⚖️𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗗𝗶𝗮𝗿𝗿𝗮 𝗰𝗮𝘀𝗲?
Short summary:
The European Court of Justice (𝗖𝗝𝗘𝗨) found that FIFA’s transfer regulations make it difficult for players to switch clubs by imposing harsh penalties if a player leaves in dispute. This is a restraint on free movement and a clear restriction of competition.
My colleague (and competition/antitrust law specialist) Anand Patel has written a fantastic explainer so please let me know if you'd like to discuss.
⚽ 𝗪𝗵𝘆 𝗮𝗿𝗲 𝗳𝗼𝗼𝘁𝗯𝗮𝗹𝗹 𝘁𝗿𝗮𝗻𝘀𝗳𝗲𝗿𝘀 𝗿𝗲𝗹𝗲𝘃𝗮𝗻𝘁 𝘁𝗼 𝗙𝟭?
The rules are different, but the potential for competition law issues is the same.
❌𝗪𝗵𝘆 𝗶𝘀 𝘁𝗵𝗲 𝗖𝗥𝗕 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗮 𝗽𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝗿𝗲𝘀𝘁𝗿𝗶𝗰𝘁𝗶𝗼𝗻 𝗼𝗻 𝗱𝗿𝗶𝘃𝗲𝗿𝘀?
See my earlier article on the F1 Contract Recognition Board (𝗖𝗥𝗕) for a general summary of the CRB.
When a team CRB-registers a driver's contract, that driver can only leave: (a) if the existing team allows (Sainz); (b) the driver contract expires (Hamilton); or (c) driver has a valid termination right because the team is in breach.
CRB registrations = team protection; driver restriction.
💥𝗛𝗼𝘄 𝗺𝗶𝗴𝗵𝘁 𝗗𝗶𝗮𝗿𝗿𝗮 𝗶𝗺𝗽𝗮𝗰𝘁 𝗙𝟭?
If a driver wanted to leave their existing team, that driver would not be able to move while their existing team held a registration (regardless of whether the new team pays the old team a zillion moneys).
This is the same as the FIFA transfer restrictions that the CJEU found were too harsh in the Diarra case and could potentially be an anti-competitive restriction.
🔄𝗦𝗼 𝗹𝗼𝗮𝗱𝘀 𝗼𝗳 𝗱𝗿𝗶𝘃𝗲𝗿 𝘀𝘄𝗮𝗽𝘀 𝗶𝗻𝗰𝗼𝗺𝗶𝗻𝗴?
Unlikely. Someone would have to expensively challenge the CRB rules (as per the Diarra case). CRB disputes are very rare.
Therefore, a driver would have to 𝘳𝘦𝘢𝘭𝘭𝘺 want to move.
💡𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘁𝗵𝗲 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀 𝗳𝗼𝗿 𝗱𝗿𝗶𝘃𝗲𝗿𝘀 / 𝘁𝗲𝗮𝗺𝘀?
Drivers may feel emboldened in negotiations (if they can back it up…).
Teams may (𝘴𝘩𝘰𝘶𝘭𝘥) feel less comfortable hiding behind a valid CRB registration.
It’s unlikely that the CRB will make any proactive changes but it could fix the problem by introducing softer protections, eg proper F1 transfer payments - money from new team to old team to transfer the registration.
Some things would still be proportionate, eg drivers could still commit a breach of contract and be sued in normal court.
✅𝗦𝘂𝗺𝗺𝗮𝗿𝘆
• The Diarra case may impact other sports
• F1 is potentially impacted
• Teams and drivers should consider the competition law implications
• Likelihood of impact is low. There are only 20 drivers and transfer disputes are unlikely (but behind closed doors...)
Let me know if you want to discuss the impact of the Diarra case on motorsport or otherwise.