JD Sports may be forced to sell Footasylum following new CMA decision
Sportswear retailer JD Sports could be required to sell off its Footasylum chain following the Competition and Markets Authority’s reassessment of the merger between the two companies.
The CMA made the decision to block the merger in May last year, but JD Sports subsequently appealed to the Competition Appeal Tribunal which remitted the case back to the CMA for reconsideration.
After gathering additional evidence on the impact of Covid-19 and other developments in the sports fashion sector, the CMA has now reached the provisional view that the merger could result in a worse deal for Footasylum shoppers throughout the UK.
In a statement, the organisation said customers could find themselves facing higher prices, fewer discounts and less choice of products in-store, as well as fewer improvements in customer service.
Kip Meek, chair of the group conducting the inquiry, said: “Since our original inquiry, we have gathered a significant amount of additional evidence, including on the impact of coronavirus, and we still have concerns about JD Sports’ takeover of Footasylum. This deal would see Footasylum bought by its closest competitor and, as a result, shoppers could face higher prices, less choice and a worse shopping experience overall.”
The CMA also said that blocking the deal, by requiring JD Sports to sell Footasylum, “may be the only way of addressing these competition concerns.”
In response, JD Sports said as the findings were provisional, it will continue to make its case to the CMA before the organisation releases its final report due in October.
JD Sports chairman Peter Cowgill said: “We have made compelling submissions on the committed positioning of the global brands towards direct to consumer and the consequent impact on an extremely competitive marketplace. I am perplexed and again disappointed that these have been rejected. I am not sure what further evidence the CMA needs to appreciate the extent of this dynamic change which has been substantially accelerated by Covid-19.
“If the CMA’s mission is indeed to “make markets work well in the interests of consumers, businesses and the economy” then I urge the CMA to reconsider its position before making its final determination. This transaction will simply not “lessen” competition, let alone “substantially”.
“On the contrary, clearance would enable JD to invest in Footasylum and work with its management team to increase the quality, range and choice of products available to its consumers which will bring wider benefits to a UK High Street decimated by a number of high-profile closures.”