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JD Sports could be required to sell Footasylum after its merger was recently blocked by the Competition and Markets Authority (CMA) on the grounds that it could lead to a “worse deal” for shoppers.
The CMA’s latest decision to block the merger, comes after its first attempt in May 2020, to which the retailer appealed to the Competition Appeal Tribunal, which remitted the case back to the CMA for reconsideration.
Having reviewed the case again, the CMA warned that the merger could lead to customers finding themselves facing higher prices, fewer discounts and less choice of products in store.
It could also result in the merged company investing less in improvements to customer service.
It comes after JD sports first agreed a £90m deal to acquire Footasylum in March 2019.
Kip Meek, chair of the group conducting this inquiry, said: “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.
“JD Sports, Footasylum and others in the sector now have the opportunity to give us their views – on both our provisional decision and our suggested remedy.”
In response to the news, Peter Cowgill, executive chairman of JD Sports Fashion stated that he was “perplexed and again disappointed” that the merger had been rejected.
He said: “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.”
