In April 2020, Portuguese First and Second Division clubs concluded an agreement with the national football association to abstain from signing players from each other who had unilaterally terminated their contracts due to pandemic-related issues, in particular the extension of the 2019/20 season to ensure its completion.

The Portuguese Competition Authority held that the ‘no-poach’ agreement was anticompetitive and imposed financial penalties on the undertakings involved.

The decision was challenged before the Competition, Regulation and Supervision Court in Portugal, which decided to stay the proceedings and refer to the ECJ for a preliminary ruling. In particular, the referring court asked the ECJ to opine on whether the ‘no-poach’ agreement could be considered to give rise to a restriction of competition ‘by object’ (i.e. whether it was inherently anticompetitive and therefore in breach of EU competition law).

The AG adopted the view that ‘no-poach’ agreements – i.e. agreements in which two or more undertakings agree not to hire or solicit staff from each other – are generally restrictive of competition ‘by object’ and therefore prohibited under EU competition law. This is because they result in the suboptimal allocation of human resources, loss of efficiency and/or innovation and lower wages for staff. As such, the economic rationale of most ‘no-poach’ agreements is anticompetitive.

However, the AG noted that the content, legal and economic context and objectives of the agreement should be considered to verify whether there are specific circumstances that may warrant a different conclusion.

In this case, the clubs concluded the agreement with the objective of ensuring that the COVID-affected 2019/20 season could be completed. The agreement had limited temporal, geographical and personal scope: it only applied to players employed by Portuguese clubs in the First and Second Divisions which were party to the agreement, whose contracts expired or were unilaterally terminated during the COVID-19 pandemic. Furthermore, it ceased to have effect from the day following the last match of the COVID-affected 2019/20 season, while clubs remained free to hire players from clubs playing outside Portugal or from lower Portuguese divisions.

As such, the agreement was instrumental in securing an appropriate competitive structure within the league until the end of the season, ensuring that clubs’ squads in the last ten matches were as similar as possible to those in the first part of the season.

Hence, the AG considered that although the agreement introduced some restrictions on the clubs’ ability to compete with regard to one of the “essential inputs of their activity (the signing of players)”, due to the exceptional circumstances of the case, the agreement could not be regarded as being inherently anticompetitive.