The Competition and Markets Authority (CMA) has announced that it has launched a competition law investigation into the sports equipment sector.
At this stage it is unclear who - or what - the CMA is investigating. In common with its practice in other cases, the CMA is saying very little at this stage. Further details are likely to emerge over time, as the CMA's investigation develops.
The CMA has a broad remit to investigate alleged infringements of competition law. The nature of the allegations that it could potentially be investigating include:
- Collusive conduct between competitors (such as price fixing, market sharing or bid rigging) - it is a basic principle of competition law that competing businesses must not discuss or agree anything that could be strategically sensitive.
- Resale price restrictions - a further well-established principle of competition law is that suppliers cannot agree with (or put pressure on) wholesalers or retailers with regard to the prices at which they resell products.
- Internet sales - in broad terms, the competition law rules protect wholesalers' and retailers' ability to sell products over the internet.
There has been some history of the competition authorities investigating the sports equipment sector in the past. For example, the German competition authority has conducted investigations into Adidas and Asics with regard to alleged restrictions on their trade customers selling through Amazon and Ebay. Meanwhile, one of the best known cases under the UK competition law rules was the 2003 decision by the OFT (which was the CMA's predecessor) to impose fines totalling £18.6 million on JJB Sports, Umbro and various others for fixing the retail price of replica football shirts.
The precise scope of this investigation will become clearer in time. The first milestone in the case has been pencilled in for April 2016, when the CMA hopes to decide whether to proceed with the investigation or to close the investigation. Between now and then, it will be conducting enquiries of the parties under investigation and others, gathering evidence of whether it thinks there is a case to be answered to.
If the CMA ultimately concludes that there has been an infringement of competition law, it will have the power to impose potentially very significant fines and, potentially, to take action (such as director disqualification) against individuals.
It goes without saying that this new investigation is a reminder of the CMA's investigatory and enforcement powers - and of the importance to businesses of minimising risk by ensuring that they have appropriate competition law compliance arrangements in place.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.