U.K.’s antitrust watchdog on Tuesday leveled price-fixing allegation at JD Sports and competitor Elite Sports.
The Competition and Markets Authority (CMA) said the companies agreed to fix the retail prices of certain Rangers-branded apparel, a charge that could force the duo to pay a fine.
Also included, but to a lesser degree, was Rangers Football Club, a Scottish professional soccer team.
According to CMA’s findings, Elite was the manufacturer of Rangers-branded apparel sold on an online channel and through certain brick-and-mortar locations. JD Sports was the only U.K.-wide retailer selling the same products. Rangers allegedly became concerned that JD Sports was selling a certain Rangers replica top at price lower than Elite, which was the “club partner.” That supposedly led to an agreement under which JD raised the garment’s retail price by 10 percent from 55 pounds ($69.18) to 60 pounds ($75.47) to compete with Elite.
JD and Elite were also alleged to have colluded on other Rangers-branded apparel, such as football kits or uniforms, and aligned the “level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect their profit margins at the expense of fans,” 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 2 retailers could pocket more money for themselves at the expense of fans,” CMA executive director of enforcement Michael Grenfell said.
Both Elite and JD Sports have applied for leniency during the probe and “confessed to cartel activity,” according to CMA. As long as they continue to cooperate with the investigation, each will receive a reduction on any financial penalties that CMA may decide to impose, it added. Companies found to breach British competition law can be fined up to 10 percent of their annual worldwide group sales.
JD Sports said it received a “draft penalty notice” from the CMA, giving the retailer the opportunity to address the preliminary findings before the watchdog issues its final ruling.
The footwear giant said it plans to set aside 2 million pounds ($2.5 million) for the year ended Jan. 29, 2022, representing its best liability estimate including legal costs.
Earlier this year, JD Sports was fined 4.3 million pounds ($5.8 million) by CMA for violating an interim order around its banned Footasylum deal. The company’s 2019 acquisition has been controversial from the get-go and initially blocked by CMA. The ban was overturned on appeal and remitted to CMA for additional review, but that led to some twists and turns.
The chairmen of JD Sports and Footasylum—Peter Cowgill and Barry Brown, respectively—were told not to share any confidential or commercially sensitive information. Upon remission to CMA, a video surfaced that showed a meeting between the two in a car in July 2021, prompting a new probe over corporate governance breaches. JD Sports, for its part, said the purpose of the meeting had been disclosed to CMA. But JD Sports also acknowledged that it “inadvertently” was in receipt of “limited commercially sensitive information” that had not been reported to CMA immediately.
JD Sports is still in the process of unwinding the Footaslyum transaction per CMA’s November 2021 ruling.