JD Sports accused by CMA of 'cartel activity' concerning price fixing of replica football merchandise
The Competitions and Market Authority (CMA) has "provisionally" ruled that JD Sports broke competition rules by fixing the retail prices of certain Rangers-branded football merchandise.
If the investigation confirms that competition rules were broken, retailer JD Sports and sporting goods business Elite Sports could face fines of up to 10% of their annual worldwide group turnover.
The CMA said that both parties have "confessed to cartel activity" and applied for leniency during the investigation, which could lead to a reduction in fines if they continue to cooperate.
JD Sports responded to the CMA investigation this morning saying that at this stage the findings were "only provisional" and that it would "review them with its advisers".
The company added that based on the current information available it would "recognise a provision of approximately £2 million in its financial statements for the 52 weeks to 29 January 2022" to represent the liability payable on this matter, including legal costs.
The provisional findings of the CMA state that JD Sports and Elite Sports "fixed" the retail prices of Rangers-branded replica kits and other clothing products from September 2018 until at least July 2019.
The CMA also found that Rangers FC took part in the alleged price fixing to the extent that it fixed the retail price of adult home short-sleeved replica shirts from September 2018 to at least mid-November 2018. All three parties are alleged to have "colluded" to stop JD Sports undercutting the retail price of the shirt on Elite’s Gers Online store.
At the time of the alleged collusion the sporting goods business Elite Sports was seen as the official "retail partner" of the Rangers team, manufacturing Rangers-branded clothing and other products and selling them online and later in its bricks-and-mortar shops in Glasgow and Belfast.
The CMA said that at the time JD Sports was the only UK-wide major retailer selling these products and that Rangers FC became concerned about the fact that, at the start of the 2018-19 football season, the retailer was selling the Rangers replica top at a lower price than Elite.
This resulted in an "understanding" that JD Sports would increase the price of the rangers adult replica shirt by 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on its online store.
Furthermore the CMA alleges that Elite and JD Sports, without the involvement of Rangers FC, aligned the level and timing of discounts towards the end of the football season in 2019, to protect their profit margins.
Michael Grenfell, Executive Director of Enforcement at the CMA, said: "We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up.
"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."