Two sportswear chains in fraud probe - Business News - Business - The Independent

Two sportswear chains in fraud probe

Two major sportswear chains were at the centre of a fraud investigation today.

JJB Sports and Sports World owner Sports Direct International are being investigated by the Serious Fraud Office (SFO) after a referral from the Office of Fair Trading (OFT) competition watchdog.

JJB said earlier today that it had blown the whistle to the OFT on alleged cartel activity in the sports retail market.



Sports Direct is controlled by billionaire founder Mike Ashley, who is also the owner of Championship football club Newcastle United.

Between them Sports Direct and JJB have leading positions in the market for replica football shirts and sportswear - where sales are set to be boosted by England's qualification for next year's World Cup.

An SFO spokeswoman said: "The SFO can confirm it is investigating the activities of JJB Sports and Sports Direct International.

"The investigation is into suspected offences under the Fraud Act and the Enterprise Act."

The SFO, which declined to say whether any arrests had been made so far, is carrying out its investigation in parallel with a separate OFT probe.

The OFT said it had raided two properties today "as part of an investigation into alleged anti-competitive conduct".

JJB approached the OFT on January 30 over a "suspected agreement or concerted practice to dampen competition in the sports retail market" between June 8 2007 and March 25 this year - the period that former chief executive Chris Ronnie was at the business.

Mr Ronnie, a friend of Mr Ashley, bought founder Dave Whelan's stake in the Wigan-based retailer in 2007 with Icelandic investor Exista.

But he used the shares as security against the £190 million loan from Icelandic bank Kaupthing for the deal.

He was sacked in March after it emerged his 27.5 per cent stake in the business had been seized by administrators when the Icelandic bank collapsed.

JJB Sports, which said the investigation could take "a number of years", was granted a marker by the OFT in August giving it full immunity from any financial penalties of up to 10 per cent of turnover.

In return for the immunity, JJB must cooperate fully with the OFT, withdraw from any further participation in the alleged cartel and pledge not to act in bad faith.

The competition inquiry puts JJB back in the spotlight less than six months after the company managed to stave off administration with a last-minute rescue deal.

Mr Ronnie's departure has been acrimonious after JJB executive chairman Sir David Jones put the entire blame for the woes of the business on his shoulders at the group's annual results in May.

Sir David said JJB suffered after Mr Ronnie pursued a strategy to try to take market share from rivals JD Sports and Sports Direct - and hit sales by trying to emulate Sports World owner Sport Direct's discount policy.

In a round of interviews last month, Mr Ronnie said he felt "betrayed" by Sir David and he alone was carrying the can for decisions made by the board.

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