Tribunal setback for Mike Ashley
SPORTS Direct had ‘no legitimate’ reason to expect Newcastle United to continue selling the club’s new shirts in the shops of Mike Ashley.
That is the verdict of a Competition Appeal Tribunal (CAT) panel after the retailer’s request for an injunction to prevent Newcastle selling their new Adidas kits through rival JD Sports was rejected.
Sir Marcus Smith, the CAT president, and fellow panellists Carole Begent and Dr William Bishop unanimously refused the application for ‘interim injunctive relief’.
The tribunal ruled that an interim injunction, if granted, would throw ‘a substantial spanner’ in the ‘delicate and complex’ restructuring of Newcastle’s replica kit business after the Magpies terminated their deal with Castore to team up with Adidas this summer. The panel went on to say that the revenues anticipated from the venture, over time, were likely to be ‘considerable’ and that Newcastle were ‘right to be concerned at the significant disruption that would occur’ were a temporary injunction granted.
“Sports Direct pleads that it ‘had every expectation that this supply would continue from Castore, or any successor’...we consider that there was no reasonable or legitimate expectation on the part of Sports Direct of continuity of supply from Castore,” an excerpt from the judgement read. “To suggest that there was some obligation on Newcastle United FC and Adidas to ensure in their arrangements that supply to Sports Direct be maintained over time represents a significant fetter on competition, not an enhancement of it.
“The contention is that an undertaking that ‘operates the largest network of sports retail stores in the UK’ is entitled to a guaranteed future supply. We do not consider that proposition, on the facts as we have articulated them, to be arguable.”
It is unlikely to be the end of the matter. The written judgement noted that ‘this refusal makes a speedy trial more, and not less, urgent’ and there were a number of references to the prospect of future proceedings at the initial hearing. Tony Singla, representing Sports Direct, told the tribunal that Newcastle would have to explain ‘with precision’ why they had chosen JD to the ‘exclusion’ of Sports Direct.