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Shellsuit billionaire Mike Ashley is under investigation by the Serious Fraud Office today, accused of price fixing and operating a sports retail cartel with former boss of JJB Chris Ronnie.
News of the SFO investigation followed the announcement that the Office of Fair Trading had launched its own inquiry after JJB chairman Sir David Jones turned in Ronnie accusing him of fixing prices with industry rivals.
The SFO said it and the OFT dawn-raided Sports Direct's headquarters in Derbyshire and JJB's in Wigan today.
The two agencies are co-operating in “an investigation into a suspected overarching agreement to dampen competition in the sports retail market”.
News of the SFO and OFT investigations is an extraordinary escalation of the venomous, mud-slinging battle between Ashley and Jones.
JJB said it has secured for itself immunity from prosecution by blowing the whistle on Ronnie. In a statement to the Stock Exchange, JJB said it had asked the OFT to conduct a probe into “a suspected cartel” and “a suspected agreement or concerted practice” to fix prices between 8 June 2007 and 25 March 2009” — the period covering Ronnie's time at JJB as chief executive.
It added that the OFT had signalled JJB “would receive full immunity from any financial penalty that would otherwise be imposed” — up to 10% of a company's turnover, in JJB's case potentially £100 million.
Sports Direct's annual retail income tops £1 billion but the revelation that the SFO is now involved is far more serious indicating that Sports Direct's management — Ashley is founder, deputy chairman and 71% shareholders — and Ronnie could face criminal prosecution and imprisonment.
The news of the SFO and OFT swoops follow a summer of extraordinary personal attacks. In the spring, Jones, who made his name running Next, sacked Ronnie just weeks after becoming chairman of JJB claiming that Ronnie had run JJB into the ground and should never have been in the job in the first place because of his friendship with Ashley.
This summer, in thinly disguised leaks from the Ashley camp, it emerged Jones had his own previously undisclosed close links with Ashley: he had received a £1.5 million loan from Ashley after he had joined the JJB board and by this summer had still not repaid it. Last month an email exchange between Jones and Ronnie emerged before the former arrived at JJB in which they discussed bidding for the company.
Ronnie made no comment. A Sports Direct statement said the company's philosophy “is to promote competition in the sports and leisure market and its record demonstrates this.”
