligations as the former clubs, especially considering the principle of free movement of workers in the EU. The right to claim training compensation is, being redundant, “without prejudice to the right (…) of the players’ previous club(s)”. Previous clubs should therefore, demonstrate as well their entitlement to training compensation by evidencing a genuine interest in the player, such as former clubs do. 
To illustrate the situation, consider the case were an EU football club omits to offer one of its players (e.g. 18 years old) a professional contract in the terms of article 6(3) of Annexe IV, and that player further registers as an amateur with another EU club for one season. That second club also fails to offer the player (now 19 years old) a professional contract. After two seasons as an amateur, the player, finally signs a professional contract with a third EU club at the age of 20 years. The current interpretation of the exception leads to conclude that the first club, which failed to offer the player a professional contract, perhaps because he was simply not sufficiently interesting to retain, would now be reinstated in the right to claim training compensation, while the former club, under identical circumstances and reasons would be deprived from it.
Within those parameters, de lege ferenda the exception of article 6(3) could reasonably be extended to those previous clubs that failed to show the so-called bona fide interest. This way, by failing to show real interest in keeping a player, the previous clubs would be also prevented from asking training compensation upon the first registration of the player as a professional, to the same extend as the former club when it fails to offer the player a contract, in the terms indicated by the exception.
Turning now the attention, to EU law, the conclusions on why article 6(3) Annexe 4 current interpretation seems unfair and should be reformulated, point towards the same direction. 
 

B. Article 6(3) Annexe IV of the FIFA RSTP and EU competition law

The Bosman ruling and its most recent successor, the Bernard ruling, stand out as constant reminders that EU Law applies to the realm of European club football insofar as it constitutes an economic activity in the sense of Article 2 of the Treaty.[14] It is nowadays unarguable that football is a real economic activity and that the regulations adopted by its governing bodies must respect EU Law as long as they apply in the territory of the EU, or in case the player concerned has a European passport and is transferring to an EU Member State. Only rules which are “inherent to sport” such as the rules of the game, and other “practices likely to be exempted” meaning, those activities not necessarily linked to sport but which are worth of protection, could potentially fall outside the remit of EU competition law (the sporting exception) as pointed out by the “Helsinki Report on Sport” in 1999. However, the decision in the Meca-Medina case went even further, overcoming the traditional distinction between rules of purely sporting nature from others, to determine that rules cannot be of purely sporting nature when they have economic repercussions, and consequently, making it possible to explore new legal avenues to test regulations that in principle may seem outside the scope of EU competition law (such as the doping regulations in Meca-Medina).
According to Bosman[15] and Bernard, training compensation is a practice worth of protection, but it is undeniable that its rules have strong economic implications, for they are expressly meant to financially reward[16] football clubs involved in the training and education of players when these move to other clubs. For that reason, they fall under the remit of EU Law.
The legitimate aim of the training compensation system is also embraced by legal scholars. For example, while delving into the aftermath of the Bosman case and the agreement reached between FIFA and the EU Commission in 2001, S. Weatherill remarked that “(…). Sport has special features that deserve respect. In accordance with Bosman, it should be regarded as legally permissible for football to devise an internal taxation system to transfer money into the hands of nursery clubs, as part of a scheme for sustaining a larger number of clubs than would survive in ‘pure’ market conditions and to diminish gaps in economic strength between clubs.”[17]
However, it is my firm belief that Annexe IV of the FIFA RSTP has in many ways gone beyond the indications in Bosman, the Helsinki Report[18] and later in Bernard. In this last case, the Court referred to a system meant to compensate[19] and not reward training; and it is precisely that difference regarding the foundations of the system implemented by FIFA that leads to disproportionate results when the amounts to pay as training compensation are superior to the real costs incurred by the training clubs.[20]
All these issues jeopardize free mobility within the EU[21], for they restrict the chances of clubs to recruit players, and have an impact on the commercial relations between clubs and players in the sense of Article 101. By way of example, a Romanian football club registering a 21-year old player trained in Romania as a professional for the first time, would end up paying the training club a significantly lower amount of training compensation than a Hungarian club of the same category, wishing to sign that same player. The reason for that is that whilst in the first scenario the Romanian club would be subject to the internal training compensation mechanism; in the second scenario, the Hungarian club would be subject to the FIFA regulations that impose higher training compensations.
With these premises in mind, the testing of article 6(3) Annexe IV of the FIFA RSTP under EU competition law seems appropriate, although the application of EU competition law in this type of cases will probably remain an exception.[22]
In short, Article 101 TFEU[23] prohibits agreements, decisions of associations and concerted practices which may affect trade between Member States and have as their object or effect the prevention, restriction or distortion within the internal market.[24] Saskia King, explaining the so-called “objective criterion”[25], has highlighted that “when determining whether an agreement restricts competition under Article 101(1) TFEU, ‘object’ expresses a true alternative to ‘effect’ and as such requires separate consideration”. Therefore, if the object of the agreement is anticompetitive, there is no need to look behind the effects.
A primary aspect of competition law is the identification of the relevant market where a possible anticompetitive practice takes place. In the present context, the relevant market is the transfer market of football players, that is, the market on which the offer and supply of players meets and clubs compete against each other to recruit the best players.[26] Geographically speaking, the market is limited to the territory of the Member States of the EU.
Assuming also, that the FIFA RSTP (ed. 2016) qualifies as a “decision by an association of undertakings”[27] and that the rules of training compensation have an appreciable affect in trade between Member States[28] since any change of clubs for players under the age of 23 requires the payment of a training compensation[29]; the questions left to answer are therefore, whether or not article 6(3) of Annexe IV of the FIFA-RSTP (Ed. 2016), in its current formulation is (1) likely to prevent, restrict or distort competition in the EU transfer market of football players under Article 101(1) TFEU and more importantly, (2) whether the restrictive effects are proportionate and “[reasonably] necessary for the organization and proper conduct of sport?”[30]
As to the first question, it is my view that both the object and the effects produced by, article 6(3) restrict and distort competition between clubs, for they discriminate former clubs vis-à-vis previous clubs with regard to their right to claim training compensation. Additionally, the compensation limits the ability of clubs to take on players acting as free agent.
As to the second question, the Meca-Medina case –though in a different context[31]- offered valuable guidance to test the compatibility of rules of sports associations with EU competition law: “42. Not every agreement between undertakings or every decision of an association of undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article 81(1) EC. For the purposes of application of that provision to a particular case, 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 and, more specifically, of its objectives. It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives (Wouters and Others, paragraph 97) and are proportionate to them.”
Following the Meca-Medina reasoning, and focusing on the rationale behind article 6(3) Annexe IV, in the CAS award 2006/A/1152 ADO Den Haag v. Newcastle United FC, the CAS Panel corrected the view of the original DRC decision of 27 April 2006. Specifically, it remarked that the aim of the rule is “to ensure that no player, whether amateur or professional, in whom the training club has no interest, is impeded to accept the offer of another club because he carries some sort of ‘compensation price tag”[32] rather than to penalize clubs failing to offer a contract to their amateur players. The unquestionably legitimate goal of “the exception to the exception” - as the Panel calls article 6(3) - is thus to limit the obstacles to the free mobility of players aforementioned.
However, as to “whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives and are proportionate to them” there cannot be a positive answer. To me it is doubtful whether the anticompetitive effects produced by establishing different conditions between former clubs and previous clubs are inherent or a necessary consequence to ensure the objective of rule (i.e. contributing to free mobility). I believe the contrary to be true. (i.e. uently,conditions ctive of the rule, tt of EU Law. by scholars.r compensation. in the application of such principle. nsatI bI be The effects generated by the current interpretation of article 6(3) collide with the aim of the rule (i.e. protecting free mobility), for reinstating previous clubs in their rights to claim training compensation irrespective of their behaviour vis-à-vis the player, compromises free movement within the EU and creates unfair competitive advantages for previous clubs.
In conclusion, my suggestion is to rethink, the current formulation of article 6(3) (if not the entire training compensation system) and correct its detrimental effects by preventing all previous clubs that fail to offer players a professional contract or to show bona fide interest as from the season in which a player turns 16 years old from requesting training compensation. It is certainly not the role of the CAS to do so, but the responsibility of the EU Commission to take an active lead to ensure full compliance of football regulations with EU law. 

[1] See FIFA Executive Committee, “Commentary on the Regulations for the Status and Transfer of Players”, Annex 4 (29 June 2005) at page 124.

[2] European Commission Press Release of 5 March 2001, “Outcome of discussions between the Commission and FIFA/UEFA on FIFA Regulations on international football transfers”.

[3] A bona fide and genuine interest in keeping the player must be demonstrated before the DRC cf. Arbitration CAS award 2009/A/1757 MTK Budapest v. FC Internazionale Milano S.p.A., award of 30 July 2009.

[4] FIFA Regulations on the Status and Transfer of Players, article 6(3) Annexe IV.

[5] In cases of subsequent transfer, the club entitled to claim training compensation will always be the “former club”.

[6]“17. As noted earlier, it is the 2005 Regulations which apply in the present case. At the same time, however, FIFA itself has clarified that the aim of the revisions introduced in 2005 was simply to “facilitate the evidence of a contract offer being made”. In its Decision, the DRC stated that “...when revising the Regulations it was decided to integrate in the 2005 edition of the Regulations some formal preconditions in order to facilitate the evidence that a contract offer was effectively made...This is the actual aim of the relevant formalities”. Consequently, the Panel does not interpret the 2005 revisions to the Regulations as constituting a substantive or material alteration to the 2001 regulatory regime because, as FIFA has said, the changes introduced related only to matters of form, and not of substance.”

[7] See para. 31 of the award. Although, the transfer structure used in this case could qualify as a bridge transfer used for the purpose of circumventing the FIFA regulations on transfer compensation.

[8] Decision of the Single Judge of the Sub-committee of the DRC case Budapest Honved FC (Hungary) v. AFC ASA 2013 Targu Mures (Romania) ref. TMS 243. Unpublished.

[9] See also FIFA RSTP, article 2 para. 2 of Annex IV.

[10] See the CAS award 2007/A/1363 TTF Liebherr Ochsenhausen v/ETTU, award of 5 October 2007 para 12 page 8: “10. By interpreting rules and regulations of associations, the starting point and the predominant element of construction is the wording (literal interpretation). Other elements such as the systematic context, the purpose and the history of the rule may contribute to the correct understanding of the meaning of the rule. This principle is accepted in both civil and common law and it has been constantly applied by CAS panels. It is also embedded in the law of Luxembourg (see, e.g., Art. 1156 of the Code Civil of Luxembourg) and the parties have not argued otherwise.” Emphasis added.

[11] Decision not published.

[12] De Weger, The Jurisprudence of the FIFA Dispute Resolution Chamber, Asser Press, 2^nd Edition, 2016. Page 401.

[13] See para. 22 of the CAS award 2006/A/1152 ADO Den Haag v. Newcastle United FC, award of 7 February 2007.

[14] See also Case 36/74, Walrave and Koch v UCI, ECLI:EU:C:1974:140.

[15] Case C-415/93, Union Royale Belge des Sociétés de Football Association and Others v Bosman and Others, ECLI:EU:C:1995:463, paras. 106-110.

[16] See FIFA Executive Committee, “Commentary on the Regulations for the Status and Transfer of Players”, article 1(2) and Annex 4 para. 1 (Objectives), page 112.

[17] S. Weatherill, European Sports Law Collected Papers, Asser Press, 2^nd Edition (2014), pages 218 and 219.

[18] See Report from the Commission to the European Council of 10 December 1999 with a view to safeguarding current sports structures and maintaining the social function of sport within the Community framework – The Helsinki Report on Sport - para. 4.2.1.3: The Report refers to a system of objectively calculated payments that are related to the costs of training.

[19] Case C-325/08, Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC, ECLI:EU:C:2010:143, paras. 44 and 45.

[20] As an example of this disproportionality, a simple comparison between the training costs established for Cat. III UEFA clubs (30.000 Euro per) with the training costs established for internal transfers by the Romanian Football Football Federation (5.000 RON per year equivalent to 1.107 Euro).

[21] Training compensation rules were recently tested against EU law, and in particular with regard to the freedom of movement of workers, by TAS-CAS in the Riverola case (CAS award 2014/A/Bologna FC 1909 SpA v. FC Barcelona). The award is not public, but a full comment and legal analysis is published in: Luca Smacchia, “The Riverola case: how the enforcement of FIFA rules may restrict the freedom of movement for workers within the EU”, Football Legal, #5 (June 2016), pages 20-24.

[22] See e.g. Ben Van Rompuy, “Sport and EU Competition Law: New developments and unfinished business”, Asser International Sports Law Blog (22 May 2015).

[23] Article 101 TFEU: “The following shall be prohibited as incompatible with the internal 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 internal market, and in particular those which: (…) (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;”

[24] “The distinction between "restrictions by object" and "restrictions by effect" arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition.” - Commission Staff Working Document of 25 June 2014, Guidance on restrictions of competition “by object” for the purpose of defining which agreements may benefit from the De Minimis Notice, page 3.

[25] Saskia King, “Agreements that restrict competition by object under Article 101 (1) TFEU: Past, present and future”, PhD Thesis – The London School of Economics and Political Science (2015), Page 28.

[26] “The combined investment of summer and winter transfer windows in the top five European leagues was almost €3.4 billion. That was up by 29 per cent versus last season and again a record high ever.” - Soccerex Transfer Review Winter Edition 2016, Prime Time Sport, page 4.

[27] See, for example, Case T-193/02, Piau v. Commission, ECLI:EU:T:2005:22, para. 69: “As regards, first, the concept of an association of undertakings, and without it being necessary to rule on the admissibility of the arguments put forward by an intervener which go against the claims made by the party in support of which it is intervening, it is common ground that FIFA's members are national associations, which are groupings of football clubs for which the practice of football is an economic activity. These football clubs are therefore undertakings within the meaning of Article 81 EC and the national associations grouping them together are associations of undertakings within the meaning of that provision.”

[28] For an in-depth economic data analysis see, e.g., FIFA T.M.S., Global Transfer Market 2012 Highlights, pages 14 and 15 – Overall Market Activity - and pages 23 and 24 - Player Age.

[29] David Nilsson, “The Revised FIFA Regulations for the Status and Transfers of Players’ Compatibility with EU competition law – the Transfer System revised”. Master Thesis. Faculty of Law - University of Lund, (September 2006).

[30] Supra, 30.

[31] Doping rules under EU competition law.

[32] See para. 20 page 7 of the award: “The Panel does not share the DRC’s view that the purpose of the first sentence of Article 6 para. 3 is to penalise clubs which do not offer professional terms to their amateur players. Rather, in the Panel’s opinion, the purpose of the above provision is to ensure that no player, whether amateur or professional, in whom the training club has no interest is impeded to accept the offer of another club because he carries some sort of “compensation price tag”.