On 25 March 2019, the European Commission ("Commission") announced its decision to fine Nike € 12,555,000 for limiting the ability of licensees to sell licensed merchandising products to other EEA countries. According to the Commission's press release, the restrictions concerned the merchandise products of certain European football clubs and federations (FC Barcelona, Manchester United, Juventus, AS Roma, Inter Milan and the French Football Federation are named by the Commission). Nike acted as a licensor with respect to these products, which feature only the brand of the club or federation; the restrictions did not concern Nike-branded products.
According to the Commission's press release, the Commission found that Nike's non-exclusive licensing and distribution agreements contained a number of restrictions which led to the partitioning of European markets. Specifically, Nike was found to have:
- Imposed direct measures restricting out-of-territory sales by licensees. Such measures included clauses explicitly prohibiting out-of-territory sales, obligations to refer orders for out-of-territory sales to Nike and clauses imposing double royalties for out-of-territory sales;
- Enforced indirect measures designed to implement the out-of-territory restrictions, including by refusing to supply "official product" security holograms, threatening licensees with ending their contract if they sold out-of-territory or carrying out audits;
- Imposed direct and indirect measures on master licensees (where Nike used master licensees in order to grant sub-licenses for use of the relevant intellectual property rights to third parties) to ensure that master licensees stayed within their territory and compelled master licensees to enforce restrictions against their respective sub-licensees;
- Included clauses expressly prohibiting licensees from supplying merchandising products to (often retail) customers who could be selling outside their allocated territories. Nike both obliged licensees to pass on out-of-territory sales prohibitions in their contracts and intervened to ensure that retailers did not purchase products from licensees in other EEA territories.
The infringement lasted nearly 13 years (between 1 July 2004 and 27 October 2017).
The fine imposed on Nike was substantially reduced based on the extent of its cooperation with the Commission during the investigation, which went beyond what was legally required of Nike. In particular, Nike provided the Commission with information permitting it to extend the scope of the case to include the sports merchandise of a number of additional clubs. Nike also provided evidence of significant added value and expressly acknowledged the facts and infringements in question. As a result, Nike was granted a 40% reduction of the fine.
Nike is the sixth company to have been fined by the Commission for restrictions in vertical agreements since July 2018, and in all of these cases substantial reductions in the fine have been granted under the Commission's informal "cooperation procedure". Three of the six cases have involved, at least in part, restrictions on cross-border sales, although this may be the only case to have concerned restrictions on licensees. The case is further evidence of the priority being given by the Commission to vigorous enforcement in the area of vertical agreements after many years of inactivity.
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