The possible impact of the UK withdrawing from the EU on the rugby transfer market

As you probably know, my husband is a professional rugby player and we are now living in France as a result.  Thanks to the UK and France’s membership of the EU, my family have benefitted from the provisions in Article 45 of the Treaty on the Functioning of the European Union (TFEU) which allow for the free movement of workers within the Union.  Should a UK referendum result in the UK leaving the Union, that could have serious implications for English players seeking to ply their trade in France and visa versa.   

Aside from the possibility that we may require visas to live and work in France should the UK decide to leave, my husband and his rugby playing colleagues may well face an additional hurdle.  In the case of English rugby, the governing body, the Rugby Football Union (the RFU) state that clubs are not allowed to “play or select as a replacement or substitute more that two Foreign Players in any match” (RFU Regulation 13.4.3). A Foreign Player is defined as “a person who can neither prove…that he is entitled to the rights granted under the TFEU…” or that he has European workers rights (RFU Regulation 1 – Definitions).   The French governing body, the Fédération français de Rugby (the FFR) have similar provisions.  

In practice, this means that unless the UK join the European Economic Area as a non-EU state, the already dwindling appetite for English players in France, will dwindle even further as clubs would become severely limited by the number of Englishmen that they could field in any game.  The opportunities for English rugby men would accordingly decrease, and those already in France would have to work that little bit harder, and bleed that little bit more to prove themselves worthy of a spot as a Foreigner.  

There are many reasons that I would like the UK to remain in the EU, but for this particular reason, my husband and I will be paying very close attention to what happens back at home.  

State Aid and Sport: does anyone really care about rugby?

http://www.asser.nl/SportsLaw/Blog/post/state-aid-and-sport-does-anyone-really-care-about-rugby-by-beverley-williamson

Guest Blogging

Keeping on top of this site was the first thing to bite the dust after the birth of our third child (Little G as she is known if you follow me on twitter), but I have been lucky enough to have been asked to make contributions to various other legal blogs.  The fist of which, ‘Premiership Rugby Union: if it walks like a duck and it quacks like one…‘, appeared on Angus McCulloch’s Who’s Competiting site.

Angus’ blog has a real variety of competition law focused stuff, its really accessible even to those who don’t have a background in competition law, and is added to fairly frequently (around twice a month I think).  It is definitely worth a look.

My latest piece is due to appear on the Asser Sports Law Blog tomorrow (I think), I will post a link to it on my site when it is available.  The Asser Sports Law Blog focuses, as you would expect, on legal issues in sport.  They have a variety of contributors, as well as some of their own researchers from the Asser Sports Law Centre in the Hague, so the variety of sports that their posts touch upon is extensive.  If you have an interest in sports law, it really is a great resource for keeping up to date with current legal issues.

Now that I’m getting back into a regular working schedule after having had Little G (and we have settled in France after out move), I will be making more regular posts on my own site too.  As always, if there are any postgrads out there looking for somewhere to articulate their own ideas, without any pressure, I’m very happy to welcome you.

Premiership Rugby: if it looks like a duck and quacks like one…

Premiership Rugby Union: if it looks like a duck and quacks like one …

Could Article 4(3) TEU be used in theory, to challenge the criminal cartel offence?

In the next chapter of my thesis, I am going to consider the theoretical possibility of a criminal cartel offence being challenged as a breach of Article 4(3) TEU. Here is why:

Article 4(3) of the Treaty of the European Union imposes a general duty of “sincere cooperation” or “loyalty” upon Member States for the purpose of establishing an internal market (Article 3(3) TEU), including “a system of ensuring that competition is not distorted” (Protocol 27 to the Treaties).

In doing so, it imposes both a positive obligation to take all appropriate measures to ensure the fulfilment of the obligations arising out of the Treaties, and a negative obligation to refrain from adopting any measures which could jeopardise the attainment of the EU’s objectives (emphasis added) of which, a highly competitive social market economy is one (Article 3(3)).

One of the ways that the UK fulfils this obligation is through the investigation and punishment of anticompetitive agreements by virtue of the Competition Act 1998, which closely mirrors Articles 101 and 102 TFEU.

In addition to this administrative aspect of antitrust legislation in the UK, there exists a criminal offence which seeks to punish the perpetrators of ‘hard-core’ cartel activity. These two aspects of the antitrust framework in the UK are linked by leniency programmes. These programmes are vital for effective detection and punishment of anticompetitive agreements. One of the purposes of the creation of the criminal offence was to further incentive individuals to blow the whistle on such agreements in order to obtain individual immunity from criminal prosecution, increasing the number of leniency applications, thereby resulting in not only criminal prosecutions (of the other members of the cartel) but increasing the number of administrative actions as well.

However, if the introduction of the criminal offence were to make the administrative arm of the anti-cartel enforcement framework on the UK less effective, by for example, creating the perception that enforcement in the UK was not very effective and so reducing the fear that individuals and undertakings may be caught and punished by it, and so in turn reducing the number of leniency applications and resulting investigations, could that put it in jeopardy of a challenge under Article 4(3)?

Thoughts and comments welcome.

The OFT initiates a criminal prosecution for a cartel offence before being replaced by the newly formed Competition and Markets Authority (Peter Nigel Snee)

http://www.concurrences.com/Bulletin/News-Issues/April-2014/The-OFT-initiates-a-criminal?lang=en

Competition Law Update: a new criminal case underway

On the 27th January 2014, the Office of Fair Trading (OFT) announced that Peter Nigel Snee had appeared at Westminster Magistrates Court facing a charge under section 188 of the Enterprise Act 2002, commonly known as the “cartel offence”.

It is alleged that Mr Snee dishonestly agreed with others to divide customers, fix prices and rig bids between 2004 and 2012 in respect of the UK supply of galvanised steel tanks for storage.

The last time that the OFT attempted to prosecute individuals under section 188 was the infamous BA executives case in 2010. As is well documented now, that case collapsed on the 10th May 2010 before the defence was required to put forward their case, after the discovery of a large amount of electronic evidence not previously seen by the defendants, or indeed the OFT. The case and its failings were looked at in the Project Condor Board Review which concluded, amongst other things, that “[c]ases under the criminal cartel regime raise many legal and practical challenges and thus a proportion will inevitably fail”. The review identified a number of specific failings of the OFT in relation to the choice of case, its management and the manner in which the leniency applicants and their evidence were handled, as well as a number of “unusual circumstances” in respect to this particular case.

Shortly after this the Government consulted on a number of reforms to competition law including the removal of dishonesty as the substantive test for the cartel offence. Dishonesty was regarded as one of the legal complications preventing successful prosecution. Following this consultation, an amended cartel offence was passed in the Enterprise and Regulatory Reform Act 2013 (ERR) which removed dishonesty and articulated ways in which the offence would not be committed as well as stipulating specific defences to the crime. The amended offence is due to come into effect in April 2014, which is also when the newly formed Competition and Markets Authority (CMA) takes over responsibility for the investigation and enforcement of the offence.

The timing of the prosecution of Mr Snee may seem unusual given that it is mere months before section 188A is due to come into force. However, given that section 47(8) ERR stipulates that section 188 will continue to be applicable to agreements that are already in existence when section 188A comes in to force, or indeed pre-exist it. Section 188A therefore will only be applicable to agreements made after the commencement of the amended offence and, which relate to arrangements made after its coming into force.
It is often the case that the OFT only becomes aware of a prohibited hard-core agreement after it has been in operation for a number of years, or has in fact already come to an end. Therefore, it is unlikely that prosecutions by virtue of section 188A will occur in the near future. It is crucial then that the OFT and then the CMA, continue to pursue and punish cartel arrangements under the original offence. One of the major failings of section 188 was the fact that it had been so rarely invoked. This resulted in its deterrent effect being seriously compromised. If the OFT and then the CMA wait to prosecute cartels criminally until they find agreements which fall within the scope of section 188A, that deterrent effect, along with the credibility of the regulator, will be further damaged.

The success of this prosecution is therefore vital; another failing and the damage to both the deterrent effect of the offence and the reputation of the regulator will be severe. If successful, it will provide a much needed boost in the perception of the effectiveness of the offence and the OFT. A successful prosecution may also provide judicial precedent on the sentencing of this type of offender, precedent that is much needed in the absence of official sentencing guidelines. Although whether the amended section 188A offence will be regarded in the same light as the original section 188 offence by the judiciary given the lack of the aggravating feature that is dishonesty, will be a hard question to answer due to the lack of any unadulterated case law with which to compare it. It’s usefulness as future authority is not inherently clear.

Thinking Outside the Punishment Box?

One of the reasons that criminalisation of cartels was regarded as necessary was due to the argument that optimally deterrent fines, would be too large and could result in the undertakings found to have engaged in cartels, going bankrupt. Without going into too much detail (there is a lot written about this already), this consequence would be far too disproportionate to the harm that the cartel caused (employees would lose their jobs and income and a competitor would be lost to the market etc).

For the thesis chapter that I am currently working on, I am reading about regulatory pluralism in environmental protection. There are various means by which compliance is sought, voluntary or self-regulation, command and control regulation, information strategies and economic instruments; they are often used in a complimentary way in order to improve their overall effectiveness.

What in particular has drawn my attention, and therefore resulted in this blog, is the idea of tax concessions. They are utilised as a way in which to encourage compliance. Tax concessions of course wouldn’t work for anti-cartel enforment, saying to companies, don’t engage in a cartels for a few years and we’ll think about a tax concession for you, could just lead to cartelists reaping the rewards of the concession while secretly reaping the rewards from a cartel; it is a lot more difficult to detect a cartel than it is to establish that environmental standards have been breached.

It did however, get me thinking whether the reverse was possible; get caught engaging in anticompetitive agreements, and see your tax liability rise for 5 years, for example. If there are systems in place that allow for concessions to be given, then perhaps the reverse can be done without too many additional complications. The optimally deterrent fine could therefore be split between a one off fine and an increased tax liability for a specified number years.**

Relying on criminalisation as an effective deterrent has so far not been particularly successful in the UK, that is hard to dispute, so maybe different approaches to civil sanctioning need to the considered while the cartel offence gets it’s house in order.

**Im sure there are plenty of reasons why it would be impractical to implement such a sanctioning regime, but perhaps re-opening the discussion on how to financially sanction undertakings is a worthwhile debate.