Price matching rights were the subject of a recent dispute between Rangers Football Club and Sports Direct. They typically allow an incumbent supplier to match an offer that its customer has obtained from a competing supplier. For incumbent suppliers, such rights can be very valuable – but customers may find themselves locked into using a supplier for longer than is ideal. Price matching clauses also require careful drafting and can sometimes raise competition law and confidentiality issues.
What happened in the Rangers case?
In 2017, Rangers appointed Sports Direct as its exclusive retailer for Rangers-branded merchandise at its ground and on the Rangers webstore. It also granted Sports Direct the right to manufacture and distribute Rangers merchandise more widely, but on a non-exclusive basis. As no other supplier had been appointed, Sports Direct had de facto exclusivity in relation to these rights.
Rangers was permitted to approach alternative suppliers during the six month period prior to expiry of the initial term of the agreement on 31 July 2018. However, crucially, Sports Direct had a right to match any offer which Rangers obtained. If Sports Direct could match the offer, Rangers was prohibited from entering into a contract with the new supplier.
The price matching dispute
In June 2018, Rangers offered Sports Direct the opportunity to match an offer obtained from another supplier, Elite. Sports Direct argued that it had not been given sufficient information about this offer to exercise its matching right effectively. It obtained an injunction preventing Rangers entering into a contract with Elite until the dispute had been resolved.
Subsequent attempts to settle the dispute failed and, on 11 September 2018, Rangers notified Sports Direct that it had entered into a nonexclusive agreement with Elite, based on a revised offer. In a further attempt to enforce its price matching right, Sports Direct brought additional court proceedings. Among other things, Rangers argued that:
- it was only intended that Sports Direct should have one opportunity to price match – which it had effectively "used up" by failing to match Elite's initial offer to Rangers' satisfaction; and
- given its non-exclusive rights, it could not have been intended that Sports Direct should be able to block the appointment of a new supplier by repeatedly exercising its price matching right.
The court's view
The court preferred to concentrate on the wording of the clause itself. It concluded that the price matching right was capable of applying more than once – and that Sports Direct could continue to exercise it at any point up to 2 years from expiry of the initial term of its agreement with Rangers. In practice, this meant that Sports Direct could maintain its de facto exclusivity, provided it could match any offers that Rangers obtained from another supplier during that period. Among other things, the court granted an injunction preventing Rangers from performing the agreement with Elite.