Covid hiring freeze for soccer faces EU antitrust test

(CN) — A Covid-era handshake deal to freeze player movement across Portuguese soccer is back in play Thursday after Europe’s top court signaled the pact may cross antitrust lines but stopped short of blowing it up.

In April 2020, with stadiums empty and the season on ice, clubs in Portugal’s top two divisions made a quiet pact with the national league: No signing players who walked away from their contracts because of the pandemic. The idea was to stop a shutdown from turning into a transfer scramble, with richer clubs snapping up talent before anyone knew when play would resume.

Portugal’s competition authority saw something else — an illegal no-poach agreement. It ordered the measure suspended, later finding the clubs and league had restricted competition. The challenge eventually reached the Court of Justice of the European Union through a specialized Portuguese court.

Judges in Luxembourg agreed the pact had obvious antitrust problems. Clubs were not just protecting the calendar. They were agreeing not to recruit certain players, cutting into a key part of competition, narrowing players’ options and weakening their bargaining power.

In a sport built on talent, limiting who can hire whom goes straight to how teams compete. The court said that kind of coordination can resemble market-sharing, one of the clearest red flags in competition law.

But the judges did not treat the case as automatic. The season was frozen, contracts were about to expire and wealthier clubs could have reshaped their squads before matches even restarted, potentially locking in an advantage before a ball was kicked again.

The agreement, the judges said, was also intended to maintain “the stability of the composition of the player rosters” while the season was on hold. That did not make it lawful by itself, but it meant the Portuguese court has to look closely at the deal’s purpose, timing and context, including whether the restriction went further than needed to keep the competition intact.

An agreement like this “must be categorized as an agreement having as its object the restriction of competition” unless a full review of its content, purpose and context shows otherwise, the judges found.

They also made clear that a crisis does not rewrite the rules. “The occurrence of an event such as the Covid-19 pandemic is not per se such as to justify making an exception” to EU antitrust rules.

Francisco Marcos, a professor at IE Law School, said the ruling reads more like a reaffirmation than a rethink of EU competition law, even in the unusual setting of professional sport during Covid. “A no-poach agreement in football can look like a cartel — and even a pandemic doesn’t automatically save it,” he said.

He pointed to how the judges handle context: It still matters, but it does not outweigh the core concern about limiting competition in the labor market.

From the regulator’s side, Teresa Duarte, communications adviser at Autoridade da Concorrência (AdC), said the ruling backs the authority’s enforcement stance. Authorities “very much welcome the court’s clear confirmation that so-called ‘no-poach’ agreements constitute restrictions of competition by object,” she said, adding the decision strengthens enforcement in labor markets and improves legal certainty.

But others see a more complicated path ahead.

Miguel Sousa Ferro, a partner at Sousa Ferro & Associados and professor of EU law at the University of Lisbon, said that leaves Portugal’s competition authority with a tougher case to defend as the dispute heads back to national court. “The AdC is facing an uphill struggle to get its decision confirmed after this ruling,” he said, referring to the authority’s earlier finding that the clubs’ no-poach agreement breached competition rules. “But the outcome is still up to the national court and depends on the evidence in the case.”

He added similar deals are unlikely to get much leeway going forward. “It feels like no-poach agreements should usually be object restrictions, but the context must always be assessed, and this context was quite exceptional.”

Football clubs involved in the case did not respond to requests for comment.

The case now returns to Portugal’s Competition, Regulation and Supervision Court, which must apply the EU court’s guidance. The ruling is binding and cannot be appealed, leaving national judges to decide whether the agreement crosses the line or stands as a narrow exception tied to an extraordinary moment.

Courthouse News reporter Eunseo Hong is based in the Netherlands.