CMA alleges price fixing in relation to replica football kits

On 7 June 2022, the CMA issued a statement of objections (SO) concerning alleged horizontal and vertical price fixing in relation to certain Rangers FC-branded clothing products by Elite Sports, JD Sports and Rangers FC between September 2018 and July 2019. In this period, Elite both manufactured the Rangers-branded clothing and retailed it through its online store (Gers Online) and in bricks and mortar stores in Glasgow and Belfast. JD Sports was the only UK-wide major retailer selling Rangers-branded products.

In its SO, the CMA has alleged that:

• At the start of the 2018-19 football season, Rangers FC became concerned that JD Sports was undercutting the price offered by Elite Sports (who were seen as Rangers' "retail partner" at the time) for the Rangers FC replica top. This led to an understanding between the three parties that JD Sports would increase its price for the Rangers adult short-sleeved home replica shirt from £55 to £60, so as to bring JD Sports' price into line with Elite Sports' prices on the Gers Online store (an increase of just under 10%). The CMA has alleged that this collusive behaviour between all three parties in respect of adult home short-sleeved replica shirts lasted from September to at least mid-November 2018.
• Over a longer period (September 2018-July 2019), the CMA has provisionally found that Elite Sports and JD Sports fixed the retail prices of a number of Rangers FC-branded replica kit and other clothing products (including training-wear) without the involvement of Rangers FC. The CMA has alleged that this included Elite Sports and JD Sports aligning the level and timing of discounts towards the end of the 2018-2019 football season to reduce competition between them and to protect their profit margins.

These findings are provisional and all the recipients of the SO now have an opportunity to make representations to the CMA before a final decision is taken; the CMA's timetable suggests that this stage of the process will take the remainder of 2022.

It should be noted the CMA's press release comments that both Elite and JD Sports applied for leniency during the CMA's investigation (which has been ongoing since mid-December 2020).

Comment

As well as arguably replicating some aspects of the 2003 decision in relation to price-fixing of replica football kit by the CMA's predecessor (the Office of Fair Trading, the OFT), the CMA is currently also considering what appears to be similar allegations that JD Sports and Leicester City FC engaged in anti-competitive behaviour with regard to Leicester FC-branded products and merchandise. The Leicester City FC investigation was opened in September 2021 (sometime after the Rangers FC investigation) but was, until recently on a similar timetable; the Leicester City FC investigation is, however, currently ongoing, with an update due by September 2022.

Although it has been almost 20 years since the conclusion of the 2003 OFT case, it is interesting to note that many of the elements in the 2003 decision appear to remain of concern to the CMA in 2022. Indeed, although the 2003 decision involved a much larger number of retailers and kits, the conduct identified by the OFT is in many ways similar to that alleged in the Rangers FC SO.

In particular, much of the anti-competitive conduct identified in the 2003 OFT decision related to retailers who, having discounted replica kit (thus undercutting their competitors), were encouraged by the other parties to the relevant anti-competitive arrangements (particularly Umbro) to raise prices/revert to RRP.

Moreover, while the anti-competitive agreements held to be in breach of Chapter I of the Competition Act 1998 in the 2003 case related to a wider range of replica-football shirts (for the England team, Chelsea, Celtic, Nottingham Forest and Manchester United), only Manchester United was party to the arrangements and sanctioned for its involvement. The anti-competitive agreements for the other shirts were between the licensed manufacturer (Umbro) and a variety of retailers.

The CMA's provisional findings in the Rangers case do not, however, appear to wholly replicate the 2003 decision. In the latter, the OFT laid particular stress on demand for replica kits being front loaded and that the first half of the season and the kit launch were crucial period for sales (the OFT estimated that 90% of sales occurred between the beginning of the season and the Christmas of that year). By contrast, in the SO, the CMA alleges that Elite and JD Sports aligned the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect their profit margins at the expense of fans. Although purchasing patterns (along with many other factors) are likely to have changed in the intervening period, the CMA would, nonetheless be concerned if the alleged collusive behaviour meant that Elite and JD Sports pricing did not need to be demand-reflective.

As the CMA's comments which accompanied the announcement of the SO make clear, the CMA's return to replica football kits reflects the fact that cases concerning the types of conduct alleged in the SO remain a priority for the CMA and, indeed, are a key part of its strategic plan for 2022-23 which stresses its ongoing prioritising of cases where the CMA considers customers are not able to secure a product at the best price.

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