CMA kicks off another investigation into anti-competitive behaviour in relation to football club merchandise

Introduction

The CMA launched an investigation into suspected breaches of competition law by Leicester City Football Club Limited and JD Sports Fashion Plc, together with their affiliates, on 23 September 2021.

The investigation concerns suspected infringements of Chapter I of the Competition Act 1998 in relation to the sale of Leicester City FC-branded products and merchandise in the United Kingdom. Chapter I CA98 prohibits agreements between businesses which have, as their object or effect, the restriction of competition within the UK.

From now until March 2022 the CMA will conduct its initial investigation, including information gathering, analysis and review of material. This could see competitors, customers and suppliers of Leicester City Football Club Limited and JD Sports Fashion PLC being formally contacted by the CMA as part of its fact-finding and information gathering exercise.

At this stage the CMA believes it has “reasonable grounds” to suspect one or more breaches of competition law, so it has not reached a view as to whether there is sufficient evidence of an infringement of competition law. Whilst it is not yet clear precisely what the investigation relates to, such as the price of products, the investigation is not confined to replica football kits, but encompasses Leicester City-branded products and merchandise.

Rangers FC-branded replica football kits

The CMA is also currently investigating suspected anti-competitive behaviour in relation to the price at which Rangers FC-branded replica football kits were sold in the United Kingdom, also involving JD Sports Fashion Plc and other companies. That case is still in the investigation stage, having been opened in December 2020. An update was due from the CMA by the end of September 2021, which is still outstanding.

Price-fixing of replica football kits

The competition authority’s interest in price-fixing of replica football kits is not new. In 2003, the Office for Fair Trading (‘OFT’) found several sportswear retailers, including JJB Sports as well as Manchester United Plc, entered into price-fixing agreements by fixing the prices of replica England and Manchester United football kits. JJB Sports and others were fined a total of over £18.6million for price-fixing.

Following the OFT case, in October 2005, Which?, the UK consumer organisation, pursued a damages action against JJB Sports on behalf of a number of individual consumers. In 2008, following months of negotiations, a settlement agreement was reached, whereby customers who joined the damages action and who purchased replica football kits during specific periods in 2000 or 2001 would receive a payment of £20 each.

Comment

As this is the second case to be opened regarding the sale of football kits and football branded products/merchandise in the space of a year, it indicates that the CMA may be focusing in on how such agreements are drafted and what terms are and are not acceptable. Clearly the CMA considers that there is a point to be made even after its 2003 case. Understanding the legal parameters and where the risks lie in merchandising agreements is therefore incredibly important.

Given the number of changes that are in the pipeline for supply chain agreements, as a result of the forthcoming revisions of UK and EU vertical agreements block exemptions (see our articles here and here), all types of businesses entering into such agreements are on notice of closer scrutiny. It is beyond doubt that the CMA will continue to look at supply chain agreements and will intervene where it has real concerns.

For further information, please contact Peter Willis, Saskia King, Ariane Le Strat and Amy Donlevey.