Retail

Nike Receives $14.14M Fine Over Cross-Border Sales

Nike

In the latest European Union sanction related to cross-border sales, Nike received a $14.14 million — or 12.5 million euro — fine. The European Commission claimed that the practices involved licensed merchandise from Manchester United, FC Barcelona and AS Roma, among other names, and took place from 2004 to 2017, CNBC reported.

European Competition Commissioner Margrethe Vestager said in a statement, according to the outlet, “Nike prevented many of its licensees from selling these branded products in a different country, leading to less choice and higher prices for consumers.”

As it stands, the case centered around the position of Nike as a licensor that makes and distributes merchandise that highlights the brands of soccer clubs instead of its own trademarks. Practices by the company were said to encompass contract clauses that banned licensee out-of-territory sales as well as the idea that agreements would be concluded if licensees didn’t follow the clauses. However, the company’s fine was reportedly reduced by 40 percent following its cooperation.

The news comes as antitrust regulators in the European Union have fined U.S.-based retailer GUESS $45.3 million (40 million euros) for blocking cross-border sales in Europe. The investigation into the retailer was started in June 2017 following a bigger inquiry into the practices for cross-border internet sales of 1,900 companies. The activity by GUESS occurred from January 1, 2014 through October 31, 2017 per the European Commission.

Vestager said in a press release at the time, “GUESS’ distribution agreements tried to prevent EU consumers from shopping in other Member States by blocking retailers from advertising and selling cross-border.” Vestager continued, “This allowed the company to maintain artificially high retail prices, in particular in Central and Eastern European countries. As a result, we have today sanctioned GUESS for this behavior.”

GUESS reportedly fully cooperated with the investigation “beyond its legal obligation to do so,” and even revealed it had broken one of the competition rules in EU that the Commission hadn’t yet come across.

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