21/11/2018

The Kristoffersen ruling: EFTA targets athlete endorsement deals

Written bySven Demeulemeester and Niels Verborgh

In its 16 November 2018 judgment, the Court of Justice of the European Free Trade Association States (the EFTA Court) delivered its eagerly awaited ruling in the case involving Henrik Kristoffersen and the Norwegian Ski Federation (NSF).

Kristoffersen took the NSF to the Oslo District Court over the latter’s refusal to let the renowned alpine skier enter into a sponsorship with Red Bull. At stake were the commercial markings on his helmet and headgear in races organised under the NSF’s umbrella. The NSF refused this sponsorship because it had already granted the advertising on helmet and headgear to its own main sponsor, Telenor.

If rules do not relate to the conduct of the sport itself, but concern sponsorship rights and hence an economic activity, these rules are subject to EEA law. The EFTA Court ruling is important in that it sets out the framework for dealing with - ever more frequent - cases where an individual athlete’s endorsement deals conflict with the interest of the national or international sports governing bodies (SGBs) they represent in international competitions.

The EFTA Court draws a clear ‘line in the sand’ for SGBs. The EFTA Court considered that a system of prior control and consent for athlete’s individual sponsorships, and potential refusal of such sponsorship, constitutes a restriction of the freedom to provide services, to the extent that the system renders less attractive the exercise of an athlete’s freedom to provide a marketing service. Such restriction will be acceptable only if it pursues a legitimate aim, is suitable and does not go beyond what is necessary to attain the aim.

Aims of a purely economic nature, such as the desire to increase profits, cannot justify such a restriction. The objective of encouraging the recruitment and training of young athletes can however be a legitimate aim, to the extent that a substantial part of the income is indeed spent on encouraging the recruitment and training of young athletes. Also, a fair balance between the federation’s interests and the particular athlete’s interests is required. The EFTA Court considers that SGBs and athletes are often mutually dependent on one another. Athletes must receive a fair share of the revenues from sponsorship contracts. A decision to refuse an endorsement must be well reasoned and communicated to the athlete within a reasonable timeframe. In addition, a review procedure before a body independent of the federation should be available.

In times where SGBs’ advertising and sponsorship restrictions are already under scrutiny from a competition law perspective, the EFTA Court adds internal market arguments to the mix. Both the fundamental freedoms and the competition law arguments are likely to bolster individual athletes seeking to increase revenue from their sports activities.

Interested in an elaborate comment on the ruling? Feel free to download it hereunder:

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