29 Sep 22
On 27 September, the UK Competition and Markets Authority (CMA) announced that it had fined Elite Sports, JD Sports and Rangers Football Club over £2 million for infringing competition law by fixing the prices of Rangers-branded clothing and products. This note summarises the CMA’s findings and some key reminders for businesses and clubs to consider in relation to pricing practices.
The CMA’s investigation and findings
In September 2018, Elite was the manufacturer of Rangers-branded clothing and was viewed as Rangers’ ‘retail partner’, selling Rangers-branded products via its online store and later in bricks-and-mortar shops. JD Sports also sold these products and was the only UK-wide major retailer to do so at the time.
The CMA opened an investigation in December 2020 into certain pricing practices involving the sale of these products.
The CMA found that at the start of the 2018/19 season Rangers became concerned that JD Sports was selling the Rangers adult home short-sleeved replica top at a lower price than the shirt was available to buy on Elite’s online store. This concern resulted in an understanding between the three parties that JD Sports would increase its retail price of the shirt by nearly 10%, to align with the prices being charged by Elite.
The CMA also found that Elite and JD Sports separately colluded over a longer period, without Rangers’ involvement, in relation to the pricing of other Rangers-branded clothing, including training wear and replica kit. This collusion involved the two parties aligning on the level and timing of discounts towards the end of the 2018/19 season, in order to protect their respective profit margins.
The CMA’s decision
The CMA held that the parties’ conduct amounts to price fixing, an infringement of UK competition law. The CMA issued fines of £459,000 against Elite Sports, £1,485,000 against JD Sports and £225,000 against Rangers for their respective conduct.
Rangers’ infringement was more limited than those of Elite Sports and JD Sports, as it only concerned fixing the retail price of the Rangers adult home short-sleeved replica top from September 2018 to mid-November 2018.
The fines reflect a discount as a result of the three parties reaching a settlement with the CMA, which includes an admission that their conduct infringed competition law. Elite Sports and JD Sports also received a further discount under the CMA’s leniency programme, as both parties came forward with information about their involvement and cooperated with the CMA’s investigation.
The CMA has yet to publish the non-confidential version of its decision, and so far has only issued a press release.
Key points to note:
- UK competition law prohibits agreements and concerted practices between businesses that have the object or effect of preventing, restricting or distorting competition within the UK, unless they are exempt.
- Price fixing is one of the more blatant examples of a prohibited agreement / practice. Retailers (and other businesses acting at the same level of the supply chain) should act independently in establishing their own pricing strategies. Clubs should ensure that they do not facilitate the exchange of pricing information between their different retail partners.
- The CMA is active in investigating and enforcing any such conduct. The CMA also has an ongoing investigation into suspected breaches of competition law by Leicester City FC and JD Sports, in relation to the sale of Leicester City-branded products and merchandise, although the CMA has not yet announced the nature of the suspected infringement.
- Clubs must also not impose minimum or fixed resale prices on retailers of their clothing and other products. This practice, known as retail price maintenance, will also breach competition law.
A link to the CMA’s announcement can be found here. If you have any questions or concerns regarding this type of conduct or other competition law compliance matters, please contact us.