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Court of Appeal upholds OFT decisions in price fixing cases

149/06    19 October 2006

The Court of Appeal has found in favour of the OFT in three linked cases relating to price fixing in the toys and games market and in the supply of replica football kit. This is the first time the Court of Appeal has ruled in cases of this nature under the Competition Act 1998.

The Court of Appeal dismissed in full both Argos and Littlewoods' appeals against liability for their part in price fixing certain toys and games. Similarly the Court of Appeal dismissed in full JJB Sports' appeal against liability for their price fixing conduct in relation to replica football kit. The appeals by Argos, Littlewoods and JJB on the amount of penalties each was respectively given by the Competition Appeal Tribunal were also dismissed.

The judgment provides welcome confirmation of the OFT's approach as to the types of behaviour by retailers and suppliers which are illegal under the Competition Act 1998 and clarity on the way in which penalties for infringements of the Competition Act should be considered and imposed. Argos, Littlewoods and JJB are liable for substantial penalties: Argos is liable for a penalty of £15 million, Littlewoods has a penalty of £4.5 million and JJB is liable for a penalty of £6.7 million.

John Fingleton, OFT Chief Executive, said:
 
'This is great news for the consumer. Anti-competitive agreements between firms to fix prices substantially harm customers. The OFT is determined to detect and punish those that are involved in agreements such as this and this judgment confirms our approach.'
 
NOTES

1. The Competition Act 1998 came into force in March 2000. The Act prohibits anticompetitive behaviour which includes agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition within the UK (or any part of it) and which may affect trade within the UK (or any part of it) (the Chapter I prohibition). Such prohibited behaviour includes agreements or concerted practices to fix prices.

2. The OFT issued its decision which found that Hasbro, Argos and Littlewoods had been involved in price fixing and imposed substantial penalties on Argos (£17.28 million) and Littlewoods (£5.37 million) on 21 November 2003. No penalty was imposed on Hasbro due to a successful appeal for leniency. Argos and Littlewoods appealed to the Competition Appeal Tribunal (CAT) against the finding of liability and the imposition of the penalty. The CAT rejected the appeal on liability though it partially reduced the penalty to £15 million for Argos and £4.5 million for Littlewoods. Both parties subsequently appealed to the Court of Appeal.

3. The OFT decision that JJB Sports (among other parties) had engaged in price fixing of Umbro replica football kit was made on 1 August 2003. JJB Sports was fined £8.37m. JJB then appealed the OFT's decision to the CAT against the finding of liability and the penalty. The CAT substantially upheld the OFT's decision but reduced the fine to £6.7m. JJB subsequently appealed to the Court of Appeal.

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