Sport is a dynamic and fast-growing sector with an underestimated macro-economic impact. Although sound and comparable data are generally lacking, this is confirmed by different studies and analyses of national accounts (impact on value-added and purchasing power; impact on employment), the economics of large-scale sporting events, physical inactivity costs, including for the ageing population (health care cost reduction, health promotion), and by sector specific analysis (e.g. sport and tourism as economic drivers). The further globalisation, commercialisation and professionalisation of sport go hand in hand with increased sport sponsoring, sale of broadcasting rights and ticket sales. Sport structures and leisure facilities, especially at local level, will require innovative investment and reconfiguration to meet the evolving sport and physical activity needs of the 21st century.

Sport has been identified as a growth area offering job potential. According to a European study commissioned in 2004[1], the sports sector (NACE group 92.6) accounted for some 800,000 jobs[2] in the EU-25. The UK alone accounted for more than 30% of aggregate employment in the field of sport, followed by Germany with 13% and France with 12.5%.

Since 1980, the total number of jobs classified under sporting activities (NACE group 92.6) has tripled. The main reasons for this trend are:

• The reallocation of income to health and leisure activities;
• The development of sporting activities which affect a wider part of the population (young people, elderly, people with disabilities) and meet a variety of needs (leisure, entertainment, health, education);
• Changes in the supply of sport.

It is difficult to estimate the aggregate employment growth of the sector because of different national methods used to classify statistical information. However, in the past ten years the aggregate volume of sport-related employment is estimated to have grown by about 60%.[3]

There are large disparities within the EU. Main professional occupation in the sector as a percentage of the active population varies between 0.11% in Poland and 0.94% in the UK. Moreover, volunteers are not visible in official labour statistics related to sport.

3.1. Statistics

The sport sector is making a positive contribution to the attainment of the goals of the Lisbon Strategy.[4] However, this contribution has so far not been made explicit. The potential of sport should therefore be made visible in EU policy-making.

Mechanisms and methods need to be identified to ensure that sport is taken into account in the framework of the implementation of the Lisbon Strategy. In general, this should be feasible without creating additional structures or mechanisms.

The launch of policy actions and enhanced cooperation on sport at EU level needs to be underpinned by a sound knowledge base. Governmental and non-governmental stakeholders have identified the need for a European statistical definition of sport and to coordinate efforts to produce sport and sport-related statistics on that basis. They have particularly stressed the need to coordinate efforts to improve the quality and comparability of data in order to allow better strategic planning and policy making for sport.

Trustworthy statistical information on sport and sport-related matters is a necessary pre-condition for developing well-founded policies and for giving sport a higher profile in other policy areas. Statistics provide the factual means to assess the need for and progress of political initiatives.

At EU level, comprehensive and comparable statistics on sport are almost inexistent. Sport is statistically defined through NACE (classification of economic activities in the European Communities) code 92.6. This code only covers the “operation of sports facilities” and “other sports services”, i.e. the core business of sport. The statistical definition does not comprise sectors directly affected by sports activities (e.g. sporting goods manufacturers and retailers, sport media, sports education) nor other sports-related activities in sectors such as health or tourism. No specific data is collected in other fields, such as sports participation, types of sport or the profile of practitioners.

The persistent underestimation of the macro-economic impact of sport is mainly due to the fact that sport is statistically defined in a very narrow way. There is a discrepancy between the statistically covered economic sector "sport" and the common understanding of sport. One underlying and recurrent problem for experts is the lack of a definition of “sport” in an economic and statistical sense.

The Commission gathered some statistical information on sport by carrying out Eurobarometer surveys in 1997, 1998, and in 2003 and 2004 (in the run up and in parallel with EYES 2004) in order to learn about European citizens' interest and participation in sport. Some research and publications have also been produced by academic institutions and by the European Observatory on Sport Employment (EOSE) and COMPASS[5]. The big professional sport federations finance their own statistics, as do the business sectors of sport, sports goods industries and sport service providers.

In 1999 and 2004 the Commission financed studies that relate to employment aspects of sport, with the “Vocasport” study being a comprehensive information source.

At their meeting in Vienna in March 2006, EU Sport Directors proposed to give the economic importance of sport a central place in discussions on sport among the Member States. A Working Group on "Sport and Economics" was set up in September 2006 with the aim of developing a common statistical definition of sport as well as a method for illustrating the economic impact of sport within the EU, most likely on the basis of national sport satellite accounts.

A satellite account is a specific data system which is based on the national accounts of a country, but does not form part of these national accounts. Hence, a satellite account is an appropriate tool for measuring an economic sector which does not correspond with specific economic activities according to statistical classification systems such as NACE, the European Community's statistical nomenclature of economic activities. Examples of other sectors where satellite accounts have proven useful are tourism and health.

At their meeting in Stuttgart in March 2007, EU Sport Ministers endorsed the activities of the Working Group on "Sport and Economics" and agreed that work on a sport satellite account should be taken forward at Member State and EU level.

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3.2. The financing of sport

Sport organisations have many sources of income, including club fees and ticket sales, advertising and sponsorship, TV and media rights, re-distribution of income within the sport federations, merchandising, public support etc. However, some sport organisations have considerably better access to resources from business operators than others. In amateur and mass sports, equal opportunities and open access to sporting activities can only be guaranteed through strong public involvement. Public financial support is often vital for sport but must be provided within the limits imposed by Community law.

This section starts with an overview of the public financing of sport. It discusses the application of EU State aid rules to public aid provided to the sport sector, as well as the taxation of sport activities.

It then considers some aspects of the private financing of sport. In this connection, it considers sport-related aspects of sponsorship and the protection of intellectual property rights.

3.2.1. Public support for sport

Public support for sport can take many different forms, such as:

• Direct subsidies from public budgets,
• Subsidies from fully or partly State-owned gambling operators, or direct revenues resulting from a licence to provide gambling services,
• Special tax rates,
• Loans with lower interest rates,
• Guarantees with lower commissions,
• Public financing of sport facilities,
• Acquisition of a public municipal facilities by a private club or institution at a low price,
• Renting of sports facilities by public entities at a low price,
• Payment for the construction or renovation of sport facilities by the local council,
• Public works in private sport facilities,
• Public acquisition of advertising spaces in sport facilities,
• Land sales or donations or an exchange of land for sport facilities.

Sport is crucial to the well-being of European society. The vast majority of sporting activities takes place in non-profit-making structures, many of which depend on public support to provide access to sporting activities to all citizens in a discrimination-free environment. The main issue faced by a number of Member States is how to achieve a more sustainable financing model for giving public support to sport organisations.

In May 2006, the Commission organised an expert meeting with representatives of the Member States to examine the importance of public support for non-profit sport organisations, the functioning of which depends to a large extent on voluntary activity. The exercise showed that the nature of public support varies considerably between Member States, and from one sport discipline to another.

3.2.2. State aid control

The objective of State aid control is to ensure that government interventions do not distort competition and intra-Community trade. In this respect, State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities. Therefore, subsidies granted to individuals or general measures open to all enterprises are not covered by Article 87 of the EC Treaty and do not constitute State aid.

The EC Treaty contains a general prohibition of State aid. In certain circumstances, however, government interventions are necessary for a well-functioning and equitable economy. The Treaty therefore leaves room for a number of policy objectives with which State aid can be considered compatible.

State aid control in the field of sport

There are very few decisions so far where the Commission has applied Article 87 of the EC Treaty to sports. Public support measures in sports generally finance either infrastructure or activities or individual sports clubs.

Public financing related to the construction of sport infrastructure can be considered not to constitute State aid, provided that certain conditions are fulfilled.[6]
Public subsidies to professional clubs, however, may raise problems of compatibility with EU State aid rules since professional clubs are engaged in economic activities and are therefore considered to be undertakings under the EU competition rules.

The Independent European Sport Review makes a number of recommendations to the EU in the State aid area. In particular, it asks the Commission to exempt certain categories of State aid to sport from the general application of State aid rules. A general exemption from State aid rules would be contrary to the Treaty itself, under which all economic undertakings fall under the application of Article 87(1) EC. A block exemption regulation, which would exempt State aid measures from the obligation of notification to the Commission when certain conditions are respected, is not possible at this stage. The Commission has not been habilitated by the Council to adopt such a block exemption regulation in the area of sport. Furthermore, a block exemption regulation is possible only in an area where the Commission and Member States have acquired a good experience through an established practice and case law. This is not the case at this stage in the area of sport. For this reason, the Commission considers also that the adoption of guidelines on State aid and sport would at this stage be premature.

The granting of State aid to undertakings is in principle prohibited, but the State aid rules foresee a number of exceptions. These imply that several types of support measures granted by Member States to their sport sectors are State aid within the meaning of EC rules, but they can be considered to be compatible under certain conditions. This is notably the case if they fall within the scope of the existing block exemptions that apply to all economic sectors, such as:
"De minimis" aid: aid of up to 200,000 EUR distributed over 3 fiscal years to a single undertaking.
Rescue and restructuring aid: aid to clubs facing financial difficulties, provided that such aid is limited in time, followed by a restructuring plan, and reimbursed in the 12 months after payment.
Aid to SMEs: under certain conditions, aid for investments by small and medium-sized enterprises can be considered compatible.
Training aid: state support accorded to the training of young athletes is generally compatible with EU law if it fulfils the conditions laid down in the block exemption regulation on training aid. Alternatively, it is not covered by the State aid rules if it falls within the competence of the State in the area of education.

Amateur sport clubs

In the area of sport, there is a tradition in most European countries that public aid is given to local sport clubs at the local level (mostly by municipalities). The sporting, social, cultural and recreational dimensions of amateur sport clubs are important for the public authorities of most Member States, which realise that sport plays an important role in promoting integration and health. Many small clubs may need to obtain public financing to run efficiently. Given the fact that amateur clubs are generally not considered as undertakings within the meaning of Article 87(1) EC, to the extent that they do not pursue economic activities, subsidies granted to these entities are generally not covered by the State aid rules.

Professional sport clubs

Since professional sport clubs are engaged in economic activities, there is no compelling argument why they should be exempted from the State aid rules.
The need to ensure competitive equality between players, clubs and competitions as well as the necessity to ensure uncertainty of results can in fact be guaranteed most effectively by the application of State aid rules, which are meant to establish a level playing field and ensure that States or municipalities that are most willing or able to grant subsidies to their clubs will not disrupt fair competition.

3.2.3. Taxation of sport activities

In the field of indirect taxation, Article 93 of the EC Treaty provides for the adoption of provisions for the harmonisation of Member States' rules and a large amount of secondary legislation has been agreed in this area. The current Community VAT rules are laid down in Council Directive 2006/112/EC[7] (hereafter referred to as"VAT Directive"). On 1 January 2007 the Sixth VAT Directive[8] was replaced by this new Directive, which codifies the text without changing existing legislation. These rules aim at ensuring that the application of Member State legislation on VAT does not distort competition or hinder the free movement of goods and services. The common system should, even if rates and exemptions are not fully harmonised, result in neutrality in competition so that within the territory of each Member State similar goods and services bear the same tax burden.

The following provisions are important for sport:

According to Art. 132 of the VAT Directive, VAT exemptions are possible for certain activities of public interest.
This category includes:

• (m) the supply of certain services closely linked to sport or physical education supplied by non-profit-making organizations to persons taking part in sport or physical education[9];
• (o) the supply of services and goods by organizations whose activities are exempt under the provisions of (m) in connection with fund-raising events organized exclusively for their own benefit provided, inter alia, that the exemption is not likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT. For the purpose of point (o), Member States may introduce any restrictions necessary, in particular as regards the number of events or the amount of receipts which give entitlement to exemption.

Member States may regard activities which are exempt under Art. 132 and engaged in by bodies governed by public law, as activities in which those bodies engage as public authorities. In such circumstances those activities will be regarded as "outside the scope of VAT" activities, meaning that they will also be non-taxable for VAT purposes.

According to Art. 98 Member States may apply either one or two reduced rates of not less than 5% to supplies of goods or services in the categories set out in Annex III of the VAT Directive. While the standard rate of VAT must be at least 15% in each Member State, Annex III provides for reduced VAT rates concerning the "admission to sporting events" and the "use of sporting facilities".

The application by Member States of the reduced VAT rate in the field of sport is not always in compliance with Community rules because of different interpretations of the "scope" of the reduced rate. With regards to the different VAT rates applied to "admission fees to sporting events" within Member States, the question of allowing a Member State to avoid a VAT bill for a given sporting event (e.g. World Cup, Olympic Games) is a recurrent issue.[10]

The Commission is currently looking into the VAT rules governing public bodies and exemptions for certain activities in the public interest, with a view to modernising those rules in order to achieve a more consistent approach across the EU, avoid market distortions and meet current needs.

The rationalisation of the rules and derogations regarding the application of reduced VAT rates to certain sectors set out in Directive 2006/112/EC is also being considered. This process may have an impact on the special rates Member States are allowed to apply in the areas of "admission to sporting events" and "use of sporting facilities".

In the absence of harmonisation, direct taxation remains a competence of the Member States. As a result, different national tax rules affect sports with regard to the taxation of clubs and of players. Different national tax rules can result in divergences e.g. in labour costs for sports clubs with the effect of imbalances between clubs in different Member States.

The income of sportspersons performing their activities in a State other than their residence State is taxed in the State of activity (Art. 17 of the OECD Model Tax Convention on Income and Capital). The applied withholding tax procedure may create some practical difficulties to get overpaid taxes reimbursed, in particular if the sportsman performed activities in several States.[11] In its "Gerritse" ruling[12] about the applicability of different rates of taxation in relation to the income of non-residents and of residents, the European Court of Justice (ECJ) stated that higher taxation of non-resident artists and sportsmen was not compatible with Articles 49 and 50 EC.

3.2.4. Sponsorship

The vast majority of sponsorship deals in Europe are found in the field of sport. In 2005, 91% of sponsorship investment went into sport, which corresponded with a figure of around $7–8 billion, compared to only 1% into culture.[13] Sport sponsorship is an inexpensive form of advertising which can easily reach favoured market segments[14] , including through TV coverage.

From a sport point of view, sponsorship makes a significant contribution to many sport activities and is an important source of revenue for sport right holders (federations, clubs, teams or individual sportspersons).[15] It therefore plays a major role in the development of sport. Event sponsoring is also important. Events such as the FIFA World Cup 2006, the European Championship 2008 or the 2012 Olympic Games offer multiple opportunities for lucrative sponsorship deals to market brands and develop business.

Commercial sport sponsorship deals are especially significant in professional sport, but sponsoring is also important in the grassroots sector through its supportive role for the development of local or amateur sport structures. It can be especially interesting for the local business sector.

In its follow-up to the Green Paper on Commercial Communications in the Internal Market[16] , the Commission identified 'sponsorship' as one of the priority areas for an Expert Group set up to examine problems arising from cross-border commercial communications and the objectives, levels and means of protection of public interest objectives of differing national regulations pertaining to them. As regards sponsorship, the Commission and the Expert Group, which consisted of two representatives appointed by each Member State, looked at the following problems: differing national regulations on sponsorship services related to particular products, differing definitions in national regulations of sponsorship and patronage which restrict the development of cross-border services in this area, and differing national regulations on TV sponsorship insofar as they concern aspects which are not covered by Directive 89/552 EEC as amended by Directive 97/36/EC or the work of its contact committee. The Commission and the Expert Group concluded that there was no need for harmonisation in this field.

From an "ethical" or societal point of view, sport sponsorship must be seen in connection with policies aimed at protecting the public or the consumer. In the field of public health, Member States have different laws and policies in place that set e.g. tobacco, alcohol or fast food apart from other goods traded within their territories, and relate also to advertising and sponsorship. Some of these areas have been regulated or are currently being addressed at EU level.

In view of the fact that the vast majority of sponsorship investment goes into sport, the economic interests of sport need to be taken into account when new policies with an impact on sponsoring are designed. However, these interests need to be balanced against considerations of public health as well as societal and ethical considerations.

As different national rules on tobacco advertising and sponsorship were becoming a barrier to the free movement between Member States of the products and services carrying them, the EU introduced a ban on tobacco advertising and sponsorship in 2003[17] that Member States had to implement by 31 July 2005, with a prolongation until 1 January 2007 for the ending of tobacco sponsorship at international sporting events.[18] The directive bans advertising in the print media, on radio and over the internet and it also prohibits tobacco sponsorship of cross-border events or other activities.[19] The WHO's Framework Convention on Tobacco Control, for which the EU completed its ratification, has as one of its objectives a world-wide ban on tobacco advertising, promotion and sponsorship.

In the autumn of 2006, the Commission adopted a Communication setting out an EU strategy to support Member States in reducing harm related to alcohol consumption.[20] The Communication identifies areas where the EU can support the actions of Member States to reduce alcohol-related harm[21], among which the field of "responsible commercial communication and sales". Here the main aim is to support EU and national/local government actions to prevent irresponsible marketing of alcoholic beverages. The intention is to improve enforcement of current regulations, codes and standards.

For both sponsors and right-holders the issue of ambushing of sponsored properties is of increasing concern. Although in most countries the notion of "ambush marketing" is undefined, in its broadest sense it can encompass any kind of marketing activity undertaken around a property by an entity that is not a sponsor, where the entity seeks commercial benefit from associating itself with the property. There is little legislation in the area of ambush marketing. Where protection is offered, it has been developed through case law as an extension of the applicability of rules on intellectual property, unfair competition and, to a lesser extent, advertising and consumer protection. As a general rule, protection against ambush marketing tactics used within the stadium where a sport event occurs is most efficiently obtained through a well-drafted contract between the sponsor and the event organiser. However, protection against such tactics used outside the physical location under the control of the event organiser is much more difficult to obtain.

There is growing pressure from event organisers, who wish to protect their events and contractual agreements with their sponsors, on governments to introduce specific anti-ambush laws.[22] For example, prior to the European football championship in 2004 Portugal made it a criminal offence to gain promotional advantage for a brand by association with certain designated events. Any Internal Market problem relating to sponsorship should be addressed in the context of the Commission's policy on Commercial Communications.

3.2.5. Protection of sport-related intellectual property rights

The protection of sport-related intellectual property rights has been shaped by case law of the European Court of Justice.

Trade marks may consist of any signs capable of being represented graphically, such as a word, logo or colour scheme applied to goods and services. The signs must be capable of distinguishing the goods and services of one undertaking from those of other undertakings. A trademarked product informs the purchaser of the origin of the product, thus marking it as distinct from other products. At EU level, trade mark law is governed by two instruments: Directive 89/104/EEC on the approximation of trade mark laws in the EU[23], which aims at harmonising the conditions for registration of a national trade mark in respect of goods or services, and Council Regulation 40/94 on the Community trademark. In the sport context, trade marks are used extensively in the sport industry to protect sporting brands, but also by other sporting actors. The Court has given its interpretation of the trade mark directive in cases involving clubs or sporting goods manufacturers.[24] In the case "Arsenal Football Club v Reed"[25] on the scope of the proprietor's exclusive right to a trademark, the Court held that the non-authorised use of the sign “Arsenal” on scarves is such as to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor. The use of a sign which is identical to the trade mark at issue is liable to jeopardise the guarantee of origin. It is consequently a use which the trade mark proprietor may prevent in accordance with Directive 89/104/EEC. The ECJ's findings are important for sport in that it supports trade mark owners and adds clarity to the question of whether a sign is being used as a trade mark or a badge of support. Moreover, in the field of trade marks, the role played by big sport federations and the IOC in setting guidelines for trade mark identification processes and designs of sports products can be an issue of concern for sporting goods manufacturers.[26]

In the field of copyright and related rights, it is mainly the 1996 Database Directive[27] that is of relevance for sport as it relates to sports information, such as fixture lists (lists of matches and dates) owned by leagues and used by sport betting companies. This Directive has been interpreted by the ECJ in four judgments of 9 November 2004 in cases concerning the sports database owners FM and BHB. Regarding the exploitation of databases (fixture lists and horse-racing data) by bookmaking services, the Court held in these cases that the right-holders cannot claim protection under the Database Directive.

Sport-related counterfeiting and piracy[28] have become an international phenomenon with considerable economic and social repercussions. Counterfeiting activities during major sporting events are a real challenge and can have economic impacts for sport right-holders. The sporting goods industries are particularly concerned by the growing purchase of counterfeit goods over the internet.

The protection and enforcement of intellectual property rights is an important issue for sport right-holders, although the sport sector hardly differs from other business sectors in this respect and faces similar challenges.

Existing cooperation networks with the Commission for the fight against counterfeiting during major sporting events (e.g. issuing of information for customs officials to help them to differentiate between genuine and counterfeit items during the European football championship in 2004) could be further developed.

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3.3. Sport as a tool for regional development

Although its potential varies according to local specificities, sport can be a tool for local and regional development, urban regeneration or, in some cases, rural development (nature sports). Synergies can be identified between sport and tourism and sport can stimulate the upgrading of collective infrastructure (e.g. transport networks) and the emergence of new mechanisms for their financing (e.g. public-private partnerships).

Sport is not referred to in the regulatory framework and guidelines for the EU's cohesion policy for the period 2007-2013. However, sport-related projects have been previously co-financed by the Structural Funds[29], based on other objectives such as tourism promotion, urban regeneration, economic competitiveness or interregional cooperation.

Regional policy instruments can also play a role in preparing and ensuring the sustainability of certain major sporting events. For example, they were used to co-finance investment in transport infrastructure linked to the Olympic Games in Athens in 2004[30], although they were not aimed at financing sport facilities, but rather at improving accessibility generally, with specific benefits linked to the events.

3.4. Anti-trust

The economic importance of sport has grown dramatically in recent years and continues to grow. As a result, the Commission has had to deal with an increasing number of cases in the area of antitrust related to the sport sector and has resolved these cases either formally through decisions or informally.

The material provisions of the EC Treaty are

• Article 81 which forbids agreements between undertakings and decisions by associations of undertakings that prevent, restrict or distort competition in the common market, subject to some narrowly defined exceptions; and
• Article 82 which prohibits the abuse by one or more undertakings of a dominant position within the common market.

It has long been established by the case-law of the Community Courts and the decisional practice of the Commission that economic activities in the context of sport fall within the scope of EC law, including EC competition rules and internal market freedoms. This has recently been confirmed specifically with regard to the anti-trust rules, Articles 81 and 82 of the EC Treaty, by the Meca Medina ruling of the European Court of Justice (ECJ).[31] This judgment is of paramount importance for the application of EC competition law to the sport sector since this is the first time the ECJ has ever pronounced on the application of Articles 81 and 82 to organisational sporting rules.[32] In prior judgments the cases were decided solely on the basis of other provisions of the EC Treaty, most notably those on the freedom of movement for workers and the freedom to provide services. The very existence of an authoritative interpretation of the anti-trust provisions of the Treaty in the context of organisational sporting rules by the ECJ represents a significant contribution to legal certainty in this area.

a) The applicability of EC anti-trust law to organisational sporting rules and the specificity of sport

The Community Courts and the Commission have consistently taken into consideration the particular characteristics of sport setting it apart from other economic activities that are frequently referred to as the "specificity of sport". Although no such legal concept has been developed or formally recognized by the Community Courts, it has become apparent that the following distinctive features may be of relevance when assessing the compliance of organisational sporting rules with Community law:
Sport events are a product of the contest between a number of clubs/teams or at least two athletes. This interdependence between competing adversaries is a feature specific to sport and one which distinguishes it from other industry or service sectors.
If sport events are to be of interest to the spectator, they must involve uncertainty as to the result. There must therefore be a certain degree of equality in competitions. This sets the sport sector apart from other industry or service sectors, where competition between firms serves the purpose of eliminating inefficient firms from the market. Sport teams, clubs and athletes have a direct interest not only in there being other teams, clubs and athletes, but also in their economic viability as competitors.
The organisational level of sport in Europe is characterised by a monopolistic pyramid structure. Traditionally, there is a single national sport association per sport and Member State, which operates under the umbrella of a single European association and a single worldwide association. The pyramid structure results from the fact that the organisation of national championships and the selection of national athletes and national teams for international competitions often require the existence of one umbrella federation. The Community Courts and the Commission have both recognized the importance of the freedom of internal organization of sport associations.
Sport fulfils important educational, public health, social, cultural and recreational functions. The preservation of some of these essential social and cultural benefits of sport which contribute to stimulating production and economic development is supported through arrangements which provide for a redistribution of financial resources from professional to amateur levels of sport (principle of solidarity).
Controversial discussions in the past have never called into question the recognition of these unique characteristics of sport. Rather, they centered on the question of the precise impact of the specificity of sport on the application of EC competition law. It was argued by some that so-called "purely sporting rules" automatically fall outside the scope of EC anti-trust rules and cannot, by definition, be in breach of those provisions.
The ECJ has unequivocally rejected this approach in Meca Medina and held that the qualification of a rule as “purely sporting” is not sufficient to remove the athlete or the sport association adopting the rule in question from the scope of EC competition rules. The Court insisted, on the contrary, that whenever the sporting activity in question constitutes an economic activity and thus falls within the scope of the EC Treaty, the conditions for engaging in it then are subject to obligations resulting from the various provisions of the Treaty including the competition rules. The Court spelled out the need to determine, on a case-by-case basis and irrespective of the nature of the rule, whether the specific requirements of Articles 81 EC or 82 EC are met. It further clarified that the anti-doping rules at issue were capable of producing adverse effects on competition because of a potentially unwarranted exclusion of athletes from sporting events.
In the light of Meca-Medina, it appears that a considerable number of organisational sporting rules, namely all those that determine the conditions for professional athletes, teams or clubs to engage in sporting activity as an economic activity, are subject to scrutiny under the anti-trust provisions of the Treaty.
The landmark Meca Medina ruling has therefore substantially enhanced legal certainty by clearly pronouncing that there exists no such thing as a category of "purely sporting rules" that would be excluded straightaway from the scope of EC competition law.
This is not to say, however, that the ECJ has decided not to take into account the specific features of sport referred to above when assessing the compatibility of organisational sporting rules with EC competition law. Rather, it has ruled that this cannot be done by way of declaring certain categories of rules a priori exempt from the application of the competition rules of the Treaty. In other words, the recognition of the specificity of sport cannot entail the categorical inapplicability of the EC competition provisions to organisational sporting rules but it has to be included as an element of legal significance within the context of analyzing the conformity of such rules with EC competition law.

b) The methodology of applying EC anti-trust law to organisational sporting rules
The second aspect of the Meca Medina ruling contributing to increased legal certainty, apart from clarifying under which conditions EC competition law is applicable to sporting rules, is the establishment of a methodological framework for the examination of the compatibility of sporting rules with Articles 81 EC and 82 EC.
The ECJ spelled out that not every sporting rule that is based on an agreement of undertakings or on a decision of an association of undertakings which implies a restriction of the freedom of action is prohibited by Article 81(1).[33] In assessing the compatibility with this provision account must be taken of
the overall context in which the rule was adopted or the decision was taken or produces its effects, and more specifically, of its objectives; and
whether the restrictive effects are inherent in the pursuit of the objectives; and
are proportionate to them.
In applying those principles to the case at hand, the ECJ found that the objective of the challenged anti-doping rules was to ensure fair sport competitions with equal chances for all athletes as well as the protection of athletes’ health, the integrity and objectivity of competitive sport and ethical values in sport. The restrictions caused by the anti-doping rules, in particular as a result of the penalties, were considered by the ECJ to be “inherent in the organisation and proper conduct of competitive sport”. The ECJ also carried out a proportionality test examining, with a positive result, whether the rules were limited to what is necessary as regards (i) the threshold for the banned substance in question and (ii) the severity of the penalties.
This demonstrates that the instruments of EC competition law provide sufficient flexibility in order to duly take into account the specificity of sport and illustrates how the distinctive features of sport play an essential role in analyzing the admissibility of organisational sporting rules under EC competition law. Where these features form the basis of a legitimate sporting objective, a rule pursuing that objective is not in breach of EC competition law provided that restrictions contained in the rule are inherent in the pursuit of that objective and are proportionate to it.
The methodology of applying EC anti-trust law, i.e. Articles 81 EC and 82 EC, to rules adopted by sport associations as set up by the ECJ in the Meca Medina ruling including criteria relating to the specificity of sport can be summarized as follows:

Step 1. Is the sports association that adopted the rule to be considered an “undertaking” or an “association of undertakings”? The sports association is an “undertaking” to the extent it carries out an “economic activity” itself (e.g., the selling of broadcasting rights). The sports association is an “association of undertakings” if its members carry out an economic activity. In this respect, the question will become relevant to what extent the sport in which the members (usually clubs/teams or athletes) are active can be considered an economic activity and to what extent the members exercise economic activity. In the absence of “economic activity”, Articles 81 and 82 EC do not apply. Step 2. Does the rule in question restrict competition within the meaning of Article 81(1) EC or constitute an abuse of a dominant position under Article 82 EC? This will depend, in application of the principles established in the Wouters judgment, on the following factors: the overall context in which the rule was adopted or produces its effects, and its objectives; whether the restrictions caused by the rule are inherent in the pursuit of the objectives; and whether the rule is proportionate in light of the objective pursued. Step 3. Is trade between Member States affected? Step 4. Does the rule fulfil the conditions of Article 81(3) EC?

The significance of the individual steps of this analysis are developed and explained in more detail in the Annex on Sport and EU Competition Rules.

It needs to be underscored that the Meca Medina ruling excludes the possibility of a pre-determined list of sporting rules that are in compliance with or in breach of EC competition law. Apart from the refusal by the ECJ to recognise purely sporting rules as automatically falling outside the scope of the Treaty competition rules or automatically compliant with them it is the requirement of a proportionality test that prevents any general categorisation. That test implies the need to take account of the individual features of each case. Even for the same kind of rule (e.g. licensing rules for sport clubs) conditions may and do vary greatly from sport to sport and from Member State to Member State (e.g. depending on the national legal obligations relating to financial management and transparency there may or may not be a need to include licensing requirements of a particular type in the statutes of a sport association). In many if not most cases there are many conceivable shapes and forms of any particular type of rule. This, as well as the interrelation with other rules, the assessment of which is often indispensable to judge the proportionality of a certain regulation as a whole, renders it virtually impossible to comment on the compatibility of certain types of rules with EC competition law in general terms.

Nevertheless, the body of existing case law of Community Courts, relating to the application of Treaty provisions other than the competition rules, as well as the decision-making practice of the Commission concerning Articles 81 EC and 82 EC can assist in identifying the types of rules that may normally be considered not to infringe EC competition rules. These decisions will have to be reviewed in the light of the Meca Medina judgment but they remain relevant inasmuch as they identify objectives that may be recognized as legitimate within the context of carrying out the examination outlined above. Bearing in mind the proviso that a specific assessment based on the circumstances of each individual case involving, most notably, a proportionality test, is indispensable and that therefore one can only express varying degrees of likelihood of compliance with EC competition law, the following distinction can be made on the basis of existing case law and decisional practice:
The following types of rules constitute examples of organisational sporting rules that – based on their legitimate objectives – are likely not to breach Articles 81 EC and/or 82 EC provided the restrictions contained in such rules are inherent and proportionate to the objectives pursued:

• “Rules of the game” (e.g., the rules fixing the length of matches or the number of players on the field);
• Rules concerning selection criteria for sport competitions;
• “At home and away from home” rules;
• Rules preventing multiple ownership in club competitions;
• Rules concerning the composition of national teams;
• Anti-doping rules;
• Rules concerning transfer periods (“transfer windows”).

The following rules represent a higher likelihood of problems concerning compliance with Articles 81 EC and/or 82 EC, although some of them could be justified under certain conditions under Article 81(3) or Article 82 EC:

• Rules protecting sports associations from competition.
• Rules excluding legal challenges of decisions by sports associations before national courts if the denial of access to ordinary courts facilitates anti-competitive agreements or conduct.
• Rules concerning nationality clauses for sport clubs/teams.
• Rules regulating the transfer of athletes between clubs (except transfer windows).
• Rules regulating professions ancillary to sport (e.g. football players’ agents).

Notwithstanding this tentative classification it needs to be recalled that an individual analysis of every challenged organisational sporting rule on a case-by-case basis is indispensable.

The reasoning underlying this categorisation as well as the relevant case law and decision-making practice is specified in the Annex on Sport and EU Competition Rules.

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1. VOCASPORT 2004.
2. Main occupation but not always full-time.
3. VOCASPORT 2004.
4. COM (2005) 024 Final of 2 February 2005: Communication to the Spring European Council - Working together for growth and jobs - A new start for the Lisbon Strategy.
5. COMPASS is a jointly funded initiative of the Italian National Olympic Committee (CONI), UK Sport and Sport England. It involved progressively institutions from other European Countries. In 1998 seven pilot countries had contributed their data: Finland, Ireland, Italy, the Netherlands, Spain, Sweden and the UK. In 1999 Portugal joined the group. The objective is to examine existing systems for the collection and analysis of sports participation data in European countries with a view to identifying ways in which harmonisation may be achieved.
6. Some general principles were laid down in a letter from the European Commission's Directorate-General for Competition to Germany regarding State funding for the Hanover football stadium. Aid for the construction of stadiums or other sports infrastructure could be argued not to constitute aid, provided it fulfils the following criteria: (1) the type of infrastructure involved is generally unlikely to be provided by the market because it is not economically viable; (2) it is not apt to selectively favour a specific undertaking: in other words, the site provides facilities for different types of activities and users and is rented out to undertakings at adequate market based compensation; (3) it is a facility needed to provide a service that is considered as being part of the typical responsibility of the public authority to the general public.
7. Council Directive 2006/112/EC of 28 November 2006 on the Common System of Value Added Tax - OJ L 347, 11.12.2006, p.1.
8. Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment. (77/388/EEC)
9. The supply of services or goods shall not be granted exemption as provided for in […] (m) if it is not essential to the transactions exempted, and if its basic purpose is to obtain additional income for the organization by carrying out transactions which are in direct competition with those of commercial enterprises liable for value-added tax.
10. Rapport Coopers&Lybrand: L'impact des activités de l'Union Européenne sur le sport, septembre 1995.
11. See judgments of the ECJ of 03.10.2006, C-290/04, "Scorpio" and of 15.02.2007, C-345/04, "Centro equestre".
12. C-234/01 of 12 June 2003.
13. European Sponsoring Association (ESA): figures based on The World Sponsorship Monitor (TWSM). Concrete overall figures on sport sponsorship are difficult to obtain, partly because every sponsor has its own figures and does not necessarily wish to publish them.
14. E.g. young men are both the keenest sports fans and the heaviest drinkers.
15. From a sport point of view, distinguishing TV/broadcasting/media sponsorship from e.g. event sponsorship is important. In the first case the money goes into the medium, whereas in the second case the money goes to sport/the event.
16. COM (1998) 121 final
17. As a consequence of these political and legislative circumstances, the Formula One grand prix of Francorchamp, mainly sponsored by Marlboro, was cancelled in 2003, because of the Belgian tobacco advertising legislation.
18. Directive 2003/33/EC of 26 May 2003.
19. Tobacco advertising on television has been banned in the EU since the early 1990s, and is governed by the Television without Frontiers Directive (Council Directive 89/552/EEC of 3 October 1989).
20. COM(2006) 625 final of 24 October 2006.
21. This Communication does not address the question of distribution (e.g. a ban to buy) – which would, arguably, be an effective instrument to tackle the alcohol-related harm.
22. These go beyond the traditional protections offered by trade mark law, unfair competition/passing off, copyright, competition laws, human rights legislation and ticket terms and conditions.
23. The codification of this Directive carried out pursuant to a Communication from the Commission is currently underway: Proposal for a Directive of the European Parliament and of the Council to approximate the laws of the Member States relating to trade marks (Codified version) COM/2006/0812 final.
24. Cases C-425/98 of 22 June 2000, C-251/95 of 11 November 1997, Case C-408/01 of 23 October 2003.
25. Case C-206/01 of 2 November 2002.
26. Industries’ concerns relate to high extra costs to show compliance with the set requirements. Manufacturers are e.g. forced to put the logo of a sport federation on sport products (e.g. balls) but are required to pay royalties to that sport federation; or design elements might be forbidden by a sport governing body for a top tournament, because it resembles too closely a logo of a manufacturer or other IPR that are registered trade marks.
27. Database directive 96/6/EC.
28. Counterfeiting means "to make something in imitation of something else with the intent to deceive". Piracy means "to illegally copy something that already exists".
29. Examples of sport projects co-financed by the Structural Funds are the SportUrban (see:http://www.sporturban.org) and the Sports Pulse (see: http://www.sportspulse.org/) projects.
30. http://ec.europa.eu/regional_policy/themes/olympe/pages/focus_en.htm
31. Case C-519/04P, Meca Medina v. Commission, ECR 2006, I-6991
32. The judgment of the CFI in Case T-193/02, Piau v. Commission, ECR 2005 II-209 (upheld by the ECJ in Case C-171/05P, ECR 2006 I-37) concerned a sporting rule adopted in relation to an activity ancillary to sport (football agents) and not relating to the sporting activity itself (football).
33. Case C-519/04P, Meca Medina v. Commission, ECR 2006, I-6991, par. 42. By the same token not every sporting rule with potentially adverse effects on competition adopted by a sport association that has to be considered an undertaking in a dominant position within the common market constitutes an abuse of that dominant position. The material parts of the judgment in that respect make reference only to Article 81(1) because the plaintiffs had only claimed a misapplication of that provision. The logic of the methodology established by the ECJ appears to be transferable to Article 82.

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