ACCC institutes legal action against FILA for AFL licensed apparel policy

The Australian Competition and Consumer Commission has today instituted legal proceedings in the Federal Court against Fila Sports Oceania Pty Ltd for the implementation of a selective distribution policy in relation to the supply of Fila's AFL licensed apparel to retailers.

The ACCC has alleged that Fila's conduct in implementing this selective distribution policy contravened a number of provisions of the Trade Practices Act 1974 - namely section 47 which prohibits certain types of exclusive dealing and section 46 which prohibits corporations with substantial degree of power in a market from taking advantage of that power to eliminate or substantially damage a competitor or to deter and prevent a person from engaging in competitive conduct.

The ACCC has also taken action against the current and former managing directors of Fila, Mr Craig Reidy and Mr David Carney, for their alleged involvement in the formulation and implementation of the policy.

Fila is the Australian subsidiary of Fila Holding S.p.A., an Italian based clothing manufacturer, with operations in over 20 countries and a worldwide sales turnover of approximately 1 billion EUR ($1.7 billion AUD).

In Australia, Fila operates as a wholesale supplier of both leisurewear and sportswear and also operates a number of Fila retail stores. In addition to being a major sponsor of the Adelaide Crows, Essendon Bombers, Geelong Cats, Melbourne Demons and Western Bulldogs, Fila is also the AFL's official supplier of on-field and licensed supporter wear for these teams.

In its action the ACCC has alleged that Fila implemented a selective distribution policy in late 1999 to only supply clothing retailers with Fila AFL licensed apparel on condition that these retailers agreed not to stock AFL licensed apparel from Fila’s competitors.

The ACCC commenced an investigation of Fila's conduct after complaints from a number of Fila's competitors, who had previously complained to the AFL, about the effect that Fila's selective distribution policy was having on their business.

The ACCC has claimed that the policy was in place on a national basis for a period of approximately 19 months, during which time, Fila withdrew its supply of Fila AFL licensed apparel from a number of major retailers who did not agree to embrace Fila’s policy and decided to stock Fila’s competitors products, primarily Vivid and Burley Sekem.

In August 2001, Fila agreed (on a without admission basis) to the ACCC's request that it suspend the selective distribution policy and provide written advice to over 400 of its retail customers that the policy had been suspended.

The ACCC is seeking a range of remedies against Fila and the individuals, including:

• pecuniary penalties

• declarations that the selective distribution policy contravened the Act

• injunctions preventing Fila from engaging in similar conduct in the future

• findings of fact

• an order requiring Fila to update its existing trade practices compliance program.

A directions hearing has been set down for 4 October 2002 in the Federal Court, before Justice Hill.