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European Commission fines Nike €12.5M for blocking cross-border sales


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European Commission fines Nike €12.5M for blocking cross-border sales

The European Commission on March 25 said it fined Nike Inc. €12.5 million for blocking cross-border sales of soccer merchandise.

Nike, which held licenses for many soccer clubs' official scarves, jerseys and other merchandise, banned traders from selling in different countries within the European Economic Area, or EEA, according to the commission. The sportswear giant was fined for its practices from 2004 to 2017, which involved licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation.

"Nike prevented many of its licensees from selling these branded products in a different country leading to less choice and higher prices for consumers," said Commissioner Margrethe Vestager, in a news release. "This is illegal under EU antitrust rules."

The EC said it imposed fines on Nike's role as a licensor of licensed products that only feature brands of a soccer club or federation, but it did not target Nike's core trademarked merchandise, which includes its name or the "Swoosh" logo. Nike licenses the manufacture and distribution of branded merchandise with European soccer club or federation brands to third parties.

The commission said it opened an antitrust probe into Nike's licensing and distribution practices in June 2017, examining whether it illegally restricted traders from selling licensed merchandise cross-border or online within the EU Single Market.

In addition to including clauses that explicitly prohibited out-of-territory sales, Nike imposed double royalties on those sales, threatened licensees with terminating their contracts if they sold outside borders and refused to supply "official product" holograms for merchandise they believed would be sold in other markets in the EEA, according to the commission.

The EC also charged that Nike used master licensees in each territory and compelled those licensees to stay within their designated regions, as well as including clauses that prohibited licensees from selling the merchandise to retailers and other customers selling outside the allocated region. Nike also intervened to prohibit retailers from purchasing products from licensees in other EEA territories, the commission charged.

The commission noted that it reduced Nike's fine by 40% after the retailer provided crucial information to the investigation, which allowed it to extend the scope of the case. The American company also provided evidence and acknowledgment of its practices.