JD Sports shares were down 3.8% to 118.5p in late afternoon trading on Tuesday after the Competitions and Markets Authority (CMA) found the FTSE 100 retailer guilty of fixing prices on Rangers Football Club replica clothing in collaboration with Elite Sports.
The CMA confirmed provisional findings including price-fixing on a number of Rangers-branded replica kits and other products between September 2018 until at least July 2019.
The institution mentioned that Rangers FC were part of the collusion, to the extent of fixing the retail price of adult home short-sleeved replica shirt from September 2018 to mid-November 2018.
The report found that JD Sports and its associates allegedly colluded to stop the company from undercutting the retail price of the shirt on Elite Sports’ Gers Online store.
The CMA stated that Rangers was concerned about JD Sports selling the Rangers replica top at a lower price than Elite, which was functioning as its ‘retail partner’ at the time.
The subsequent understanding saw JD Sports raise the price of its Rangers replica football shirt by almost 10% from £55 to £60 in order to bring it in line with prices which Elite was charging on its Gers Online site.
JD Sports and Elite are also under scrutiny for alleged price fixing of training wear and replica kits over a longer time, without the involvement of Rangers FC, including the timing of discounts close to the end of the football season in 2019 to avoid competition between them and to protect their profit margins to the detriment of football club fans.
JD Sports and Elite reportedly confessed to “cartel activity” and requested leniency throughout the CMA’s investigation. The organisation said if both parties comply with the process, they would receive a reduction on the financial penalties imposed by the CMA.
Companies found guilty of infringing on the prohibitions in the Competition Act 1998 may be fined up to 10% of its annual international group turnover.
“We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up,” said CMA executive director of enforcement Michael Grenfell.
“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 2 retailers could pocket more money for themselves at the expense of fans.”
JD Sports confirmed that it would recognise a provision of £2 million in its financial statements for FY 2022 in representation of the company’s best estimate of its payable liability in relation to the investigation, including legal costs.
