Nike Handed Eu Fine Over Football Merchandise Restrictions
The European Commission has fined Nike €12.5 million for banning traders from selling licensed merchandise to other countries within the European Economic Area (EEA).
The practice concerned merchandising products of some of Europe’s leading football clubs and federations, for which Nike held the licence.
They include clubs like FC Barcelona, Manchester United, Juventus, Inter Milan and AS Roma, as well as national federations such as the French Football Federation.
The ruling follows the conclusion of an EU antitrust investigation, which found that Nike’s illegal practices partitioned the Single Market and prevented licensees in Europe from selling products cross-border over a 13 year period from July 2004 to October 2017, to the ultimate detriment of European consumers.
Commissioner Margrethe Vestager, in charge of competition policy, explained: “Football fans often cherish branded products from their favourite teams, such as jerseys or scarves.
“Nike prevented many of its licensees from selling these branded products in a different country leading to less choice and higher prices for consumers.
“This is illegal under EU antitrust rules. Today’s decision makes sure that retailers and consumers can take full advantage of one of the main benefits of the Single Market: the ability to shop around Europe for a larger variety of products and for the best deals.”
The European Commission opened its antitrust investigation in June 2017 to explore certain licensing and distribution practices of Nike and to assess whether the brand illegally restricted traders from selling licensed merchandise cross-border and online within the EU Single Market.
It focussed on the distribution of “licensed merchandise,” which features club or federation brands but not the Nike trademarks.
For such products, Nike acts as a licensor of intellectual property rights, granting licences to third parties for the manufacture and distribution of the items.
The Commission investigation found a number of breaches of EU competition laws.
In particular, it concluded that Nike imposed a number of direct measures restricting out-of-territory sales by licensees, such as clauses explicitly prohibiting these sales, obligations to refer orders for out-of-territory sales to Nike and clauses imposing double royalties for out-of-territory sales.
Nike also enforced indirect measures to implement the out-of-territory restrictions, for instance threatening licensees with ending their contract if they sold out-of-territory, refusing to supply “official product” holograms if it feared that sales could be going towards other territories in the EEA and carrying out audits to ensure compliance with the restrictions.
In addition, the Commission found that Nike included clauses that explicitly prohibited licensees from supplying merchandising products to customers, often retailers, who could be selling outside the allocated territories.
As well as obliging licensees to pass on these prohibitions in their contracts, Nike would intervene to ensure that retailers (e.g. fashion shops, supermarkets, etc.) stopped purchasing products from licensees in other EEA territories.
Nike received a 40% reduction in its fine in recognition of its cooperation with the Commission’s investigation.
A press release issued by the European Commission noted that the company “also provided evidence with significant added value and expressly acknowledged the facts and the infringements of EU competition rules.”
