Antitrust Law Daily Conspiracy to restrain trade claim thrown out in U.S. soccer dispute over match sanctioning
Wednesday, July 22, 2020

Conspiracy to restrain trade claim thrown out in U.S. soccer dispute over match sanctioning

By Robert B. Barnett Jr., J.D.

A unilateral decision to comply with FIFA’s rules is not direct evidence of an agreement to restrain trade.

A soccer promoter’s claim that the U.S. Soccer Federation (USSF) conspired with FIFA, the world governing body in soccer, and other regional and national soccer associations to illegally restrain its right to host official soccer games in the U.S. was dismissed where no evidence existed that the USSF entered into any agreement, either horizontally or vertically, to restrain the promoter’s right to host games, the federal district court in New York City has ruled. The USSF’s unilateral decision to comply with FIFA rules, which prohibit official games from being played outside the host team’s country, did not constitute an agreement to restrain trade. Prior to dismissing the claim, the court had ruled that the antitrust claim was not subject to FIFA’s mandatory arbitration requirements because, in a prior similar case, FIFA’s arbitration tribunal had determined that antitrust claims were not within its jurisdiction (Relevant Sports, LLC v. U.S. Soccer Federation, July 20, 2020, Caproni, V.).

Background. Relevant Sports, LLC, promotes soccer games in the U.S. In soccer, a distinction is made between official matches, which count in the standings, and friendlies, which do not. For an official match to be properly sanctioned, a promoter has to obtain permission from both teams, from the regional and national soccer associations with jurisdiction over the two teams, as well as from the soccer association where the game is to be played, if the match is to be played outside of either team’s country. Permission or sanctioning for a match must be obtained through a FIFA-licensed match agent. Relevant uses a match agent named Charlie Stillitano. Relevant became frustrated when the USSF refused to sanction, first, an official game between two Spanish teams to be played in Miami, and, second, an official game between two Ecuadoran teams that was also to be played in Miami.

The penalties for playing a game without official sanction are severe, including a ban from the World Cup. As a result, the teams and players will not play without the proper sanction. The FIFA Council actually ruled on the first Miami match, concluding that the match would violate its rule that official matches cannot take place outside the teams’ home territory, absent "exceptional circumstances." The USSF also refused to sanction the second match, based on FIFA’s ruling on the first match.

The match promoter sued the USSF, alleging that its denial of the request for a match sanction constituted an anticompetitive agreement with FIFA (Federation Internationale de Football Association) to limit official matches in the U.S. The complaint alleged the vertical agreement with FIFA, as well as a horizontal agreement with other national and regional soccer associations to boycott clubs and players that played without a sanction. The promotor also alleged a separate tort, interference with existing and prospective business relationships. The USSF moved to compel arbitration or, in the alternative, to dismiss the complaint.

Arbitration. The FIFA Match Agent Regulations compel arbitration between a match agent and a national association. The court first concluded that the promoter was bound by the regulations, even though it was never a party to the agreement between FIFA and the match agent. Stillitano, the FIFA-licensed match agent, was acting on the promoter’s behalf when he sought to obtain sanctions for the two matches. The promoter, therefore, was bound by his actions under the rules of agency law. In fact, in ChampionsWorld, LLC v. U.S. Soccer Fed’n, Inc., 487 F. Supp. 2d 980, 987 (N.D. Ill. 2007), the court ruled that a different promoter was bound by the FIFA arbitration provision because Stillitano was acting on its behalf.

Having found that the promoter was bound by the arbitration rules, the court nevertheless concluded that FIFA lacked jurisdiction to hear the antitrust claim. In that same ChampionsWorld case, in which an antitrust claim was referred to arbitration, FIFA’s arbitration tribunal had concluded that it would not hear the antitrust claim because the category of disputes that the regulations allowed the tribunal to hear did not include antitrust issues. As a result, this court ruled that the antitrust claim would not be referred to arbitration, and it denied the motion to compel arbitration of the antitrust claim.

Those same constraints, however, did not apply to the promoter’s tort claim for tortious interference. That claim constituted a dispute between a match agent and a national association, which was squarely within the FIFA mandatory arbitration provision. As a result, USSF’s motion to compel arbitration was granted as it applied to the tortious interference claim.

Antitrust claim. Turning to the merits of the antitrust claim, the court expressed concern over the lack of any evidence of an agreement between or among the alleged conspirators. No recorded phone calls. No emails. No plus factors supporting a conspiracy. As for the alleged vertical agreement between FIFA and USSF, USSF’s unilateral adherence to FIFA’s rules did not qualify as direct evidence of an agreement to violate the antitrust rules. No further evidence existed that USSF entered into any agreement with FIFA to restrict output. The promoter’s conclusory statements that an anticompetitive agreement existed were insufficient to satisfy its pleading requirements. As a result, the court concluded that the promoter failed to allege an unlawful vertical agreement to support an antitrust violation.

Turning to the possibility of a horizontal agreement between USSF and other sanctioning bodies, a serious question existed about whether they were actually competitors in the sense necessary for an antitrust violation. Ignoring that question for a minute, the court returned to the problem plaguing the vertical agreement: the absence of any evidence of an agreement among the parties. The allegations, for example, never established which of the myriad of associations and confederations actually conspired with USSF. Instead, the complaint throughout only refers to the conspiracy among USSF, FIFA, "and others." As with the vertical agreement analysis, the other associations’ decision to comply with FIFA’s rules did not constitute direct evidence of a conspiracy. Those decisions simply do not violate the Sherman Act. As a result, the complaint failed to allege a horizontal commitment to a common scheme to achieve an unlawful objective.

The court, therefore, granted the motion to compel the tort claim to arbitration and denied the motion to compel the antitrust claim to arbitration. The motion to dismiss the antitrust claim was granted without prejudice.

The case is No. 19-CV-8359 (VEC).

Attorneys: Adam Dale (Winston & Strawn LLP) for Relevent Sports LLC Christopher St John Yates (Latham & Watkins LLP) for United States Soccer Federation Inc.

Companies: United States Soccer Federation Inc.

MainStory: TopStory Antitrust NewYorkNews GCNNews

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