The German Federal Cartel Office ("FCO") has issued preliminary recommendations regarding the application of German football's controversial 50+1 rule, marking a significant development in the intersection of competition law and sports regulation. Following a comprehensive assessment requested by the German Football League Society, “Deutsche Fußball Liga e.V.” ("DFL"), the FCO has confirmed the rule's fundamental compatibility with competition law, whilst identifying critical areas requiring improvement to ensure consistent and non-discriminatory application.

This development provides crucial clarity for football clubs, investors, and sports organisations operating within the EU's evolving competition law framework, particularly following landmark judgments of the Court of Justice of the European Union ("CJEU") in December 2023. Andreas Mundt, President of the FCO, emphasised: "This is not a proceeding against DFL; DFL approached the FCO asking for a detailed assessment of this complicated legal issue at the intersection of competition law and sport."

Background and Context of the FCO’s Decision

Understanding the 50+1 Rule

In Germany, sports clubs (and particularly soccer clubs) are traditionally organised as registered societies (eingetragener Verein, "e.V."), the legal form of choice for non-profit organisations owned and run by its members. The 50+1 rule is a provision in DFL's articles of association that stipulates that, if the professional soccer division is outsourced into a capital company, the non-profit parent club (organised as an e.V.) has to retain the majority of voting rights. Only then can the football club participate in Germany's top two football divisions — the "Bundesliga" and "Bundesliga 2". This mechanism preserves the "club character" of German professional football by ensuring that traditional football clubs and their members, rather than external investors, maintain control over professional football operations.

The 50+1 rule creates a balance between idealistic and economic interests in professional football by allowing equity investments whilst preserving club control. However, the rule includes notable exceptions: the DFL Executive Committee can approve "funding exemptions" for investors who have sponsored football at their club for more than 20 years. Currently, Bayer Leverkusen and VfL Wolfsburg hold such exemptions, whilst TSG Hoffenheim is no longer covered.

Procedural History

This matter came before the FCO not through enforcement action, but via DFL's proactive 2018 request for a ‘carte blanche’ — a procedure allowing organisations to achieve legal certainty regarding their practices. The proceedings have had a complex procedural history, including bias allegations against case handlers and the need for reassessment following the CJEU's December 2023 judgments in "European Superleague Company", "ISU" and "Royal Antwerp" cases.

The three judgments of the Grand Chamber of the CJEU are "fundamental for sports antitrust law." Particularly important is that an exception to competition law is "out of the question from the outset in the case of particularly anti-competitive measures by sports associations." Furthermore, the CJEU has emphasised the importance of "homogeneous regulatory conditions of participation in organised competitions" and the need for sports associations to "consistently and systematically implement the public interest objectives they pursue."

Equal Access to Club Membership

The FCO found that DFL's club licensing practice does not sufficiently ensure that all Bundesliga and Bundesliga 2 clubs equally offer fans the opportunity to become full voting members. The authority stressed that "only by strictly ensuring access to the clubs can the 50+1 rule achieve its objective of maintaining the club character of the sport capable of exempting the rule from competition law."

This requirement is fundamental to the rule's justification: the 50+1 rule can only achieve its goal of giving broad sections of the population the opportunity to participate in decision-making if accessibility to clubs is strictly enforced. All clubs must provide open access to membership, giving fans a genuine say in how clubs are run. As Mundt explained: "It will be crucial for DFL to ensure that all Bundesliga and Bundesliga 2 clubs equally offer open access to membership, giving fans a say in how the clubs are run."

Inconsistent Application in Voting Processes

The investigation revealed problematic inconsistencies in DFL's own application of the 50+1 rule during its December 2023 voting process regarding investor participation in media revenue. Despite being informed that Hannover 96's parent club had instructed club president Martin Kind (a well-known German entrepreneur and investor) to vote against investor participation, DFL took no measures to verify compliance or take appropriate action if necessary.

The FCO found this particularly problematic because DFL considered the parent club's right to issue instructions to Mr Kind as the key aspect demonstrating Hannover 96's compliance with the 50+1 rule. Nevertheless, DFL took no measures during the voting process to verify whether Mr Kind had actually voted as instructed. This inconsistent application "calls the rule's exemption from competition law into question." As Mundt stated: "DFL should make sure that the principles of the 50+1 rule are also respected in its own voting process."

Revision of Benefactor Exemption Protections

Given recent European case law applying strict standards, the FCO has determined that long-term protection of the status quo for clubs previously granted benefactor exemptions is no longer sustainable under proposed conditions. The current design of these arrangements would run counter to the CJEU's requirement for homogeneous regulatory conditions of competition, as the proposed conditions do not provide for a club, open to new members, to dominate the professional division.

DFL's existing proposals to remove the possibility of granting benefactor exemptions are "in essence, still capable of contributing to achieving legal certainty in the future application of the 50+1 rule." However, the authority requires that "the conditions of competition generally have to be the same for all clubs" in the long term. This means that all clubs—regardless of previous exemptions—must ensure that the parent club, open to new members, controls the professional division. As Mundt emphasised: "DFL must revise its proposed modifications to the conditions for protecting the status quo of clubs which were previously granted a benefactor exemption, as European case law now applies a strict standard in this respect."

Conclusion

The FCO's preliminary recommendations represent another milestone in the application of competition law to sport. The decision establishes a precedent for European sports governance by demonstrating that traditional sporting values and modern competition law can coexist. It could therefore influence how sports governance structures are evaluated throughout the European Union.

For more information or guidance in this area, please contact Stephan Waldheim or Gitty Narymany Shandy.

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