JD Sports prepares for £2m bill after watchdog finds it broke law by fixing Rangers FC merch prices
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JD Sports may face a hefty penalty after the competition watchdog found it broke rules by fixing retail prices of some Rangers Football Club branded clothes.
The Competition and Markets Authority (CMA) said it had provisionally found that Elite Sports 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.
JD Sports said it intends to recognise a provision of approximately £2m in its financial statements for the year to 29 January 2022, which was its “best estimate of the liability payable in respect of this matter,” including legal fees.
After the football club noticed the high street retailer was selling a replica top for a cheaper price than Elite, the club’s retail partner at the time, the CMA claims the three parties colluded.
The three firms are claimed to have come to an understanding so that JD Sports would up the price of an Rangers adult short-sleeved home replica shirt by nearly 10 per cent, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.
The watchdog also said it was concerned that Elite and JD Sports had colluded to fix prices of Rangers-branded clothing, including training wear and replica kit, over a longer period – without involvement from Rangers.
Collusion is thought to have included aligning the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect profit margins. This came at the expense of fans, the CMA said.
The retailer had admitted to cartel activity, alongside Elite, the CMA said.
“We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up,” Michael Grenfell, executive director of enforcement at the CMA, said.
He added: “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.”
Companies discovered to have breached competition rules can face a fine of up to 10 per cent of their annual worldwide group turnover.
JD Sports said it was hopeful it would receive a reduction on any financial penalties as it had co-operated fully with the watchdog.
The retailer’s share price was down 1.8 per cent when trading opened in London on Tuesday morning and sunk further to six per cent down in the afternoon.
It comes as another blow for the company, which recently ousted its chair Peter Cowgill and has since tried to reassure investors that was no “big skeleton in the closet”, CityA.M. previously reported.
Cowgill’s departure follows JD Sports and its rival Footasylum being slapped with fine worth almost £5m after Cowgill met with Footasylum’s opposite number Barry Brown in a car park to discuss a blocked takeover.
In the early 2000s, a slew of retailers were hit with painful fines after regulators discovered anti-competitive agreements over the prices of popular England and Manchester United shirts.
High street retailer JJB Sports was slapped with the heftiest fine, almost £8.4m, followed a £6.6m fine for sports equipment manufacturer Umbro.