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The Competition and Markets Authority (CMA) has issued JD Sports a penalty of £4.3m for failure to comply in certain respects with an Interim Order issued by the CMA on 19 May 2021 as part of the CMA’s review of the Footasylum acquisition.
The CMA reported reason to suspect a breach of the IO as the executive chairman and chief executive officers (CEOs) of JD Sports, Peter Cowgill, and Footasylum, Barry Bown, had meetings where business and “commercially sensitive” information, intellectual property and confidential information (CSI) was exchanged, without being reported to the CMA.
JD Sports has been fined £2.5m for failing to prevent the disclosure of CSI, with an additional £800k for passing CSI between the parties on at least two occasions, one in a meeting in a carpark and one over the phone, and a further £1m for JD Sports failing to notify the CMA that CSI was exchanged following the meetings.
According to the CMA, the penalty is “proportionate” as it represents only 0.063% of JD Sports’ global turnover, and it won’t affect JD Sports disproportionately at 0.98% of operating profit, 1.65% of profit after tax, and 0.25% of net assets.
Meanwhile, JD Sports said that the CMA suggests that phone records have been deleted and, whilst JD accepts that some phone records were not available, it “absolutely refutes any allegation that this was due to records being deliberately deleted”.
The retailer said it does not believe that the description of events or the penalty that has been levied is a “fair reflection of the group’s efforts” to ensure compliance with the order.
JD Sports said: “At no point has there been any intention to breach the rules although JD does accept that, inadvertently, it was in receipt of limited commercially sensitive information and that this was not reported to the CMA immediately.
“However, JD believes that a number of the further conclusions which the CMA have drawn are either incorrect or have been presented in a misleading manner through the use of inflammatory language.”
It added: “JD will now review the detail of the CMA’s decision although the group has already taken swift action to implement additional measures to strengthen its processes in this area which now go well beyond what is legally required by the CMA.
“Separately, JD will continue to work constructively with the CMA on the process to divest Footasylum in line with the CMA’s decision in November 2021.”
