Leicester City Football Club has been handed a heavy monetary punishment of £880,000 by the UK’s competition authority, the Competition and Markets Authority (CMA), for breaking anti-competitive laws with JD Sports.
The fine was issued following an investigation by the CMA into the partnership between the two companies for the 2018/2019 season. The agreement between the club and the retail giant included that JD Sports would not sell Leicester City-branded items online until the end of the 2020/2021 season and continue to charge delivery for Leicester City products. The CMA found that this had potential to lead to fans paying more than they should.
In response, Michael Grenfell, the CMA’s Executive Director of Enforcement, said “Strong and unimpeded competition between retailers is essential to consumers’ ability to shop around for the best deals. In this case, we have provisionally found that Leicester City FC and JD Sports colluded to share out markets and fix prices – with the result that fans may have ended up paying more than they would otherwise have done. Both parties have now admitted their involvement, allowing us to bring the investigation to a swift conclusion. The fine that Leicester City FC and its parent companies have agreed to pay sends a clear message to them and other businesses that anti-competitive collusion will not be tolerated.”
Unlike Leicester City FC, who were severely penalised in the form of a fine, JD Sports managed to avoid a similar punishment. This was thanks to JD Sports submitting their own case to the CMA detailing their own involvement and providing leniency due to their cooperation with the investigation. While JD Sports were let off lightly, they did take steps to improve their corporate training and procedure in a bid to ensure compliance with UK competition law.
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It is clear that the £880,000 fine given to Leicester City reflects the significance of this type of case and serves as an indicator that the CMA does not take any violation of the competition law lightly.
This is further emphasized by the sanctions handed down to JD Sports’ former Executive Chairman and Chief Executive, Peter Cowgill, who stepped down last year in May. Following this, the group carried out a review of their governance procedures and policies to ensure that their practices are competitively fair.
In light of this, it is important for all businesses, including Leicester City and JD Sports, to keep a strict eye on their compliance. It is also worth noting that this cautionary tale has a light at the end of the tunnel, as fans of Leicester City can now be assured that the price of their replica merchandise won’t be artificially inflated and manipulated.
