Indirect Assurances and Complaints as Cartel Conduct: CAT clarifies civil standard of proof and the scope of “agreement” and “concerted practice” in JJB Sports plc v OFT

Case: JJB Sports plc v Office of Fair Trading, [2004] CAT 17
Court: UK Competition Appeal Tribunal (CAT)
Date: 1 October 2004

Introduction

This landmark judgment addresses the legal characterisation of retailer–supplier interactions as agreements or concerted practices under the Chapter I prohibition of the Competition Act 1998, and clarifies the standard of proof applicable in UK competition law appeals. The CAT reviewed OFT findings that multiple retailers and Umbro coordinated prices of England and Manchester United (MU) replica shirts in 2000 and 2001. The case engages critical issues: when supplier‑mediated “assurances” and “ring‑rounds” crystallise into infringing collusion; whether retailer complaints can amount to a concerted practice; the evidential standard for cartel findings; and the temporal scope of liability where part of the conduct pre‑dated the Act’s commencement.

Parties and roles. Umbro supplied licensed replica kit (England, MU and others). The retailers included JJB (market leader), Allsports, Sports Soccer (the whistleblower), Blacks/First Sport, JD Sports. MU and the FA also featured as licensors and, in MU’s case, as a complaining counterpart. The OFT found four infringements relevant to JJB and Allsports: (1) the “England Agreement” (Euro 2000), (2) the “MU Agreement” (1 August 2000 launch), (3) the “Continuation Agreement” (through 2001), and (4) the “England Direct Agreement” (FA/Sportsetail web prices aligned with JJB). JJB and Allsports appealed liability; Umbro and MU appealed penalty only.

Summary of the Judgment

Standard of proof: The Tribunal reaffirmed that the civil standard (balance of probabilities) applies, but given the seriousness of competition infringements, the evidence must be cogent and strong to overcome the presumption of innocence. The CAT expressly rejected importing the criminal standard; it confirmed that circumstantial evidence and inference from consistent indicia can satisfy the civil test in cartel cases.
England Agreement (Euro 2000): Appeals by JJB and Allsports dismissed. The CAT found an agreement/concerted practice: Umbro secured assurances/indications from major retailers (including JJB and Allsports) that they would sell at £39.99 and communicated those assurances reciprocally to Sports Soccer; Sports Soccer agreed to observe the “High Street price” during England’s Euro 2000 participation. Retailer complaints and Umbro’s “ring‑round” were central.
MU Agreement (1 August 2000 launch): Appeals by JJB and Allsports dismissed. A meeting on 8 June 2000 at Mr Hughes’ (Allsports) home resulted in an agreement/concerted practice among JJB, Allsports and Sports Soccer to launch MU home shirts at £39.99.
Continuation Agreement (late 2000–2001): Partially upheld. The CAT found insufficient evidence to sustain a continuation infringement for the April 2001 England home shirt launch against JJB. But it found that JJB engaged in a concerted practice regarding the MU Centenary kit (20 July 2001), by seeking and receiving from Umbro an assurance that Sports Soccer would not discount at launch.
England Direct Agreement (FA/Sportsetail web pricing pegged to JJB): The CAT allowed JJB’s appeal on liability. While acknowledging the FA–Sportsetail–Umbro price‑pegging arrangement, it held that JJB did not remain a party post‑1 March 2000 (Act commencement): JJB had withdrawn from the “loop,” did no overt acts after commencement, and the antecedent involvement pre‑dated the Act.

Legal Analysis

A. The legal framework: agreement and concerted practice

The CAT applied section 60 of the Act to interpret Chapter I consistently with EU jurisprudence:

Agreement arises from a concurrence of wills or joint intention to behave on the market in a specific way; formality or legal enforceability is unnecessary (Bayer; Anic).
Concerted practice is coordination which replaces the risks of competition with practical cooperation (Dyestuffs). It spans direct or indirect contacts that influence conduct or disclose future intentions (Suiker Unie).
Indirect disclosure suffices: Reciprocal contacts exist where one competitor discloses intentions to another who requests it or accepts it; even unilateral disclosure can create a concerted practice if it substantially reduces uncertainty (Cimenteries; Tate & Lyle).
Complaints as collusion: A competitor’s complaints to a supplier about another competitor’s pricing can constitute a concerted practice if the supplier acts on them to restrict competition (Suiker Unie; Hasselblad; Pioneer).
Passive participation: Once an undertaking has joined a single infringement, not distancing itself can amount to continued participation (Aalborg Portland), though the CAT carefully cabin‑ed this principle where the original “initiative” preceded the Act.

B. Standard of proof

Reaffirming its earlier decision in Napp, the CAT held:

The standard is civil (more likely than not), not criminal. The seriousness of the allegations does not import a criminal threshold.
Given the gravity of cartel findings, the evidence must be strong and compelling to overcome the presumption of innocence: a requirement about the quality and weight of evidence, not a higher legal standard.
Cartel activity is clandestine; documentary evidence is sparse; circumstantial evidence and cumulative indicia may suffice (Aalborg Portland); even a single convincing item can be enough in context.

The Tribunal rejected attempts to “leap across” to the criminal standard via authorities on ASBOs or sex offender orders (McCann; B v CC Avon & Somerset; Re T). It also noted practical and doctrinal reasons why criminal stardards are ill‑fitted to competition analysis (market definition, effects, 81(3)/s.9 assessments).

C. Application to the facts

1) The England Agreement (Euro 2000)

Key evidence:

Umbro’s May 2000 Monthly Management Report (MMR): “JJB, Sports Soccer, First Sport, JD Sports and Allsports have all agreed to retail their adult shirts at £39.99” following “a month of dialogue” and a decision that Umbro “cannot allow our statement product to be discounted”.
Umbro’s 2 June 2000 fax to Debenhams: “other retailers… have agreed… to take effect from opening of business Saturday 3rd June”.
Umbro’s 6 June 2000 fax to MU: assurances from Sports Soccer and JJB to “revise their current pricing of jerseys to [High Street price].”
Sports Soccer/Ashley’s 13 August 2001 statement to OFT: Ronnie said he had contacted JJB, Allsports, Blacks and possibly JD, and all agreed £39.99 for the tournament; Sports Soccer would “conform”.
Umbro’s “ring‑round”: Fellone called Blacks, JD, Debenhams, John Lewis; Ronnie called JJB and Allsports. Debenhams refused and was partly cut off from MU launch supply.

Findings: The CAT found that:

Umbro orchestrated a coordinated alignment by seeking retailers’ pricing intentions and conveying them reciprocally, thereby reducing uncertainty and inducing Sports Soccer to fall into line.
JJB and Allsports gave Umbro assurances/indications to maintain £39.99 during Euro 2000, predicated on no one undercutting; Umbro relayed these to Sports Soccer; Ronnie informed JJB/Allsports of Sports Soccer’s adherence and warned them not to undercut.
Retailer complaints, particularly from JJB (and materially Allsports), exerted commercial pressure on Umbro to “get it sorted”, i.e., stop discounting, amplifying the concerted practice analysis (Suiker Unie/Hasselblad line).

Legal characterisation: The Tribunal treated this as an agreement (concurrence of wills) or, in the alternative, a concerted practice, satisfied by indirect reciprocal disclosures via Umbro that eliminated uncertainty about future pricing (Suiker Unie; Cimenteries; Tate & Lyle).

2) The MU Agreement (8 June 2000 meeting)

Key evidence:

Private meeting at Mr Hughes’ (Allsports) home with JJB (Mr Whelan and Mr Sharpe) and Sports Soccer (Mr Ashley); arranged by Allsports to “stop discounting”.
Two Allsports memos dated 9 June 2000:
- Memo 700: “I have already told you that JJB are going at £39.99… and Sports Soccer will also do that.”
- Memo 701: “continue any necessary dialogue with JJB and Sports Soccer” (contact details supplied).
A later Umbro letter (13 July 2000) to MU referencing a “consensus” and that Umbro “even managed to get Messrs Hughes, Ashley and Whelan in the same room to agree this issue”.
Mr Ashley’s consistent evidence that he agreed to launch MU home at £39.99; that he “got the message” and had gone to the meeting in response to Umbro pressure to give in‑person assurance.

Findings: The CAT preferred Ashley’s evidence (open and corroborated) and the contemporaneous memos over later denials. It found that JJB stated that £39.99 was the “right price” and would be its price, and Sports Soccer agreed to price at £39.99 at launch. Allsports facilitated and recorded that consensus.

Legal characterisation: An agreement (and at minimum a concerted practice) to fix the launch price at £39.99. Even if only unilateral declarations were proven, Tate & Lyle would characterise attendance and receipt of pricing intentions as concerted practice.

3) The Continuation Agreement (2000–2001)

England home launch (April 2001): The CAT found the evidence insufficient to prove JJB’s participation. While Umbro/Sports Soccer had a price‑fixing arrangement and JJB maintained High Street prices, the record lacked specific pressure or assurances by JJB linking to the April 2001 launch, and an Umbro file note about discounting in a Carlisle store was ambivalent.

MU Centenary launch (20 July 2001): The CAT found a concerted practice. JJB cancelled 40,000 Centenary shirts (1 June 2001) amid anger that Umbro had sold MU home shirts to Sports Soccer at clearance prices. In subsequent meetings (8 and 15 June) JJB asked for and received assurance from Umbro that Sports Soccer would not discount “for the first few weeks” of the Centenary launch (Ronnie/Fellone evidence). That indirect disclosure reduced uncertainty about Sports Soccer’s future conduct, satisfying a concerted practice, and contributed causally to JJB’s reinstatement of the order.

4) The England Direct Agreement (FA/Sportsetail web price pegging)

The CAT held the FA–Sportsetail (with Umbro) had an arrangement to peg web prices to JJB’s. However, as regards JJB:

JJB’s involvement in discussions and the FA letter (7 February 2000) pre‑dated the Act’s commencement.
JJB quickly withdrew from the supply “loop” (11 February 2000), and no post‑commencement overt acts were found.
Although JJB had passive knowledge (e.g., Sportsetail’s 29 March 2000 fax) that the FA was still pegging prices, the Aalborg Portland principle of passive continuation was not applied to antecedent lawful involvement under the Act.

Accordingly, liability against JJB was not made out.

D. Precedents and their influence

Dyestuffs: Defined concerted practice as coordination replacing competition risks; foundational for non‑contractual collusion.
Suiker Unie: Prohibited direct or indirect contacts that influence market conduct or disclose future intentions; critical for finding that supplier‑mediated exchanges and complaints are concerted practices.
Anic: Agreement vs concerted practice are not mutually exclusive; the Tribunal freely characterised the same conduct under either limb.
Bayer: Agreement centres on concurrence of wills regardless of legal enforceability; helped treat retailer “assurances” as agreements.
Cimenteries: Reciprocal contacts exist where one discloses intentions and the other accepts; unilateral disclosure reducing uncertainty suffices; maps onto Umbro’s ring‑round and confirmatory communications.
Tate & Lyle: Attendance and receipt of future pricing information at competitor meetings constitutes infringement; underpinned the MU home meeting analysis.
Pioneer (Musique Diffusion): Continuation of a practice may be inferred; used cautiously here, given the pre‑Act timing.
Hasselblad; Dunlop Slazenger: Complaints channelled through a supplier and acted upon amount to concerted practice; directly applied to retailers’ pressure on Umbro.
Aalborg Portland: Acknowledged clandestine nature of cartels and permitted reliance on circumstantial evidence; supported CAT’s evidential approach. Also cited for passive participation, though the CAT limited its application in the England Direct timing scenario.

E. Legal reasoning distilled

Supplier‑mediated collusion: Where a supplier elicits retailers’ pricing intentions and reciprocally assures other retailers, that triangular flow of information constitutes an agreement or concerted practice. The lack of direct retailer–retailer contact is immaterial if uncertainty is removed indirectly.
Complaints as concerted practice: Retailers’ sustained complaints and implied threats to a supplier—if acted on to restrain a rival—render the complaining retailer a party to a concerted practice, even without explicit threats.
Market context matters: The MA/Euro 2000 launches were genuine “key selling periods”; the evidence of “High Street prices,” RRPs, and the practicalities of launch pricing and retailer margins supplied the necessary economic context to infer collusion from cumulative indicia.
Evidence evaluation: The CAT navigated inconsistent witness statements by privileging contemporaneous documents (MMRs, faxes, memos) and testimony corroborated by those records, while accepting that leniency statements made in haste may lack precision.
Temporal limits: Liability cannot be imposed for pre‑Act collusion; the CAT required post‑commencement conduct or passive continuation tied to an earlier unlawful initiative; it declined to stretch passive participation where the initiative pre‑dated the Act.

Impact and Practical Significance

1. Doctrinal clarifications

Indirect channels suffice: Retailers that reveal pricing intentions to suppliers—and accept supplier assurances about rivals—can form an infringing agreement/concerted practice, even absent direct competitor contact.
Complaints are risky: Persistent retailer complaints that press a supplier to discipline a discounting rival can amount to concerted practice if the supplier acts on them.
Standard of proof settled: The civil standard governs UK competition appeals; strong, coherent circumstantial evidence is sufficient; no criminal standard creep.
Continuity needs care: “Passive continuation” doctrine (Aalborg) is not automatic where the initial initiative precedes the statutory regime; liability will turn on post‑commencement acts or qualified passive complicity.

2. Enforcement and compliance

Compliance risk for retailers and suppliers: Avoid seeking or giving “assurances” about launch pricing; do not solicit, share, or accept information on competitors’ future prices—directly or via suppliers.
Complaint protocols: Complaining to a supplier about a rival’s discounting, coupled with implied commercial pressure, can be enough for a concerted practice finding if the supplier acts to suppress competition.
Document hygiene: MMRs, internal memos, and faxes can be dispositive. Leniency statements must be carefully prepared; inconsistencies will be weighed against contemporaneous records.
Temporal diligence: Where conduct straddles legal regimes, firms must consider withdrawal and explicit distancing if a pre‑commencement practice continues; silence may not always shield them.

Complex Concepts Simplified

Agreement: A mutual understanding to act in a particular way in the market. No need for a contract; a “meeting of minds” suffices.
Concerted practice: Any coordination replacing competition risks—such as exchanging future pricing intentions—whether or not there is a formal agreement.
Indirect contact: Sharing future pricing intentions via a supplier (who relays them) can amount to a concerted practice; direct competitor contact is unnecessary.
Complaints‑as‑collusion: Complaining to a supplier about a rival’s discounts—and the supplier acting on it—can make the complainant part of a concerted practice.
Civil standard of proof: “More likely than not,” but in serious cases the evidence must be particularly cogent and convincing; circumstantial and documentary evidence can suffice.
Passive participation: Remaining silently involved in a cartel can sustain liability; but the CAT limited this where the initial “initiative” pre‑dated the Act.

Conclusions

This decision is a foundational UK authority on how supplier‑mediated “assurances” and retailer complaints can constitute agreements or concerted practices under the Chapter I prohibition. The CAT synthesised EU jurisprudence to hold that:

Indirectly exchanging future pricing intentions via a supplier can remove market uncertainty and infringe, even without direct competitor contacts.
Sustained retailer complaints that prompt supplier action to restrain a discounting rival can incriminate the complainer as part of a concerted practice.
The civil standard of proof applies, but cogent, cumulative evidence—often circumstantial—will ground cartel findings.

On the facts, the Tribunal upheld OFT findings that JJB and Allsports participated in the Euro 2000 England price‑fixing and in the MU launch price‑fixing in June–August 2000; it found a narrower continuation infringement against JJB for the MU Centenary launch; and it set aside JJB’s liability for the England Direct web price‑pegging because its involvement pre‑dated the Act and lacked post‑commencement conduct.

For competition compliance, the case is a clear warning: do not ask for, disclose, or accept future pricing assurances—directly or through suppliers—and treat complaints about rivals’ prices as a potential cartel vector. For evidential practice, it confirms that tribunals will rely on contemporaneous business records and credible, corroborated witness testimony to reconstruct clandestine cartel activity.