Nike’s European Distribution Subject of New Competition Probe

The European Commission is cracking down on companies that may be restricting cross-border sales with distribution agreements.

Nike is facing a probe by the European Commission into whether its licensing and distribution practices block sales by some retailers in the European Union.

European Commissioner for Competition’s Margrethe Vestager said the newly launched investigation revolves around whether Nike has worked to restrict cross-border and online sales of its goods in the region.

Sanrio, the maker of Hello Kitty, and Universal Studios, which owns the rights to the “Minions” and “Despicable Me” movies that have launched a popular line of toys and merchandise, are the subjects of similar investigations, according to the commission.

“We are going to examine whether the licensing and distribution practices of these three companies may be denying consumers access to wider choice and better deals in the single market,” Vestager said.

The EU’s “single market” is meant to encourage unrestricted trade and increase competition among the 28 member states, and companies such as Nike and Sanrio limiting the rights of licensees to sell goods to other countries or online is not allowed.

Such practices ultimately limit consumers’ choice by making it harder to buy goods in other member states and likely make for more expensive goods, according to the commission.

“These practices may ultimately harm consumers by preventing them from benefiting from greater choice and lower prices, both online and off-line,” the commission said.

A Nike spokesman said the company is “aware of the European Commission’s investigation and will work to cooperate with the authorities.”

A representative of Sanrio and Universal could not be reached immediately for comment.

There is no deadline for bringing an antitrust investigation to an end in the EU.

The investigations stem from the commission’s recently completed two-year probe of the e-commerce sector as a whole, which found an increased use of “selective distribution systems” that allow companies to control quality but also price, along with pricing restrictions and marketplace bans.

While the commission admitted when it released a May report on the findings that some of these practices “may be justified,” it said others may “unduly prevent” greater product choice and lower prices and warrant enforcement of EU competition rules.

The investigation of Nike and Sanrio comes about one week after the commission launched a similar inquiry into Guess.

Vestager said last week that information indicated Guess banned cross-border sales to consumers in its distribution agreements with retailers and wholesalers and that the investigation will “ensure [Guess] is playing by the rules.”

Guess executives have cited increased sales in Europe as central to the brand’s growth over the last several quarters.