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From Antitrust Law Daily, March 25, 2019

Nike fined by EU for restricting online, cross-border sales of soccer merch

By Wendy Biddle, J.D.

The EC today fined Nike €12.5m for unlawfully restricting cross-border sales of soccer merchandise. Geo-blocking probes of Sanrio, Universal Studios continue.

The European Commission (EC) has fined Nike €12.5 million for banning sales of licensed merchandise cross-border and online to other countries within the European Economic Area. According to the announcement, the restriction concerned sports merchandising products of some of Europe's best-known soccer clubs and federations, for which Nike held the license. Because of Nike’s cooperation with the investigation, the fine was reduced 40 percent.

The EC concluded that for 13 years (from 2004 to 2017), Nike broke the EU’s antitrust rules when it banned retailers from selling merchandise for clubs, such as Manchester United, Juventus, and AS Roma, as well as some national soccer federations, into other countries in the European economic area.

The case was launched in June 2017 as part of the European Commission’s crackdown on restrictions on retailers that prevent people buying from websites based in another member state, known as geo-blocking. The investigation found that Nike imposed a number of measures that restricted out-of-territory sales by licensees, including clauses explicitly prohibiting these sales. Nike also threatened licensees with ending their Nike contracts or withholding the official hologram if licensees did not implement the out-of-territory restrictions. Nike obliged licensees to include territory prohibitions in their contracts with retailers and Nike would intervene to ensure that retailers stopped purchasing products from licensees in other EEA territories.

Margrethe Vestager, EU competition commissioner, said: "[F]ans 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."

Ongoing probes. Two separate probes that opened at the same time are still ongoing. The EC continues to investigate geo-blocking restrictions on Sanrio’s licenses for brands such as Hello Kitty, and Universal Studios’ merchandising rights for films such as Despicable Me and Minions.

Companies: Nike, Inc., Sanrio, Inc., Universal Studios

MainStory: TopStory Antitrust FranchisingDistribution

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