JD Sports is facing its second investigation into price-fixing of football shirts after the UK competition watchdog uncovered evidence of collusion over the sale of Rangers Football Club’s replica kits and other merchandise.
The sports retailer, whose executive chair Peter Cowgill departed last month because of disagreements about governance and succession, said it had received a draft penalty notice from the UK’s Competition and Markets Authority (CMA) and would make a £2 million (€2.4 million) provision in relation to the Rangers case.
The CMA said it had provisionally found that JD Sports, another retailer, Elite Sports and Rangers broke competition rules by illegally fixing the retail prices of certain Rangers-branded clothing products.
The competition regulator is also looking at whether Leicester City Football club and JD Sports broke competition law in relation to the sale of Leicester City-branded kits and merchandise, together with their affiliates. It has not yet reached a conclusion.
JD Sports noted that the findings were provisional and that it had co-operated with the CMA. The body has the power to fine companies up to 10 per cent of turnover for breaches of competition law.
Michael Grenfell, executive director of enforcement at the CMA, said: “Football fans are well-known for their loyalty towards their teams. We are concerned that, in this case, Elite, JD Sports and to some extent Rangers may have colluded to keep prices high, so that the two retailers could pocket more money for themselves at the expense of fans.”
The CMA’s provisional investigation found Elite and JD Sports fixed the retail prices of a number of Rangers-branded replica kits and other clothing products from September 2018 until at least July 2019.
The deal included agreeing on the level and the timing of kit discounts to “avoid competition between them and protect their profit margins at the expense of fans”, the regulator said.
Rangers FC also took part in the alleged collusion, but specifically in relation to fixing the retail price of adult short-sleeved home replica shirts, between September 2018 to at least mid-November 2018. The three groups allegedly colluded to stop JD Sports undercutting the retail price of the shirt on Elite’s “Gers” online store.
The watchdog claims Rangers became concerned at the start of the 2018/19 football season that JD Sports was selling the Rangers replica top at a lower price than Elite, which was seen as the club’s retail partner at the time.
As a result, the three groups allegedly agreed that JD Sports would increase the retail price of the Rangers adult short-sleeved home shirt by almost 10 per cent, to £60 (€70), bringing it in line with the price Elite was charging online.
The issue of football kit collusion is not new, and has been in the regulator’s sights for decades. In 2003 the CMA’s predecessor, the Office of Fair Trading, handed out fines of more than £18.6 million (€21.8 million) after it found retailers including JJB Sports as well as Manchester United had fixed the price of replica England and Manchester United kits.
The CMA said Elite and JD Sports applied for “leniency” during its investigation and confessed to cartel activity, meaning they will be in line for a reduction in fine.
Elite did not immediately respond to a request for comment. Rangers FC could not be reached for comment.
– Copyright The Financial Times Limited 2022
