The Strategist

Nike gets €12.5 mln fine in Europe

03/25/2019 - 14:22

The European Commission fined the American company Nike 12.5 million euros (about $ 14 million) for a ban and restrictions on cross-border sale of licensed sports products in the Eurozone countries, reports Reuters.

"The European Commission fined Nike 12.5 million euros for the ban on selling licensed goods to other countries within the EEA. This restriction concerned sale of attributes of some of the most famous football clubs and federations in Europe for which Nike had a license," the company said.

The restrictions were related to sale of products that contain the so-called "licensed merchandise" (for example, logo of a football club or a federation that is not a Nike trademark). Companies receive a non-exclusive license for intellectual property rights, which gives them right to use these marks in the manufacture of their products.

The department explained that for 13 years, from July 1, 2004 to October 27, 2017 Nike had been restricting rights of other licensees in Europe to sell goods with such attributes to other euro zone countries, which ultimately caused damage to consumers.

"Nike introduced direct measures restricting other licensees to sell products to other countries in the euro zone, including measures to directly prohibit such sales, obligations to transfer orders for such products to Nike, and provisions establishing double license fees for such sales," the commission concluded.

Such practices of the company in varying degrees influenced the licensed goods, which depict the brands of such football clubs as Barcelona, Manchester United, Juventus, Inter Milan and Roma, as well as national federations, such as Football France.

This is not the first EC penalty for market segmentation versus a well-known company in this year. For example, in January, the international payment system Mastercard was fined 570 million euros for not allowing retailers to use more favorable conditions offered by banks in other EU countries.