MCO AND EU COMPETITON LAW: A LEGAL CROSSROADS

In April 2025, Club León and Club de Fútbol Pachuca filed appeals before the Court of Arbitration for Sport (CAS), contesting their exclusion from the FIFA Club World Cup for violating Article 10.1 of the tournament regulations on multiple club ownership (MCO). In line with Article 10.4 of the Regulations for FIFA Club World Cup 2025, FIFA has determined that Club León be removed from the competition.

This dispute has reignited a long-standing legal debate over whether MCO (Multiple Club Ownership) rules can still be reconciled with EU competition law in the current legal and economic environment.

This question is not new. The tension between sporting integrity and market freedoms was first addressed in the ENIC investment group case. The tribunal in the ENIC case (CAS 98/200, award of 20 August 1999) upheld the right of UEFA to exclude two clubs, AEK Athens and Slavia Prague, on the basis that both were controlled by the same investment group. CAS affirmed that such restrictions served a legitimate purpose, namely preserving the integrity, fairness, and unpredictability of sporting competitions, and held that such restrictions were essential to maintaining public confidence in the authenticity of sporting results.

In this case, the CAS panel considered whether the UEFA ban on clubs under common ownership participating in the same competition infringed EU competition rules, namely Articles 81 and 82 EC Treaty (now Articles 101 and 102 TFEU). Whilst recognising that the ban had restrictive effects, the tribunal found that it pursued a legitimate objective, namely the prevention of conflicts of interest and the preservation of sporting integrity, and that it was both necessary and proportionate to that goal. The panel also concluded that no less restrictive alternatives were available and rejected any claim of abuse of dominance, emphasising that UEFA acted as a regulator rather than a market participant. As such, the contested rule was found not to violate EU competition law.

The ENIC award has since been relied upon as a foundational precedent for MCO regulations and has marked the beginning of a legal tradition that sought to protect sporting integrity through restrictions on club ownership.

In parallel to the CAS proceedings, ENIC lodged a formal complaint with the European Commission, alleging that the UEFA rule on the independence of clubs violated Articles 81 and 82 EC Treaty (now Articles 101 and 102 TFEU). However, in its 2002 decision (Case COMP/37 806: ENIC/ UEFA), the Commission rejected these arguments and endorsed the rule’s legitimacy. The Commission found that the rule’s purpose was not to distort competition, but to protect the integrity and credibility of UEFA competitions. It stressed that any limitation on clubs or investors was inherent to the functioning of pan-European football, and that the public perception of fairness was crucial to maintaining the value and marketability of the sport. Whilst it acknowledged potential negative effects, such as reduced investment, the Commission held that such effects were acceptable side-effects of a rule which was deemed necessary and proportionate. It dismissed the ENIC proposal for a case-by-case approach, considering it legally uncertain, discretionary, and incompatible with the principles of equal treatment and ex ante predictability. Moreover, the Commission emphasised that investors remained free to acquire as many clubs as they wished, provided they accepted that only one could participate in UEFA competitions in cases of qualification overlap.

 

In its final assessment, the Commission considered that the rule aimed to protect the credibility and integrity of competitions, not to distort the market. Any limits placed on clubs or investors were seen as part of how football competitions naturally work, not as signs of anti-competitive intent. The Commission also concluded that the rule did not go beyond what was needed to achieve this sporting aim, namely, maintaining fair play, unpredictable outcomes, and public trust in European football. Notably, this decision was not challenged before the CJEU. As a result, the Commission reasoning was never subject to judicial scrutiny, and its legal authority must, therefore, be viewed in this context.

In short, the Commission reasoning mirrored that of CAS, confirming that the rule pursued a legitimate aim, was applied objectively, and was necessary to ensure competitive balance, sporting integrity, and public trust in European football.

It remains to be seen whether the CAS in the pending León/Pachuca case will uphold the ENIC logic or adopt a more nuanced, context-sensitive approach under current EU law standards. It may be remembered that there is no stare decisis rule regarding CAS Awards.

The legal landscape in 2025 is no longer the same as it was in 1999. Today, football ownership structures have become more complex and globalised. Multi-club investment models are increasingly common, involving private equity firms and strategic partnerships across continents. The UEFA 2024 Club Finance and Investment Landscape Report has acknowledged this trend, highlighting the increasing sophistication of football investment and the regulatory challenges it creates.

In this context, rules banning MCO without nuance or flexibility may appear increasingly rigid. Whilst the goal of sporting integrity remains legitimate, regulators may need to explore less restrictive alternatives before resorting to outright bans. Whether this approach will be refined or reaffirmed remains an open question.

The CJEU recent rulings in European Super League (C-333/21) and Diarra (C-650/22) mark a turning point in the legal assessment of sports regulations under EU competition law.

Whilst both judgments have reaffirmed the legitimacy of objectives such as sporting integrity and fair competition, the Court clarified that these goals cannot justify any restriction by default. Instead, sports rules must now pass a stricter test of proportionality, grounded in objective, transparent, and non-discriminatory criteria. The CJEU notably rejected the idea that the so-called “specificity of sport” could operate as a legal shield. Whilst Article 165 TFEU recognises the unique role of sport in European society, the CJEU made it clear that this provision does not provide a general exemption from the application of EU internal market or competition law. Sport is subject to the rule of law, and sporting rules must be justified, necessary, and proportionate.

In Diarra, the CJEU underlined that even rules pursuing a legitimate purpose must be carefully assessed for their actual impact on competition, including whether less restrictive alternatives could achieve the same aim.

Should the CAS maintain the ENIC line, it would confirm the continued relevance of integrity-based restrictions, albeit in a changed environment. The CAS decision in the León/Pachuca appeals will likely influence how far the legacy of ENIC can endure in the post-Super League legal era.

The question of whether MCO rules remain compatible with EU competition law continues to raise complex legal and regulatory issues, especially as the football investment landscape has evolved considerably. Multi-club structures are now widespread, often involving global investors and internal safeguards. Against this backdrop, exclusion mechanisms that do not allow for individualised assessments may raise concerns under the current legal standards.

The outcome of the CAS proceedings may thus offer a timely opportunity to clarify how such ownership restrictions are to be assessed in light of recent EU case law. Whether this results in a reaffirmation or a refinement of the ENIC approach, it is likely to shape future discussions on the balance between sporting autonomy and regulatory accountability in European football.

In this evolving legal landscape, the CAS ruling may either consolidate the ENIC framework or prompt a recalibration of MCO rules for better alignment with the requirements of EU competition law post Super League and Diarra. Regardless of the outcome, it will likely guide how regulators approach the interplay between autonomy, integrity, and market freedoms.

Ultimately, the León/Pachuca CAS case, scheduled to be heard on 5 May 2025, may serve as a reference point for future regulatory efforts in a sector where legal certainty, competitive balance, sporting integrity, and investor interest increasingly intersect.

We advise on MCO ownership cases and further information may be obtained from Dr Estelle Ivanova by emailing her at ivanova’valloni.ch.