The European Commission has become an unlikely venue for football clubs after the European Union acquired new powers over investigating foreign subsidies.
Spain’s top men’s professional football division La Liga has taken a complaint about France’s Paris Saint-Germain team to EC referees, arguing the French club’s Qatari funding violates EU foreign subsidies rules.
Belgian football club Royal Excelsior Virton has done the same regarding its Abu Dhabi-funded rival Lommel SK.
“The European Commission has received several football-related complaints,” Brussels-based trade lawyer Arnoud Willems told Brussels Signal.
Under the EU Foreign Subsidies Regulation (FSR) that came into force on October 12, companies and other entities now need to notify the EC of procurement and merger transactions involving large foreign financial contributions.
The Commission can also start its own investigations into other types of overseas state aid.
The new powers seem to have led to a number of football clubs and leagues to try to score on FSR penalties.
With the EC wielding such new regulations, “investigating football seems like a no-brainer”, said Willems.
First, “it is a big sector,” and second, “clubs that do not have access to non-EU state support are being marginalised”, he said.
Willems added: “It is not against China, proving the point that the FSR is not purely a China initiative.”
Regarding the current football-related complainants, he said: “There are many small clubs. My feeling therefore is that they will wait for a bigger club, and wait until they have more resources. At the moment they are stretched.”
Michal Bernat, a lawyer at Dentons Warsaw, said the EC was “severely understaffed as far as FSR is concerned”, with “at least 17 pre-notifications currently pending.
“Football claims may thus not exactly be the EC’s major concern.”
Sophie Bertin Hadjiveltcheva, who advises on state aid and EU regulations, agreed, saying that the EC seemed “not very keen on spending resources on FSR and the football clubs”.
“However, this may change rapidly if and when there are more complaints,” she added.
Alexander Rose, a partner at DWF who specialises in public-funding law, said that for all the talk about the FSR not exclusively concentrating on state aid from China, “I think the European Commission is eager that the first FSR investigation is focused on a political priority such as Chinese funding of EV cars.”
This meant Brussels officials “will do what they can not to get drawn into a FSR investigation into the football market”.
“The amount of noise created by the two complaints suggests that they [the EC] won’t have a choice but to look into the issues,” he admitted.
He pointed out that football was also a familiar subject with the public – and in addition, possibly good PR.
Sam MacMahon Baldwin, an EU lawyer who has also advised the EC’s directorate general for competition, agreed. It’s a market “that’s easy to understand for the public at large, and the Commission can ‘sell’ an intervention as good marketing on how it can flex its muscles with this new instrument”, he said.
Besides competition concerns regarding UAE and Qatari money distorting Europe’s football market, the two cases could also “have the element of sportswashing’,” he said.
This referred to governments using sport to burnish their reputations, especially amid domestic controversies or scandals.
The issue of sportswashing “isn’t relevant legally under the FSR but it will increase the Commission’s appetite to prioritise the case on policy and resource grounds”, he added.
MacMahon Baldwin also said that, despite Brexit, the EC could still investigate clubs in the English Premier League. “The English clubs compete in the Champions League, and thus there is an effect and distortion within the EU based on the effects doctrine.”
Bogdan Gecić, a state aid and European law expert in Belgrade, said more broadly, as with any new tool, the FSR was “a First Generation project” and “lacks a lot of fine-tuning”.
The EC will “need to resolve this as it goes”, and “we can expect a fair amount of legal challenges and a lot of work for lawyers”, he added.
Even in the early days of FSR, Brussels has already scored an own goal, argued Gecić.
While companies will now notify the EC of mergers and procurement bids that fall under FSR, “in the majority of cases, the wider public will never find out”, he said.
The case register “won’t show the deals notified under the FSR as it does with its usual merger control”.
This “will only generate more legal uncertainty, as though the FSR didn’t bring enough as it is, not to mention [issues of] transparency and third-party rights”, he added.