Ten businesses have been fined a total of £18.6 million by the OFT for fixing the price of Umbro replica football kit in breach of the Competition Act 1998.
The businesses fined are JJB Sports (£8.373m), Umbro (£6.641m), Manchester United (£1.652m), Allsports (£1.35m), the FA (£198,000 reduced to £158,000 by leniency), Blacks (£197,000), Sports Soccer (£123,000), JD Sports (£73,000), Sports Connection (£27,000 reduced to £20,000 by leniency) and Sportsetail (£4,000 reduced to nil by leniency). (See note 3 for more details on the fines and on leniency).
Agreements (see note 2) between some of the parties set the prices for the top selling short sleeved adult and junior shirt of the England team and for Manchester United football club. Other agreements involved the short sleeved adult and junior Chelsea, Glasgow Celtic and Nottingham Forest shirts or the entire England replica football kit.
John Vickers, OFT Chairman, said: ‘The fines imposed reflect the seriousness of the price fixing in this case. Since we launched our investigation the prices of replica football shirts have fallen and consumers can now shop around and get a better price’.
Most of the agreements covered key selling periods such as the launch of new kits or England’s participation in Euro 2000.
In 2000 and 2001 most retailers charged just under £40 for adult short-sleeved England shirts and just under £30 for juniors. An OFT random shopping and telephone survey (see note 4) found a wide variety of prices for the 2003 England shirt on its launch. Prices ranged from £24 to £40 for adult England short-sleeved shirts and £18 to £30 for the junior version.
NOTES
1. The decision is addressed to Allsports Ltd, Blacks Leisure Group plc, Florence Clothiers (Scotland) Ltd (in receivership) (formerly trading as ‘Sports Connection’), JJB Sports plc, Manchester United plc, Sportsetail Ltd (in administration) (formerly trading as ‘England-direct.com’), Sports Soccer Ltd, The Football Association Ltd, The John David Group plc and Umbro Holdings Ltd.
2. There were a number of agreements:
Allsports Ltd, Blacks Leisure Group plc, JJB Sports plc, The John David Group plc, Manchester United plc, Sports Soccer Ltd and Umbro Holdings Ltd were involved in various agreements which fixed the prices of certain top-selling adult and junior short sleeved replica football shirts manufactured by Umbro Holdings Ltd. These were the replica football shirts of the England team and Manchester United, Chelsea, Glasgow Celtic and Nottingham Forest football clubs. Some of the parties were involved with the shirts of only one or some of the teams and some for longer periods than others. The longest that any of the parties were involved was from the spring of 2000 to the late summer of 2001. The agreements applied during key selling periods after the launch of a new replica football kit and during the Euro 2000 tournament.
Florence Clothiers (Scotland) Ltd (in receivership) (formerly trading as ‘Sports Connection’) and Umbro Holdings Ltd were involved in an agreement which fixed the prices of Glasgow Celtic’s adult and junior short sleeved replica football shirt for a short period during the spring of 2001.
JJB Sports plc, Sportsetail Ltd (in administration) (formerly trading at ‘England direct.com’), the Football Association Ltd and Umbro Holdings Ltd were involved in an agreement which aligned the prices of the England team replica football kit sold at England-direct.com to the high street prices of JJB Sports plc. The agreement lasted from the early spring of 2000 until the late autumn of 2001.
3. The OFT may impose a penalty of up to 10 per cent of UK turnover for a maximum of three years for infringement of the Competition Act 1998. The OFT has calculated the fines in accordance with its published guidance on financial penalties. These take into account, amongst other things, the serious nature of price-fixing, the need for deterrence and the turnover and involvement of the parties concerned. Sportsetail (which is now in administration) was granted 100 per cent leniency and so its potential penalty of £4,000 was reduced to zero. Sportsetail provided crucial evidence and met the conditions for full immunity in the OFT’s published guidance. Sports Connection (which is now in receivership) was granted 25 per cent leniency. The FA was granted 20 per cent leniency. JJB had the highest turnover of the ten parties and this is one of the reasons why it incurred the highest penalty.
4. The OFT’s random shopping and telephone survey involved visiting nine retailers on 2 and 3 April 2003 (the England shirt was launched on 2 April 2003) and phoning nine retailers around the country on 3 April 2003. The OFT also noted the order price for the England shirt on five different retail websites from 26 March to 3 April 2003.
5. The OFT wrote to eleven businesses on 16 May 2002 with a notice saying that it proposed to make a decision that they had infringed competition law by entering into agreements to fix the price of replica football kit and giving its reasons (see PN 27/02). The OFT issued a further notice to ten businesses on 26 November 2002 (see PN 80/02). In the original notice of 16 May 2002 Debenhams was also named as a party to the infringements. However, Debenhams was later dropped from the case in November 2002.
6. Replica football kit prices have previously been a concern for the OFT. In the summer of 1999 the FA, the English Premier League clubs and the Scottish FA gave assurances to the OFT that they would take action to prevent resale price maintenance. (See PN 30/99).
7. The Competition Act 1998 came into force in March 2000. The Act contains two prohibitions:
(a) the Chapter I prohibition prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition within the UK (or any part of it) and which may affect trade within the UK (or any part of it)
(b) the Chapter II prohibition prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).
8. The text of the decision will be published on the OFT website once commercially sensitive information has been removed. It will appear on the Competition Act Public Register.
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