Risk & Compliance

EU Fines Nike Over Restrictions On Cross-Border Sales

The case involved "geo-blocking" of the merchandise of top European football sports franchises.
Vincent RyanMarch 25, 2019

The European Commission has fined Nike $14.14 million, saying the sportswear company illegally blocked cross-border sales of soccer merchandise between 2004 and 2017.

A two-year investigation focused on Nike’s role as a licensor of merchandise that featured soccer clubs’ branding. EU regulators said Nike used contracts prohibiting out-of-territory sales by licensees and threatened to end agreements if licensees did not participate.

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“Football fans often cherish branded products from their favorite teams,” European Competition Commissioner Margrethe Vestager stated. “Nike prevented many of its licensees from selling these branded products in a different country, leading to less [consumer] choice and higher prices.”

The European Union’s competition rules forbid so-called geo-blocking, the use of restrictions on retailers that prevent people from buying from websites based in another member state.

Margrethe Vestager, European Competition Commissioner

The Nike merchandise in question included jerseys, scarves, mugs, bed sheets, and stationery, with logos from FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma, and the French Football Federation.

“Nike cooperated with the commission beyond its legal obligation to do so, in particular by providing the commission with information that allowed it to extend the scope of the case,” the commission said. “As a result, the investigation included ancillary sport merchandise of a number of additional clubs.”

Nike’s fine was reduced by 40% as a result of the cooperation.

Nike shares were up in morning trading but fell in the afternoon after a tweet from Michael Avenatti saying that he would hold a press conference on Tuesday to disclose a “major high school/college basketball scandal” involving Nike. The celebrity lawyer was arrested Monday on charges of trying to extort up to $25 million from Nike by threatening to reveal negative publicity.

The EU has launched similar investigations into geo-blocking by Universal Studios for merchandise related to films like Despicable Me and Minions and into Sanrio over brands like Hello Kitty.

“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,” Vestager said.