Danni Hewson AJ Bell financial analyst comments on Competition and Markets Authority (CMA) provisional findings of illegal price-fixing of Rangers FC merchandise CMA provisionally finds illegal price-fixing of Rangers FC merchandise - GOV.UK (www.gov.uk)
“Allegations that JD Sports colluded to fix prices won’t go down well with cash strapped consumers. Football kits are pricey items but for some supporters they’re must haves and parents in particular wince every time an update is unveiled. Competition is supposed to keep those prices in check and the competition watchdog has said it will come down hard on companies that ignore the spirit of fair trade in order to make a bit of extra cash.
“JD sports has set aside £2m to cover any fines and legal costs it may incur if it’s found to have broken the law. It has cooperated fully with the CMA during the investigation, something which is expected to impact the size of any fine they might face. But the bad press couldn’t come at a worse time for JD Sports. Still bruised from the failed takeover of Footasylum, and the departure of its long-time boss Peter Cowgill, shares have plunged almost 44% since the start of the year.
“At a time when consumers are having to make tough choices about where to spend their dwindling spare cash, retailers need to stand out for the right reasons. Shoppers have become incredibly savvy; they will penalise businesses for bad practice. JD Sports is trying to step forward but now finds itself on the back foot. It will need to think carefully about how it engages with the consumer going forward.
“Football is supposed to be the “beautiful game” but there’s nothing beautiful about this particular chapter and Rangers fans will be galled that the club itself seems to have played a small part in the episode. Fans and shareholders will scrutinise any response to the allegations from the three parties involved before a final ruling is made.”