Nasser Al-Khelaifi during the presentation of Luis Enrique as the new coach of PSG.AFP7 via Europa Press (AFP7 via Europa Press)
LaLiga announced on Saturday that it has denounced PSG before the European Commission as their funding mechanisms “create a serious distortion in the European Union (EU) internal market”. The Spanish Football Federation believes that the Parisian club has “received foreign subsidies from the State of Qatar that have allowed it to improve its competitive position and create significant distortions in several domestic and EU markets,” the statement said.
In Brussels, the European executive confirmed receipt of the claim, which a spokeswoman said would be “assessed,” but declined to comment further. There is no maximum period for the Commission to analyze the case, therefore the times following the filing of the complaint are not known. This is not the first under this new regulation, although it recently came into force, community sources say.
LaLiga understands that PSG’s funding, which is owned by the Qatar Sovereign Investment Fund, violates the Foreign Subsidy Regulations effective from July 12, 2023. The regulation affects foreign subsidies granted by states outside the European Union to companies conducting economic activities in the single market, including those originating from public companies that are directly or indirectly controlled by a state. LaLiga also points out that this even affects “those granted in the five years before the application of the above-mentioned regulation”, but adds that the regulations only apply “if said subsidies affect the internal market after the start of the distort application”. the regulations”.
Employers argue that Qatar’s investments in PSG allow them to hire the best footballers and coaches well beyond their normal capabilities and generate income from sports sponsorships at figures that do not reflect market prices.
It is unlikely that when the Commission presented its proposal for a regulation, it was intended that it would be used to resolve disputes in the competitive multi-billion dollar football market. In fact, when its legislative plans were published in May 2021, the initiative was justified as “a key element of the EU industrial strategy (…) that creates the right conditions for European industry to thrive.” In the midst of the post-pandemic period, Competition Commissioner Margarethe Vestager confided rest assured that the rules “will ensure a level playing field and support the recovery of the EU economy in these difficult times”.
However, LaLiga’s lawyers appear to have seen an opportunity in this new European standard, which came into effect in January but has only been in effect since July 12. And in addition to arguments about sporting advantages and competitiveness, they add a commercial justification when they assume that the Qatari subsidies “would also allow PSG to improve its competitive position in markets bordering on sporting competition (e.g .the marketing markets for audiovisual competitions, etc.). of the sponsorship market) and thus leads to an artificial increase in the value of the club on the market.”
In addition, the regulation does not explicitly mention the applicable sectors, but aims “to ensure a level playing field in all economic activities in the internal market with regard to foreign subsidies”. For this reason, the Commission stresses, “it applies equally to all sectors of the economy and to all companies operating in the EU”.
The regulation allows the Commission both to launch its own investigation and to respond to a query about it, as LaLiga has now done. If one concludes that a foreign subsidy distorts the internal market, “its negative effects in terms of distortion must be weighed against the positive effects on the development of the aided economic activity”. In the event that the negative impacts outweigh the positive ones, Brussels can impose corrective measures, structural or non-structural, on companies, or accept them as obligations, to address the distortion (e.g. transfer of certain assets or prohibition of certain behaviors). on the market). In principle, subsidies of less than EUR 4 million over a three-year period are considered unlikely to be distortive.
LaLiga, which has already carried out several measures in this direction, again insists on continuing the Parisian club’s way of working, pointing out that this better sporting and economic positioning gives PSG an advantage in other aspects, such as the audiovisual negotiations Marketing of the competitions. “Therefore, LaLiga trusts that, thanks to this new regulatory tool, the European Commission will take the necessary measures to eliminate market distortions like those described, which seriously damage the sports ecosystem,” the statement concluded.
The complaint comes on the same day that PSG officially announced Barcelona striker Ousmane Dembélé’s €50m signing, while the future remains uncertain for Mbappé, who is determined to end his contract with the Parisian club.
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