Nike, the iconic sports retailer, has become the latest target in the Europe Union’s crackdown on antitrust violations. On Monday, it was also caught in a media whirlwind involving separate developments involving a Michael Jordan photo and the arrest of famed celebrity lawyer Michael Avenatti.
The EU’s competition commission has slapped Nike with a $14 million fine, saying the Beaverton-based sports apparel giant prevented many of its licensees from selling soccer team merchandise across European borders, leaving European shoppers with fewer choices and higher prices.
Nike is just the latest U.S. company to get sideways with the EU over its business practices. Just five days ago, the bloc’s top competition cop levied a $1.7 billion fine against Google for the “illegal practices” it used to cement its edge in advertising and search functions. Her agency also launches inquiries against other high-profile tech companies.
The licensed merchandise included mugs, bags, toys and bedding with branding for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation. The EU panel said Nike engaged in what is known as geo-blocking from 2004 to 2017.
The competition commission said Nike cooperated with its investigation “beyond its legal obligation to do so” and that its fine was cut 40 percent as a result.
Nike did not immediately respond to a request for comment about the fine Monday.
In perhaps the most jarring Nike-related news Monday, Michael Avenatti — the pugnacious attorney best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump — was arrested on charges that included trying to shake down Nike for as much as $25 million by threatening it with bad publicity.
Avenatti, who was also accused of embezzling a client’s money to pay his own expenses, was charged with extortion and bank and wire fraud in separate cases in New York and California. He was arrested at a New York law firm where he had gone to meet with Nike executives. It was just minutes after he tweeted that he planned to hold a news conference Tuesday to “disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered.”
“When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals,” said Geoffrey Berman, the U.S. attorney in New York. California investigators had been building a case against Avenatti for more than a year, but prosecutors in New York said their investigation began only last week and was completed in days.
In the California case, Avenatti allegedly misused a client’s money to pay his debts and those of his coffee business and law firm. Federal prosecutors said he also defrauded a Mississippi bank by using phony tax returns to obtain millions of dollars in loans.
The allegations “paint an ugly picture of lawless conduct and greed,” said Nick Hanna, the U.S. attorney in Los Angeles. Avenatti describes himself on Twitter as an attorney and advocate, but the accusations describe “a corrupt lawyer who instead fights for his own selfish interests.”
The arrest was a sharp reversal of fortune for the 48-year-old lawyer, who, less than a year ago, emerged as a leading figure in the anti-Trump movement, with relentless cable news appearances, a hard-punching style and a knack for obtaining information about others’ wrongdoing. Avenatti appeared briefly in court Monday evening and was ordered released on $300,000 bond. He did not enter a plea.
Avenatti told reporters late Monday he is confident he will be “fully exonerated” of federal extortion and bank and wire fraud charges. He said he will “never stop fighting the good fight” against powerful people and corporations.
Avenatti allegedly threatened to hold a news conference last week on the eve of Nike’s quarterly earnings call and the start of the NCAA tournament to announce allegations of misconduct by Nike employees. The attorney and a co-conspirator demanded to be paid $15 million to $25 million and an additional $1.5 million for an Avenatti client to remain silent, the complaint said. Two people familiar with the investigation confirmed that the unidentified co-conspirator was Mark Geragos, a Los Angeles criminal defense lawyer known for his work with celebrities. That information was not made public by prosecutors.
Geragos, a CNN contributor, has a client list that has included Michael Jackson, Winona Ryder, Scott Peterson and most recently Jussie Smollett, the actor accused of fabricating a racist, anti-gay attack in Chicago. Geragos did not respond to messages seeking comment. Within hours, CNN cut ties with him.
The Avenatti client is a coach of an amateur athletic union men’s basketball program in California, according to the papers. The AAU program coached by the client was sponsored by Nike for $72,000 annually, the complaint said.
While lawyers sometimes make demands to seek out-of-court settlements, they cannot threaten to go public with damaging information to get something of value or gain leverage in a civil dispute, attorney Neama Rahmani said.
“The Department of Justice historically has been very cautious when charging attorneys, so they likely have evidence that Avenatti seriously crossed this line,” said Rahmani, a former federal prosecutor.
Nike officials told investigators Avenatti claimed to know of rules violations by an amateur basketball team sponsored by Nike. Executives immediately reported the threats to federal authorities.
The company “firmly believes in ethical and fair play, both in business and sports, and will continue to assist,” Nike said in a statement.
Avenatti rose to national prominence by representing Daniels, whose real name is Stephanie Clifford, in a lawsuit to break a confidentiality agreement to speak about her alleged affair with Trump. Daniels said she was “saddened but not shocked” by the arrest. She issued a statement Monday on Twitter saying she fired Avenatti a month ago after “discovering that he had dealt with me extremely dishonestly.” She said she would not elaborate.
Avenatti himself has been dogged with tax and financial troubles in recent years.
Donald Trump Jr. gloated over the arrest on Twitter. “Good news for my friend @MichaelAvenatti, if you plead fast enough, you might just get to share a cell with Michael Cohen!” he wrote, referring to the former Trump lawyer set to go to prison for crimes that include orchestrating hush-money payments to Daniels.
Michael Jordan photo
Also Monday, the Supreme Court let stand lower court rulings for the athletic apparel maker in a case involving a well-known photo of Michael Jordan.
Photographer Jacobus Rentmeester sued Nike after it used an image he took of Jordan in the 1980s as inspiration for a photograph it commissioned for its own ads. The company’s photo, which was used on posters and billboards, then became the basis for the “Jumpman” logo for Nike’s Air Jordan shoes. Rentmeester sued Nike in 2015 saying both the Nike photo and logo infringed on his copyright image.
Rentmeester’s original photo of Jordan was taken for Life magazine in 1984, while Jordan was a student at the University of North Carolina. It shows Jordan holding a basketball in his left hand and leaping, ballet-like toward a basketball hoop. Nike’s image was different, but Rentmeester cried foul, arguing the differences between his photo and Nike’s were “minor” and said that nearly every original element in his photo also appeared in Nike’s. Lower courts ruled for Nike.