The CMA report noted concerns that the loss of competition brought about by the merger could result in “higher prices, worse choice in stores or reductions in service quality”.
The £90m acquisition of the footwear retailer was approved by shareholders in April this year, with the CMA launching its inquiry in July.
Peter Cowgill, executive chairman of JD, said: “We continue to believe that Footasylum would be a positive addition to the group, bringing a differentiated customer demographic and fashion-led product range that is complementary to our existing business. We also believe that there will be significant operational and strategic benefits from a combination of the two businesses.
“Our discussions with the CMA are ongoing as we consider whether to proceed to Phase 2 or if acceptable remedies can be agreed at this stage. We look forward to working constructively with the CMA in this regard and will provide further updates in due course.”
Colin Raftery, senior director, CMA, added: “Our investigation has shown us that JD Sports and Footasylum have been competing strongly across the UK, with a sports fashion offering that few other retailers are able to match.
“That’s why we’re concerned this deal could lead to higher prices, less choice and a worse shopping experience for customers.”
Earlier this month JD Sports reported a 47% jump in revenues in the wake of its acquisition of Finish Line, after the retailer debuted on the FTSE100 earlier this year.