JJB Sports Plc and Sports Direct International are being investigated by the U.K.'s Serious Fraud Office in conjunction with the Office of Fair Trade (OFT) over allegations of price fixing and fraud. In a statement, JJB said the investigation related to an “agreement or concerted practice to dampen competition in the sports retail market” from June 2007 through March 2009.


The investigation was triggered after JJB blew the whistle on suspected cartel activity in January in a bid to seek immunity. Last Thursday the offices of JJB and Sports Direct were raided as part of the investigation. JJB said the investigation covers a period when former CEO Chris Ronnie was in charge.


JJB would not comment further on the activities under investigation, but people familiar with the matter told The Financial Times that the OFT was looking at the sale of 31 stores by JJB to Sports Direct. A Competition Commission probe has already ruled that the sale raised antitrust issues, resulting in a ruling that Sports Direct should sell five of those stores. But one person close to the situation told FT that the current probe was far wider-reaching than focusing on only those deals.
JJB said in a statement, “The directors take seriously JJB's obligations under UK competition law and, since approaching the OFT, the company has worked closely, and continues to co-operate fully, with the OFT and all aspects of its investigation.” JJB said it will have immunity from any fine of up to 10% of sales or any criminal prosecution resulting from price-fixing charges if they arise. It is not clear whether that immunity also applies to any potential fraud charges.


Sports Direct in its own statement said the investigation referred to “a suspected over-arching agreement to dampen competition in the sports retail market,” and likewise said it would cooperate with the investigation.


Ronnie, through a statement from his lawyer, also denied any malpractice. He said: “I am disappointed that I have been singled out in JJB's announcement today. I have never taken part in any anti-competitive behavior.”  Ronnie is a long-time friend of Mike Ashley, the owner of Sports Direct and Newcastle United Football Club, and used to work alongside Ashley at Sports Direct. He was ousted from JJB in March 2009 for “gross misconduct,” JJB said at the time without providing further details. Ronnie had been suspended in January, when JJB began probing liquidators' seizure of his shares in a transaction linked to a failed Icelandic bank.