JD Sports says it’s setting aside about £2m in its upcoming full-year results to cover a CMA fine and legal costs following a provisional finding that it may have colluded with Rangers FC and its kit manufacturer Elite to fix the price of replica kit online and in stores.
The Competition and Markets Authority alleges that the multichannel retailer worked with Rangers FC and its kit manufacturer Elite Sports Group to stop JD Sports undercutting the price at which Elite sold a replica Rangers top in the 2018/19 football season. It says that the Glasgow club was concerned that JD Sports was selling the Rangers replica top for less than Elite, which was then seen as the club’s retail partner, at the start of the season. The three reached an understanding, says the CMA, that JD Sports would raise its price for a Rangers adult short-sleeved home replica shirt by almost 10% – from £55 to £60 – to bring it in line with the price that Elite charged on its own Gers Online website. At the time, JD Sports was the only UK-wide retailer selling those products. Elite sold online through the Gers Online website and later in stores in Belfast and Glasgow.
Collusion amounting to cartel activity, says the CMA, continued between Elite and JD Sports over a longer period of time – running up to the end of the football season in 2019, when discounts were aligned so that the two could avoid competition and protect their profits margins at the expense of fans.
The CMA says that both Elite and JD Sports have cooperated throughout its investigation and admit cartel activity, and both will receive a reduction on any financial penalties that it imposes. Businesses found to have infringed the Competition Act 1998 can be fined up to 10% of annual worldwide group turnover.
Michael Grenfell, executive director of enforcement at the CMA, says: “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 two retailers could pocket more money for themselves at the expense of fans.
“These are the CMA’s provisional findings and the companies involved now have the chance to make representations to the CMA before it reaches a final decision.”
JD Sports says it will now review the CMA’s provisional findings with its advisers, and that it intends to set aside about £2m in its full-year statement for the 52 weeks to January 29 2022, as its best estimate of what it will be likely to pay, both in fines and related legal costs.
In a statement, Rangers FC says that today’s statement of objections from the CMA represents only its provisional view. It adds: “It is not a finding that Rangers has broken the law and does not mean that the CMA will issue a final decision or impose a fine on Rangers.
“Rangers is committed to operating its business in full compliance with all laws, including competition law, and treats this matter very seriously. As such, Rangers will review in detail the CMA’s preliminary findings and will be submitting its response to the CMA in due course. Rangers notes that it has cooperated with the CMA since the investigation was initiated and will continue to do so.”
InternetRetailing has contacted Elite Sports Group for a comment, which will be added here in due course.
JD Sports is ranked Leading in RXUK Top500 research.