Nike pays 12.5 million euro fine for trade restrictions

   The European Commission this week fined Nike 12.5 million euros (about $14 million) for previously restricting traders from selling certain licensed merchandise to other countries within the European Economic Area, which included non-EU members.
   Specifically, Nike’s licensing restriction covered numerous products related to some of Europe’s top football clubs, such as FC Barcelona, Manchester United, Juventus, Inter Milan and AS Roma and national federations like the French Football Federation.
   “Football fans often cherish branded products from their favorite teams, such as jerseys or scarves. 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 EC Commissioner Margrethe Vestager in a statement. “This is illegal under EU antitrust rules.”
   Through a licensing agreement, a licensor — in this case Nike — allows a licensee to use one or more of its intellectual property rights (IPRs) involving a certain product. “Licensors typically grant nonexclusive licenses to increase the number of merchandising products in the market and their territorial coverage,” the EC explained.
   Nike is a leading designer and seller of athletic footwear and apparel to the EU’s football clubs and federations, which generally feature the company’s registered trademarks, such as its name or “Swoosh” logo. 
   The EC noted that “licensed merchandise” feature the brands of a football club or a federation, not Nike’s trademarks. For these products, Nike acts as a licensor of IPRs that grants licences to third parties, who can then manufacture and distribute those products. “It is in the context of Nike’s role as a licensor for the manufacture and distribution of these licensed merchandise products that the commission is imposing a fine,” the EC said.
   According to the EC, Nike illegally restricted traders from selling licensed merchandise cross-border and online across Europe. The company allegedly threatened to cancel contracts with those merchandisers to enforce the restrictions.
   The EC’s antitrust regulators started their investigation into Nike’s licensed merchandise controls in June 2017. The commission said the illegal practices were in place from 2004 to 2017. However, since Nike fully cooperated with investigators, the EC said it reduced the company’s fine by 40 percent.
   In June 2017, the EC initiated similar investigations against Sanrio and Universal Studios, which remain ongoing.