Watchdog blocks JD Sports-Footasylum merger

Watchdog blocks JD Sports-Footasylum merger

After concluding its Phase 2 investigation, the Competition & Markets Authority (CMA) has announced its decision to block JD Sports Fashion plc (JD) in its takeover of Footasylum limited (Footasylum).

The CMA based its decision on evidence that JD and Footasylum were close competitors and as such ‘this transaction would lead to a substantial lessening of competition nationally. This would leave shoppers with fewer discounts or receiving lower quality customer service’.

Although the CMA did acknowledge the ‘uncertain and challenging trading conditions’ resulting from the coronavirus pandemic, the watchdog found no evidence to suggest this would remove any competition concerns. JD have, however, been given additional time to sell Footaslyum in light of these conditions.

Responding to the CMA, JD have disputed the judgement, claiming the CMA ‘materially fails to take proper account of the dynamic and rapidly evolving competitive landscape in which we operate, as well as the long lasting - and likely permanent - impact that COVID-19 has had on our industry, which may never return to its pre-merger state, to the particular detriment of smaller retailers like Footasylum’.

In addition, JD went on to explain the detrimental impact the decision may on have on Footasylum, believing that without its backing it would likely join the ‘long list of retail casualties we've already seen during the current crisis’. As such, JD believes that the watchdog ‘failed to meet its objective of protecting consumer interests’ concluding that the decision would be ‘detrimental for Footasylum, its customers, its 2,500 staff and the UK sports retail market as a whole’.

JD is currently considering making an application to the Competition Appeal Tribunal to review the decision.

 

 

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