The Competition Appeal Tribunal (CAT) has refused Sports Direct’s bid to secure an injunction which would force Newcastle United to supply the retailer with next season’s kit.
The dispute stems from Newcastle’s decision to enter an exclusive partnership with rival sportswear retailer JD Sports, which they claim breaches competition laws.
Sports Direct, who were founded by former Newcastle owner Mike Ashley, were seeking £1.5million ($1.9m) in damages and an injunction which would order the club to provide a supply until any court resolution is reached.
However, the three-person tribunal panel ruled unanimously to refuse the injunction, citing Sports Direct’s failure to “show there is a serious issue to be tried”, meaning they did not feel compelled to take interim action.
The parties will now go to trial in order to resolve the dispute, with Sports Direct wanting the case to be heard by June 7, when Newcastle’s home strip is due to be launched.
GO DEEPER
Along came Mike Ashley
Sports Direct was founded by former Newcastle owner Ashley in 1982, with the 59-year-old still holding a 70 per cent stake in the company.
Ashley’s ownership of Newcastle was acrimonious, with his 14-year reign hallmarked by fan protests over a perceived underinvestment in the club. Ashley sold Newcastle to a consortium led by Saudi Arabia’s Public Investment Fund (PIF) for $415 million (£305 million) in October 2021.
Sports Direct, represented by Tony Singla KC, told a three-judge panel headed by Mr Justice Marcus Smith KC that “the anticompetitive effect is that you are excluding entirely from the relevant market the retailer that offers consumers the lowest prices”.
Singla claimed that the absence would “distort the retail market” and “have an impact on the competitive level”, meaning customers would be likely to desert the discount chain and shop at other higher-priced stores.
Ashley (left) sold Newcastle in 2021 (Marc Atkins/Getty Images)
Representing Newcastle, Thomas de la Mare KC told the tribunal that “there is a wealth of evidence which shows that there are a series of pro-competitive reasons behind the reorganisation of the (selling) structures in question”.
The club’s argument is that by selling their kit through three primary retailers — the club itself, manufacturers Adidas, and an exclusive agreement with JD Sport — there is “no evidence that there will be any impact on competition”, citing similar arrangements in place at Leeds United, Leicester City, and with the Scottish and Welsh FA’s.
Newcastle have taken the club store back under their wing as they seek to drive commercial revenue, having previously been operated by existing kit manufacturer Castore. Chief commercial officer Peter Silverstone said in his witness statement that an injunction would “kill off our retail operation”, which Singla described as “completely wrong”.
Summarising, Justice Smith wrote that: “We do not consider the proposition that a refusal by a dominant undertaking (Newcastle United) to supply another undertaking (Sports Direct) gives rise to an arguable case of abuse without some further allegation or averment.”
According to the panel, the reasons for this were threefold: that “there is a potential fragility in Sports Direct’s supply chain that has nothing to do with Newcastle United FC”, that “the new owners of the dominant undertaking were entitled to revisit the supply arrangements for NUFC Replica Kit”, and finally that there was no obligation on Newcastle United to continue their supply based on Sports Direct’s dominant position in the market.
Justice Smith concluded that: “We consider that this refusal makes a speedy trial more, and not less, urgent.”
Newcastle United and Sports Direct have been contacted for comment.
(Serena Taylor/Newcastle United via Getty Images)
