Written by Stephen C. Tupper | Lisa Navarro
On 10 September 2009 the Office of Fair Trading (OFT) and the Serious Fraud Office (SFO) dawn-raided the offices of Sports Direct. The dawn raid is the first public step by the OFT in its investigation into alleged anti-competitive agreements between Sports Direct and JJB Sports.
Whilst no details have been released formally as to the nature of the alleged anticompetitive conduct, it is likely to be linked to agreements between the two companies for JJB to stock Sports Direct’s own-brand products (e.g., Slazenger, Everlast, Dunlop, etc.) and, specifically, the arrangements regarding onward pricing.
The OFT’s investigation, which commenced in January of 2009, was triggered by JJB whistleblowing to the OFT. As a result, JJB has been granted immunity under the OFT’s leniency policy from any fines under the Competition Act 1998 and from criminal prosecution of responsible directors under the Enterprise Act 2002. Sports Direct, however, is subject to the risk of both. In addition, the decision by the OFT to involve the SFO raises the prospect of additional criminal liability to which both companies remain exposed.
The rivalry between JJB and Sports Direct has traditionally been hard fought, similar to that between Rudi and Adi Dassler, the brothers that spawned the competing Puma and Adidas brands. At times, the JJB-Sports Direct rivalry has led to uneasy cooperation, although the temptation to gain a competitive edge has more often than not proved too tempting.
Sports Direct’s Mike Ashley’s whistleblowing on the replica football shirt price fixing cartel in 2000 led to JJB paying a fine of £6.7 million and taking full responsibility for all consumer claims. No criminal charges were brought as a result of that investigation as price fixing has only been a criminal offence since 2003. Now, in a reversal, it’s JJB’s whistleblowing that appears to have Sports Direct on the defensive — with the stakes raised by the involvement of the SFO and the possibility of criminal sanctions under the Enterprise Act 2002.