Police raid Sports Direct after JJB blows the whistle

JJB spills the beans on price-fixing in sportswear retail - leading to a raid on rival Sports Direct.

Last Updated: 06 Nov 2012

The ongoing spat between JJB Sports and Sports Direct has taken another twist: JJB said yesterday that it had admitted to being part of a price-fixing cartel along with Sports Direct last year, when former boss Chris Ronnie was at the helm. Apparently JJB first confessed to the Office of Fair Trading back in January – soon after Sir David Jones joined the board – and has since been granted immunity in return for full co-operation. And the investigation seems to be gathering pace: the Serious Fraud Office has just raided both firms looking for evidence. Sports Direct has protested its innocence (as has Ronnie) – but whatever happens, this isn’t going to make relations between the two rivals any more cordial…

The timing of JJB’s confession – on January 30 this year – does point to the influence of Jones, who signed up only a few weeks earlier. Apparently the OFT is probing a ‘suspected agreement or concerted practice to dampen competition in the sports retail market’, and although the full investigation could take years, it told JJB last month that it would be given immunity from any financial penalties, as long as it played ball (which is handy, given its recent financial woes). From its point of view, this will be quite a relief.

However, the involvement of the SFO – which says that it’s investigating ‘suspected offences under the Fraud Act and the Enterprise Act’ – suggests that the situation could get serious for Sports Direct. Ashley’s retailer has naturally denied any wrongdoing, protesting that its ‘philosophy is to promote competition’ (and there were us thinking it was: ‘to flog as many cheap trainers and t-shirts as possible’). Ronnie also denies that he was party to any price-fixing – and given the kicking his reputation has had lately, he won’t want another black mark against his name.

Despite being competitors on the high street, JJB and Sports Direct have strangely close ties. The latter’s boss Mike Ashley is a big JJB shareholder, while Ronnie used to be his right-hand man. So the idea that the two men got together to talk business after the latter took the JJB gig is plausible, to say the least. However, the relationship between the two companies has since got even more complicated – Ronnie was sacked earlier this year after it emerged that he’d used his shares in the company to secure a loan from Kaupthing, while bizarrely, it turns out that Jones owes another hefty pile of cash to Ashley.

Clearly there’s more to come on this latest saga – and it spells trouble for both sides. It’s only six months since JJB escaped administration, and however much it might try to pin this all on Ronnie, this will be another blow to its reputation. And we suspect that Ashley won’t be lending Jones any more cash for a while, either...

In today's bulletin:

Row erupts as Rover enquiry slams directors - but clears Government
Wetherspoon still merry after record sales
Police raid Sports Direct after JJB blows the whistle
Fears mount for Vauxhall as GM picks Magna
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