25 Clubs from 16 different countries met on the fringes of the EHF Euro 2014 in Budapest/Hungary. Under the leadership of Ernö Kelecsenyi/Györ they listened to the reports of the WFCH representatives in the various EHF and EHFM bodies. Two Club representatives were elected as deputy board members: Thomas Hylle from Team Esbjerg/DEN and Torbjorn Balstad from Byasen/NOR. In the second part of the meeting, the Club representatives welcomed as guest the 1. Vice-President of the International Handball Federation (IHF) Miguel Roca. The IHF representative underlined the importance of the Clubs for the World Federation and mentioned that IHF tried to implement Clubs as stakeholders in the statutes – but failed to reach the needed 2/3 majority. The Clubs expressed the wish to base the relation between Clubs and IHF on a Memorandum of Understanding. Roca promised to inform the IHF President about the wish of the Women Clubs.
On invitation of Karl-Heinz Rummenigge, Chairman of the European Club Association, the Forum Club Handball (FCH) President Joan Marin attended the Championsleague match of FC Bayern München and ZSKA Moscow. He was accompanied by FCH Vice-President Dierk Schmäschke/Flensburg, FCH Managing Director Gerd Butzeck and the lawyers Prof. Duvinage and Christian Heesch.
Rummenigge, accompanied by his legal advisor M. Gerlinger, and Marin exchanged views on the relations between Football/Handball clubs and FIFA/IHF.
The ‘Asser International Sports Law Blog’ published an article on the court case, lodged by 17 German Bundesliga Clubs against the German Handball Federation (DHB) and the International Handball Federation (IHF). The author is Prof Ben van Rompuy from Asser Institute/Netherlands, a well-known specialist on International and European Sports law.
The article gives an insight on the importance of the issue:
The European Commission’s competition decisions in the area of sport, which set out broad principles regarding the interface between sports-related activities and EU competition law, are widely publicized. As a result of the decentralization of EU competition law enforcement, however, enforcement activity has largely shifted to the national level. Since 2004, national competition authorities (NCAs) and national courts are empowered to fully apply the EU competition rules on anti-competitive agreements (Article 101 TFEU) and abuse of a dominant position (Article 102 TFEU).
Even though NCAs and national courts have addressed a series of interesting competition cases (notably dealing with the regulatory aspects of sport) during the last ten years, the academic literature has largely overlooked these developments. This is unfortunate since all stakeholders (sports organisations, clubs, practitioners, etc.) increasingly need to learn from pressing issues arising in national cases and enforcement decisions. In a series of blog posts we will explore these unknown territories of the application of EU competition law to sport.
In this second installment of this blog series, we discuss a recent judgment of the regional court (Landgericht) of Dortmund finding that the International Handball Federation (IHF)’s mandatory release system of players for matches of national teams without compensation infringes EU and German competition law.
In 2009, the Spanish Handball League (ASOBAL) and Group Club Handball (the predecessor of the Forum Club Handball (FCH); an association representing the interest of the top European handball clubs) launched a complaint with the European Commission alleging that the rules of the IHF and EHF on the mandatory release of players were in breach of Articles 101 and 102 TFEU. The Commission opened a preliminary investigation. This prompted the EHF to seek an amicable solution with the complainants.
In May 2010, the EHF signed a Memorandum of Understanding with FCH, covering issues such as the terms of compensation for the release of players and the representation of clubs and other stakeholders in the bodies of the EHF:
- The EHF agreed to pay compensation to the clubs for the release of their players to the national team. Starting from the 2010 European Championship, the EHF paid a fee of 270 EUR per player per match via the national federations to the clubs (amounting to a total compensation of 400.000 EUR, i.e. 10 percent of the profits of the 2010 European Championship).
The EHF agreed on the principle that “each day a player spends with the national team/selection his salary should be insured by the National Federation, EHF or IHF in case of injury in favour of the clubs”.
The EHF took an important step towards more inclusive governance by creating the Professional Handball Board, a strategic platform for various stakeholders (leagues, clubs, national federations, and players). It plays an advisory role through the submission of reports and analyses to the EHF Executive Committee and contributes to the decision-making process through its chairperson (who is a full member of the Executive Committee).
Since many of the complainants’ demands were met, ASBOL and FCH withdrew their competition law complaint. Subsequently, the European Commission closed its preliminary investigation in June 2010.
The EU handball “case” is a good illustration of the remedial potential of EU competition law to strengthen good governance in sport. The mere threat of a formal investigation by the European Commission proved sufficient for the EHF to change its rules for the release of players and to establish a channel for clubs and other stakeholders to participate in its decision-making process.
In 2014, the EHF and FCH renewed the 2010 Memorandum of Understanding (MoU) until June 2018. The modified MoU, which has been the subject of negotiations for more than one year, foresees increased fees for the release of players to the European Championships.
Strengthened by the satisfactory outcome reached with the EHF in 2010, the FCH made attempts to come to a similar arrangement with the IHF. Following negotiations during the course of 2010 and 2011, the IHF for the first time in history paid compensation for the release of players to the World Championship and signed insurance for player salaries for injured players. The IHF Council also proposed to integrate the clubs as stakeholders in its bylaws. The clubs, however, did not accept with the terms and conditions of the proposal and no agreement was reached. The clubs were also dissatisfied with the amount of the compensation paid by the IHF: qualification matches were not compensated and the fee only amounted in average to 10-20 percent of the monthly salary paid by the European top clubs. The prospects of reaching an agreement between the IHF and the CFH dimmed. In March 2012, the IHF made clear that it was no longer prepared to discuss a MoU with the FCH. This prompted 30 German clubs to sue the IHF and the German Handball Federation (DHB) before the regional court of Dortmund in April 2013.
The 2014 Dortmund judgment
The IHF Player Eligibility Code provides that a club having a foreign player under contract is obliged to “release such player to his National Federation if he is called up to take part in activities of that federation’s national team” (Article 7.1.2). The activities include the Olympic Games, World Championships, and continental championships as well as the qualification matches and tournaments for these events. According to Article 7.2 of the Code, a club releasing a national player “shall not have any claim to compensation”. Furthermore, the club must take out insurance coverage for the player in the event of personal injury and resulting consequences for the period for which the player has been called to his federation’s activities (Article 7.3.2). A club failing to release a player that is able to play will be penalized in accordance with the IHF Regulations Concerning Penalties and Fines and the disciplinary regulations of the Continental Confederation concerned (Article 7.4.4).
The German handball clubs, supported by the FCH, argued that the rules concerning the mandatory release of players to the national team and their application by the IHF and DHB constitute an abuse of a dominant position prohibited by Article 102 TFEU and the equivalent German competition law provision (§ 19 Gesetz gegen Wettbewerbsbeschränkungen, GWB).
The regional court of Dortmund first addressed a number of procedural issues. Considering that the DHB is bound by the rules of the IHF, the court decided to join the proceedings against the IHF and DHB. Moreover, the court did not defer to the jurisdictional exclusivity claimed by the defendants. It stressed that the internal disciplinary bodies or even the Court of Arbitration could not be considered independent and impartial for the purpose of reviewing the compatibility of the mandatory player release system with competition law. According to the court, neither the IHF nor the DHB regulations could prevent the clubs from seeking direct recourse to an ordinary civil court. Lastly, the court found German law to be applicable. Even though Article 7 of the IHF Player Eligibility Code affects handball clubs worldwide, its obligations also substantially affect the German market in which the claimants operate. The intimate connection between the claims against the IHF and the DHB further supported the conclusion that the regional court of Dortmund was the appropriate legal venue for hearing the case.
On substance, the court found that the IHF is a monopolist on the market for the organisation of international handball events, including the World Championships and the Olympic Games (i.e. events in which national teams compete), and on a number of other separate, but closely related, commercial markets (e.g. sponsorship). Also on the markets for the organisation of European and national handball competitions, the IHF holds a dominant position (solely and together with the EHF and the national federations).
Turning to the contested rule of the IHF Player Eligibility Code (Article 7), the court stressed that the obligation for clubs to release players for matches of national teams without compensation is incompatible with the civil code rule of good faith in contractual performance. In any normal business, it would be unthinkable that an undertaking would provide for free a resource, its employees, to a competitor seeking to make profits from that resource. At the same time, the court found that this obligation constitutes an exploitative abuse of a dominant position prohibited by § 19 GWB and Article 102 TFEU. When recruiting top foreign-raised players, clubs must take into account the costs of paying their players while they are absent and, what is more, the costs incurred if those players would get injured during an international match. As such, uncompensated player release restricts the clubs’ contractual freedom and distorts competition between the clubs.
Although Article 102 TFEU does not contain an exemption clause similar to Article 101(3) TFEU, an undertaking may escape an abuse finding by demonstrating an objective justification or efficiency defense for its conduct. The court, however, brushed aside the arguments put forward by the IHF and DHB to this end.
First, the defendants contended that without the player release system, clubs would not be willing to release their players to national teams. The release rules would also prevent clubs from trying to weaken foreign national teams in favor of their own national team. The court stressed, however, that the mandatory release of players for national teams in itself is not being contested. It also pointed to the fact that the IHF, notwithstanding Article 7.2 of the Player Eligibility Code, decided to pay compensation for the release of players to the 2011 and 2013 World Championships. This indicates that in principle a compensation would not adversely affect the sporting or other interests of the IHF. In addition, the court made numerous references to the MoU reached between the EHF and the FCH as well as to the MoU between FIFA and the European Club Association (ECA) (i.e. the deal as a result of which the Oulmers litigation was terminated, see below). These examples indeed exemplify that an uncompensated player release system cannot be considered indispensable.
Second, the defendants argued that participation in international handball events increases the exposure and thus the value of the players, which indirectly benefits the clubs. Also this argument failed to convince the court. If the IHF and DHB would be able to quantify this advantage, this could be taken into consideration when determining the compensation. Yet it could not objectively justify the denial of compensation for the release of players or for their potential injuries.
In light of these observations, the court declared the conditions for the release of players to foreign national teams, embedded in Article 7.2 and 7.3.2 of the IHF Player Eligibility Code, null and void. Interestingly, the court also suggested that the IHF would introduce a cap on the number of days an association would be entitled to call up players for the national team.
A landmark judgment in the making?
Unsurprisingly, the IHF and the DHB lodged an appeal against the judgment before the higher regional court (Oberlandesgericht) of Düsseldorf. It is not unthinkable that eventually the case will trigger a preliminary reference to the Court of Justice and emerge as the successor of the abandoned Oulmers litigation against the FIFA player release system.
The regional court of Dortmund did not expressly rely on the Wouters proportionality test, transposed in Meca-Medina, to assess whether the IHF’s player release system constituted an abuse of a dominant position. The court’s analysis is, however, largely consistent with the analysis that the Court of Justice would follow. After having established that the contested rules emanate from an undertaking that has a dominant position, the court verified whether there are less restrictive means to achieve the objectives pursued by the IHF’s mandatory player release system. It did not call into question the necessity of a mandatory player release system for the organisation of international handball competitions, but the court did conclude that the current system – which leaves clubs uncompensated – could not be objectively justified.
For at least two reasons theDortmundjudgment, while not final yet, has potential to become an important precedent for many other sports.
First and foremost, it offers the first substantive assessment of the compatibility of player release rules with EU (and national) competition law. Particularly in the event of a preliminary reference to the Court of Justice, the case could serve as a much-needed wake up call to all international sports federations that currently operate a similar system. Arguably, federations could assert that the compensation should not cover all the costs incurred by the clubs. Indirect benefits to the clubs could be discounted. Yet it appears undeniable that the imposition of the burden on clubs to supply players without allowing them a fair share of the resulting benefits constitutes an abuse prohibited by Article 102 TFEU.
Second, even though sports federations usually have practical monopolies in a given sport, the remedial potential of Article 102 TFEU to tackle abusive conduct remains underexplored. This case, and even the earlier competition law complaint lodged against the EHF, reveals that it offers a powerful instrument to steer sports federations into the direction of better governance. Eventually the IHF will have to follow the path that others (e.g. EHF, FIFA) have traveled. After all, the determination of a fair compensation for player release necessitates a consensual strategy that balances the needs of stakeholders, in this case the clubs, with the needs of the federation.
We continue to follow this case closely, so stay tuned.
 Cases COMP/39659 ASOBAL v handball federations and COMP/39669 Group Club Handball v handball federations.
 Landgericht Dortmund, Urteil vom 14.05.2014, 8 O 46/13, paras. 104-114.
 Idem, para. 118.
 Idem, paras. 121-122.
 German Civil Code, Section 242 (“An obligor has a duty to perform according to the requirements of good faith, taking customary practice into consideration”).
 Landgericht Dortmund, Urteil vom 14.05.2014, 8 O 46/13, para. 129.
 Idem, para. 130.
 Idem, para. 132.
For the first time the boards of Men and Women FCH met during the annual board meeting in Spain. During a common dinner Men and Women Club representatives shared experiences. Women FCH President Ernö Kelecsenyi/Györ welcomed the participants and highlighted the good cooperation with the male partners, which led to the foundation of Women FCH and a first Memorandum of Understanding with EHF. The Women FCH board discussed the reports of the EHF Women Handball Board and the EHFM Women Club Board. A discussion on Women FCH targets was started and will be continued during the next General Assembly in Budapest (20.12.14). In the second part of the meeting Biljana Crvenkoska, Managing Director of the Women Professional Handball League (WPHL) presented her project which shall be started in season 15/16. The participants welcomed the idea in order to strengthen handball in countries with only few professional teams.
The ordinary Board meeting season 14/15 took place in Spain on 20. Oct 2014. It was a historical meeting in two aspects: For the first time ever the leadership of the Men’s and the Women’s Forum met in order to share experiences during a common dinner and for the first time ever an IHF guest attend FCH: the 1. Vice-President Miguel Roca.
In the first part of the meeting the board of FCH dealt with reports and ordinary business. Radek Wasiak/Kielce was nominated FCH representative of the EHF Competition Commission.
In the second part the FCH lawyers Prof Duvinage and Dr. Heesch informed on the complaint, lodged by 17 Bundesliga-Clubs against the German Federation (DHB) and the International Handball Federation (IHF). The Clubs won the first instance.
The court Landgericht Dortmund decided the following: For the German Handball Federation DHB and the Internationale Handball Föderation (IHF) it is prohibited
a) to oblige the plaintiffs to release their foreign National team player employees to the according National Teams and/or
b) in case that the plaintiffs do not act according to the request oft he foreign National Federation to punish the plaintiffs or to enforce the punishment of the plaintiffs
The third part was devoted to the discussion with the IHF representative which took place in a positive athmosphere. FCH welcomed the initiative of the IHF Council to limit the number of national team days to 60 per year. Anyhow it was stated that the IHF Council has the right to change this regulation at any time. Roca underlined that this was the first official meeting between IHF and FCH, the World Federation and the Clubs are on a good way. From his point of view it should be possible to come to a written agreement in the near future. Further contacts were envisaged.
The first joint board meeting of Women and Men Forum Club Handball representatives will take place in Spain on 20./21. October 2014. Top issue during the Men’s Forum will be the complaint of 17 German Bundesliga-Clubs against the German Handball Federation (DHB) and International Handall Federation (IHF). IHF 1. Vice-President Miguel Roca will attend the meeting and explain the position of the world federation.
The Women’s Forum will have to discuss targets and a strategy for the next years. One of the points on the agenda will be the WOMEN PROFESSIONAL HANDBALL LEAGUE. The concept of this league will be presented by Managing Director Biljana Crvenkoska.
The President of Women Forum Club Handball (WFCH) Ernö Kelecsenyi and the President of the European Handball Federation (EHF) signed a ‘Memorandum of Understanding’ (MoU) on the fringes of the 12th EHF Ordinary Congress in Dublin last Weekend. The MoU regulates the partnership between Clubs and EHF. In particular it regulates the representation of Club representatives in the various bodies of EHF and its daughter company EHF Marketing GmbH. Details will be presented to the WFCH member Clubs during the next WFCH General Assembly which will take place in Budapest on the weekend of the EHF European Championship. GB
17 Clubs of the DKB Handball-Bundesliga lodged a complaint against German Handball Federation (DHB) and International Handball Federation (IHF) in April 2013. IHF and DHB should be adjudged to refrain from obligating the Clubs to second their employed foreign handball players upon demand of their respective national federations for measures of said national federations. The Clubs, supported from FCH, won the first instance at the court Landgericht Dortmund in May 2014. Now – as expected – DHB and IHF lodged an appeal at the court Oberlandesgericht Düsseldorf.
A first meeting between the newly elected board of Women Forum Club Handball and the leadership of EHF will take place on 27th June 2014 prior to the draw of the Championsleagues. Women Forum Club Handball will be represented by President Ernö Kelecsenyi/Györ, Vice-President Gordana Naceva/Vardar Skopje and Kay-Sven Hähner/Leipzig. EHF will be represented by President Jean Brihault and General Secretary Michael Wiederer. The target of the meeting is to define the conditions for future cooperation between EHF and WFCH. GB
Internationale Handball Federation (IHF) President Dr. Hassan Moustafa conveyed his ‘heartfelt congratulations’ to Joan Marin on his election as President Forum Club Handball (FCH).
‘I wish you every success in your tasks and challenges and look forward to cooperating with you for the benefit of the further development of our sport.’
The congratulations were accompanied by an invitation to visit the match of the ‘IHF World Selection’ vs the Egypt National Team in favor of a Cairo Hospital for children with cancer.