JD Sports faces CMA fine for ‘cartel activity’ on alleged football shirt price-fixing

The Competition and Markets Authority (CMA) has provisionally found evidence of illegal price fixing of Rangers Football Club merchandise that lasted “at least” 10 months between September 2018 and July 2019.

The watchdog has alleged that JD Sports colluded with Rangers and Elite Sports – the then-manufacturer Rangers-branded clothing – to fix the retail price of adult replica home shirts between September 2018 and at least mid-November 2018. 

The CMA alleged that Rangers “became concerned” that JD was selling the replica shirts at a lower price than Elite. The three parties are said to have agreed that JD would raise its price almost 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on the Rangers website.

The CMA’s probe provisionally found JD and Elite fixed the retail prices of “a number of Rangers-branded replica kits and other clothing products” between September 2018 until at least July 2019, without the involvement or knowledge of the football club.

The watchdog alleged this included “aligning the level and timing of discounts” towards the end of the 2018/19 football season “to avoid competition” and “protect their profit margins at the expense of fans”.

Both JD and Elite admitted to “cartel activity” and have “applied for leniency” following the investigation.

The CMA said both parties will receive reduced financial penalties “provided they continue to cooperate with the investigation”. Any business found to be in breach of the Competition Act 1998 can be fined as much as 10% of annual turnover. That would amount to a penalty of more than £600m for JD, which raked in £6.17bn in sales during the year to January 30, 2021.

But JD said it only “intends to recognise a provision of approximately £2m” in its 2021/22 results, which is its “best estimate of the liability payable”, including legal costs.

All companies involved have the opportunity to make additional representations to the CMA before it reaches a final decision. JD said it is currently reviewing the findings with its advisers.

CMA executive director of enforcement Michael Grenfell said: “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.”

JD’s 2021/22 financial report has been delayed amid the fallout of its blocked Footasylum acquisition and a corporate governance review, which resulted in the dramatic departure of boss Peter Cowgill last month.

Helen Ashton, who stepped into the role of non-executive chair following Cowgill’s exit, said at the time of the changes: “The business has developed strongly under Peter’s leadership into a world-leading multichannel retailer with a proven strategy and clear momentum.

“However, as our business has become bigger and more complex, what is clear is that our internal infrastructure, governance and controls have not developed at the same pace.

“As we capitalise on the great opportunities ahead of us, the board is committed to ensuring that we have the highest standards of corporate governance and controls appropriate to a FTSE 100 company to support future growth.”

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