On 31 July 2023, the Competition and Markets Authority (CMA) issued an infringement decision finding that Leicester City Football Club and JD Sports had colluded to restrict competition in the sales of Leicester City-branded clothing, including replica kit, in the UK. Leicester City FC and its parent companies reached a settlement agreement with the CMA, under which they will pay a fine of £880,000. JD Sports had reported the infringement to the CMA, in exchange for immunity from financial penalties.
Both Leicester City and JD Sports sell Leicester City-branded clothing online. The CMA believes that the two parties entered into an arrangement under which: (i) JD Sports would stop selling Leicester City-branded clothing online during the 2018/19 football season, (ii) JD Sports agreed not to undercut Leicester City in terms of online sales for the 2019/20 season by applying a delivery charge to all orders of Leicester City-branded clothing (even though the company otherwise offered free online delivery for all orders over £70) and (iii) JD Sports would continue to apply delivery charges to online orders of Leicester City-branded clothing for the 2020/21 season.
The fine agreed between the CMA and Leicester City reflects a settlement discount intended to recognise the resource savings to the CMA as a result of Leicester City’s admission of anticompetitive conduct, which will allow the CMA to resolve its investigation more efficiently. As whistle-blower, JD Sports will benefit from immunity from fines, provided that it continues to co-operate with the CMA’s investigation and to fulfil the other conditions of the CMA’s leniency policy.
Michael Grenfell, the Executive Director of Enforcement at the CMA, said that the fine imposed “sends a clear message to … other businesses that anti-competitive collusion will not be tolerated.” He stressed that the rising cost of living made it especially important for football fans to benefit from competitively priced merchandise, which is consistent with the CMA’s stated objective to “help contain rising cost of living pressures,” which we reported last month.
This is not the first time the CMA has issued fines in response to price-fixing of replica football kits.
In October 2022, the CMA imposed fines exceeding £2 million on Elite Sports, JD Sports, and Rangers FC for colluding to set the retail prices of a number of Rangers-branded products. Elite Sports manufactured Rangers FC merchandise and sold Rangers-branded products through both its online store and physical outlets. JD Sports, the only UK-wide major retailer selling those products at the time, was offering them at a lower price. Rangers FC, who recognised Elite as its traditional “retail partner” entered into an agreement with Elite and JD Sports, whereby the latter would increase the price of the adult replica shirt by nearly 10%. Separately, the CMA’s investigation found that Elite Sports and JD Sports colluded to fix the retail prices of a wider set of Rangers-branded clothing, including coordinating promotions and discounts to avoid competition.
Almost 20 years prior to that, the CMA’s predecessor, the Office of Fair Trading (OFT), found that several sports retailers as well as Manchester United plc – the ultimate parent company of the Manchester United Football Club – had been involved in various agreements or concerted practices which had fixed the prices of top-selling replica shirts of the England, Manchester United, Chelsea, Glasgow Celtic and Nottingham Forest football teams. The retailers included Allsports, Blacks Leisure Group, JJB Sports, Sports Soccer, The John David Group, as well as sports kit manufacturer and retailer Umbro Holdings. Agreements between various combinations of the parties artificially inflated the price of Umbro-licensed replica football kits between February 2000 and November 2001. The OFT investigated following a complaint made by a retailer in August 2000 and issued fines totalling £18.6 million.
This case followed an earlier investigation by the OFT, which was closed in 1999 when the Football Association and the FA Premier League clubs (amongst others) gave the OFT non-statutory assurances that they would take action to prevent resale price maintenance in the market for replica football kit.
Follow on actions for damages
Findings of competition-law infringements can also expose the parties to actions for damages, including collective proceedings brought on behalf of consumers who paid excessive prices as a result of the anticompetitive behaviour. Before the introduction of the Consumer Rights Act 2015, options for bringing actions on behalf of consumers were more limited. Claims could, however, be brought on behalf of consumers by certified consumer bodies. In 2008, Which? (the UK Consumers’ Association) brought a claim against JJB Sports on behalf of 600 consumers who had purchased replica Manchester United or England football shirts whose prices had been inflated as a result of the 2000 to 2001 agreements described above. This ultimately resulted in a settlement agreement entitling customers who had opted in to the proceedings and purchased affected football shirts during the relevant period, to receive a payment of £20 each. Consumers who had not opted in to the proceedings, but who could provide proof of purchase of an affected shirt, were able to claim a lesser amount. The difficulty of bringing this claim and relatively small sum successfully recovered gave rise to criticism of the regime that, in part, resulted in the introduction of the collective proceedings regime in 2015.