The European Commission has imposes a fine of €12.5 million on Nike after it prevented the free sale in European of popular football merchandising, said European Competition Commissioner Margrethe Vestager.
The illegal practices took place between 2004 and 2017 and Nike, as the owner of the commercial rights for the merchandising of FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French national team, violated the EU’s rules on the sales of team merchandise.
“Football fans often cherish branded products from their favourite teams. Nike prevented traders from selling branded products to different countries of the EU Single market,” resulting in the risk of less choice and higher prices.
Nike’s tactics as it became the distributor for those football items was to hand out licenses per country and imposed legal conditions that are contrary to the free movement of goods, the European Commission said.
Nike also enforced indirect measures to implement out-of-territory restrictions, including 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 markets outside of the European Economic Area (EEA), and carrying out audits to ensure compliance with the restrictions.
In some cases, Nike used master licensees in each region to grant sub-licences and to secure the practice through the whole distribution chain, Nike imposed direct and indirect measures on master licensees. Through these measures, Nike compelled master licensees to stay within their territories and to enforce restrictions vis-à-vis their sub-licensees.
The company also included clauses that explicitly prohibited licensees from supplying merchandising products to customers, often retailers, who could be selling outside the allocated territories. In addition to obliging licensees to pass on these prohibitions in their contracts, Nike would intervene to ensure that fashion shops, supermarkets, and other retailers stopped purchasing products from licensees in other countries within Europe.
“Nike made it contractually impossible for many of its licensees to sell those products outside their country or via the internet,” Vestager added. Nike received a 40% discount on the fine because it cooperated with the European Commission’s investigation.