SportsDirect.com Retail Limited v Newcastle United Football Club Limited & Anor

On an application for interim injunctive relief, the claimant’s pleaded and evidenced primary facts must be accepted unless plainly false or fanciful. The court must not exclude disputed facts or resolve conflicts of evidence or law at that stage. Under the American Cyanamid framework, a serious issue permits consideration of damages and the balance of convenience.

Even where there is a serious case to be tried and damages would be inadequate for both parties, the balance may favour refusal. The court may weigh the strength of the case, commercial disruption, the proper current position between the parties, and the complexity of enforcing the proposed order. A speedy trial may appropriately mitigate the loss caused by refusing interim relief.

Sports Direct sought a mandatory interim injunction requiring Newcastle United to continue supplying replica football kit for resale. It alleged that the withdrawal of supply and new exclusive arrangements breached the Chapter I and Chapter II prohibitions in the Competition Act 1998.

The Competition Appeal Tribunal dismissed the application. It held that there was no serious case to be tried, but also considered damages and the balance of convenience and directed a speedy trial. Sports Direct appealed in an expedited rolled-up hearing. The central issues were whether the Tribunal had applied the correct approach to the serious-issue threshold and whether its refusal of interim relief should stand.

1. Permission to appeal was granted, but the appeal was dismissed. The court held that the Tribunal had erred in finding that Sports Direct had no serious case to be tried. That error did not undermine its discretionary conclusion on the balance of convenience.

2. Under American Cyanamid, the court must accept the claimant’s pleaded and evidenced primary facts unless they are plainly fanciful. It must not resolve factual conflicts or difficult legal questions, and it must not disregard contested material. The Tribunal therefore wrongly excluded disputed evidence concerning the former supply arrangements and effectively assumed that Newcastle United’s case on the relevant status quo would succeed at trial.

3. On Sports Direct’s assumed case, it was arguable that withdrawal of supply from an existing retailer had a material adverse effect on competition and could establish breaches of both statutory prohibitions. The court did not decide the competing legal standards for abuse of dominance. That issue was for trial. The serious-issue threshold was accordingly crossed.

4. Damages would not adequately compensate Sports Direct for difficult-to-quantify loss of future and repeat custom. Nor would an undertaking in damages adequately compensate Newcastle United if an injunction wrongly disrupted its new arrangements with Adidas and JD Sports. The balance of convenience therefore governed the result.

5. The Tribunal was entitled, when conducting that balance, to regard Sports Direct’s case as weak despite its being arguable. It could weigh the new owners’ freedom to develop their commercial arrangements, the greater and more fundamental potential harm to Newcastle United, uncertainty over consumer benefit, and the proposed order’s complexity and need for policing. A speedy trial was the appropriate means of reducing any loss to Sports Direct. Sir Julian Flaux and Lady Justice Andrews agreed.

• Court of Appeal (Civil Division)—Granted permission to appeal and dismissed Sports Direct’s appeal: [2024] EWCA Civ 532.
• Competition Appeal Tribunal—Dismissed Sports Direct’s application for a mandatory interim injunction, while directing a speedy trial.