Alerts

DOJ Antitrust Takes a Shot at FIFA

Alerts / September 9, 2020

Fédération International de Football Association (FIFA) is no stranger to scandal, but this time, the U.S. Department of Justice (DOJ) Antitrust Division is leading the charge. In a newly unsealed exhibit in the Southern District of New York case of Relevant Sports, LLC v. United States Soccer Federation, Inc., 1:19-cv-08359-VEC, it was revealed that DOJ Antitrust informed both FIFA and the United States Soccer Federation (USSF) that their activities were likely violating Section 1 of the Sherman Act.

According to the proposed amended complaint in the action, in 2018, Relevant Sports, LLC, a promotion company, attempted to bring top-tier international men’s soccer games to the United States. Likely inspired by the marketing and promotional success of American sports leagues such as the NFL or MLB hosting games in London, Relevant negotiated with the Spanish professional league, La Liga, to host certain games in the United States. After these negotiations, Relevant embarked on receiving FIFA approval that would allow the matches to occur in the United States. However, the complaint alleges that instead of giving this approval, FIFA, with USSF’s agreement, enacted a rule that would require league matches to take place in the territory of the member association concerned.[1] Any violation of this rule would result in FIFA penalties and discipline. Relevant’s proposed amended complaint alleges deliberate market division resulting in stifled competition and Sherman Act violations.

Regardless of whether Relevant is successful in its claims against USSF and FIFA, problems for the leagues could grow exponentially, as the controversial rules change caught the eye of DOJ Antitrust. Appended to Relevant’s proposed amended complaint is a letter dated March 16, 2020, from Assistant Attorney General Makan Delrahim to FIFA President Gianni Infantino and USSF President Cindy Barlow Cone, addressing the Antitrust Division’s concerns of such a competition-stifling rule. In the brief correspondence, DOJ Antitrust makes a couple of key points:

1. Geographical Market Allocation Is Strictly Prohibited.

The U.S. antitrust laws specifically prohibit competitors from dividing geographical markets among themselves, and market allocation is considered a per se violation of the antitrust laws.

2. Sports Leagues Are Not Immune From Liability.

Sports leagues are not immune from liability under the U.S. antitrust laws, and there should be no reason for FIFA or USSF to believe they would not be subject to liability. Addressing jurisdiction and standing, the correspondence specifically points out that FIFA’s activities and those of its subsidiaries substantially affect activities in the United States.

3. The Proposed Rules Change Does Not Fall Into Any Accepted Exemptions.

DOJ Antitrust admits that leagues may need to restrain competition in order to properly regulate players, teams, and leagues but counters that nothing about the proposed rule fits into any known exemptions such as conditions of play, eligibility of players, or benefit sharing.

While not explicitly stating so, the DOJ Antitrust letter is clear that enforcement will be a necessity if FIFA and USSF persist with this rule change. This is not the first time the DOJ has pressed FIFA on wrongdoing. On May 27, 2015, the DOJ disclosed a 47-count, 164-page criminal indictment charging seven FIFA executives with having received $150 million in bribes over a period of more than two decades. The DOJ asserted those indicted engaged in a number of schemes designed to solicit and receive over $200 million in bribes and kickbacks to sell lucrative media and marketing rights to international soccer tournaments and matches. As the investigation continued, 41 individuals and entities were charged with racketeering, wire fraud, and money laundering, resulting in over $190 million in forfeiture.[2] In her statement, then-Attorney General Loretta Lynch stated that “[t]he Department of Justice is committed to ending the rampant corruption we have alleged amidst the leadership of international soccer – not only because of the scale of the schemes, or the brazenness and breadth of the operation required to sustain such corruption, but also because of the affront to international principles that this behavior represents.” Through these prosecutions, the DOJ acted decisively to promote and preserve market integrity in sport. Despite the change in presidential administrations, this focus has not waned but has pivoted toward ensuring fair competition between and among leagues by allowing them to compete outside their home countries.

Clearly, the DOJ remains committed to purging international sport of corruption, whether through antitrust, racketeering, or other criminal activity. All sports leagues, domestic and international, should take note.

Authorship Credit: Jeffrey D. Martino and Elizabeth G. McCurrach

[1] https://www.fifa.com/who-we-are/news/football-stakeholders-agree-further-steps-in-the-reform-of-the-transfer-system.

[2] https://www.justice.gov/opa/pr/sixteen-additional-fifa-officials-indicted-racketeering-conspiracy-and-corruption.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

Related Industries