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JD Sports and Elite Sports confess to ‘cartel activity’ in Rangers FC replica kit price-fixing probe

JD Sports and Elite Sports have confessed to “cartel activity” in illegally fixed the retail prices of a number of Rangers-branded replica kits and other clothing products, the Competition and Markets Authority (CMA) has said.

The watchdog said the price fixing took place from September 2018 until at least July 2019.

It added that Rangers also took part in the alleged collusion but “only to the extent” of fixing the retail price of adult home short-sleeved replica shirts from September 2018 to at least mid-November 2018.

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The CMA said that all three parties allegedly colluded to stop JD Sports undercutting the retail price of the shirt on Elite’s Gers Online store.

At the time, Elite was the manufacturer of Rangers-branded clothing and also sold Rangers-branded products directly through Gers Online Store and later in bricks-and-mortar shops in Glasgow and Belfast.

The only UK-wide major retailer selling those products at the time was JD Sports.

The CMA has released its provisional conclusions and if confirmed, the companies involved “can expect to face fines”.

Michael Grenfell, executive director of enforcement at the CMA, 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.”

The CMA has alleged that Rangers FC became concerned about the fact that, at the start of the 2018-19 football season, JD Sports was selling the Rangers replica top at a lower price than Elite, which was seen at the time as the club’s ‘retail partner’.

This resulted in an understanding between the three parties that JD Sports would increase its retail price of the Rangers adult short-sleeved home replica shirt by nearly 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.

The CMA added that it is also concerned that Elite and JD Sports – without involvement from Rangers – colluded to fix the retail prices of Rangers-branded clothing, including training wear and replica kit, over a longer period.

This included aligning 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”.

Elite and JD Sports applied for leniency during the CMA’s investigation and “confessed to cartel activity”.

Provided they continue to cooperate with the investigation, each will receive a reduction on any financial penalties the CMA may decide to impose. Any business found to have infringed the prohibitions in the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover.

A JD Sports statement said: “JD Sports Fashion Plc notes the press release issued by the Competition and Markets Authority (CMA) earlier today with regards to its ongoing investigation into the suspected breaches of competition law by the following entities and their affiliates: The Rangers Football Club Limited, LBJ Sports Apparel Limited (trading as Elite Sports) and JD Sports Fashion Plc.

“JD can confirm that it has, today, also received a Provisional Statement of Objections and a Draft Penalty Notice from the CMA.

“The CMA’s findings are, at this stage, only provisional and the group will now review them with its advisers.

“The CMA will consider any representations that are made before issuing its final findings. As the CMA has noted, JD has co-operated fully with the CMA and, provided this continues, JD will receive a reduction on any financial penalties that the CMA may decide to impose.

“Based on the information available to it at this time, the group intends to recognise a provision of approximately £2m in its financial statements for the 52 weeks to 29 January 2022 representing the group’s best estimate of the liability payable in respect of this matter, including associated legal costs.

“The group expects to release its final results for this period, incorporating this provision, shortly.”

Source: www.business-live.co.uk

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