Nike Faces Fine for Blocking Sales of Soccer Items in Other Countries

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. enter into (something) / ˈɛntɚ ˈɪntu / (phrasal) – to join or become involved in something

    The company entered into a deal with a new supplier.

  2. distinguished / dɪˈstɪŋgwɪʃt / (adj) – well-known

    Our aim is to be one of the most distinguished companies in the world.

  3. deprive of / dɪˈpraɪv ʌv / (phrasal) – to not allow someone to have something or to take something away

    The company makes sure not to deprive employees of opportunities for growth.

  4. factor in (something) / ˈfæktɚ ɪn / (phrasal) – to consider something before making a decision

    Some customers factor in brand names when choosing products to buy.

  5. severity / səˈverəti / (n) – the seriousness of something unpleasant

    The company had to pay a large fine because of the severity of its violations.


Read the text below.

The European Commission (EC) has fined Nike for limiting the sale of licensed soccer merchandise across the European Economic Area (EEA).

The commission required Nike to pay a fine of over €12 million for violating Article 101 of the Treaty on the Functioning of the European Union (TFEU). The article forbids companies from entering into deals that limit or control the manufacture or sale of products in countries covered by the EEA.

Nike’s violations of the treaty are related to selling merchandise for distinguished soccer clubs like Manchester United and FC Barcelona. According to the EC’s investigation, Nike prevented licensed distributors from selling items, such as mugs and bags, to other countries. The company’s other violations include requiring sellers to refer customers from other countries directly to Nike and threatening distributors of contract termination if they sell the licensed items in other countries.

Such actions deprived customers of a wider option of products to buy and made the items’ prices higher.

In deciding the disciplinary action for these violations, the commission used its 2006 guidelines on fines as its legal basis. The EC factored in the money made from Nike’s unfair practices, the severity of the violations, and the fact that the practices went on for almost 13 years. However, the fine was reduced by 40% because Nike cooperated with the EC’s investigation.

The EC began investigating Nike’s unfair business practices in June 2017 in hopes of discouraging businesses that restrict sales to other countries. In doing so, the EC ensures that consumers can get the products they want at affordable prices.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

• How do you think the investigation results will affect Nike’s business practices?
• How do you think customers will react to the investigation results?

Discussion B

• What do you think are the benefits of selling products in other countries? Explain.
• What are the possible risks of selling products in other countries? Discuss.