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JD Sport considering appeal against CMA decision that it must sell Footasylum

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JD Sport considering appeal against CMA decision that it must sell Footasylum

JD Sports executive chairman Peter Cowgill has said the retail group “fundamentally disagrees” with the decision of the Competition and Markets Authority (CMA) to block its acquisition of Footasylum. The group is now considering challenging the decision at an appeal.

 

The CMA said this week that it had blocked JD Sport’s acquisition of Footasylum because it believed that would leave shoppers worse off in a less competitive market. It also said it did not believe that the coronavirus would remove those competition concerns, but it said JD Sports should have time to sell Footasylum in a disrupted market. It cited a study suggesting that many of the two retail brands’ customers said they would turn first to the other brand if they were not able to shop at their preferred brand.

 

Kip Meek, chair of the CMA inquiry group, said: “This deal would mean the removal of a direct competitor from the market, leaving customers worse off. Based on the evidence we have seen,

blocking the deal is the only way to ensure they are protected.

 

"This decision comes at a very difficult time for retailers and we have been careful to consider the effects of coronavirus. However, we need to make sure we think about the impact of this merger on shoppers, both now and in the foreseeable future and we do not see the effects of the current crisis changing the competitive dynamics in a way that diminishes the substantial lessening of competition which we need to remedy.

 

“We never take decisions to block mergers lightly, but in this case the evidence has shown it is necessary for JD Sports to sell Footasylum, so that they can continue to compete against each other as independent businesses."

 

JD Sports’ Cowgill said: ”When the CMA published its provisional findings in February, we said at the time that they demonstrated a complete misunderstanding of our market to an alarming extent,” said Cowgill. “Today, and equally frustratingly, in the midst of a global pandemic and with the UK high street in a state of complete lockdown, the CMA’s final decision is even more absurd.

 

“Since the CMA launched its review 12 months ago, the competitive landscape in which we operate has changed beyond recognition. Further, since the outbreak of Covid-19, competition has not lessened; it has become even more intense as the consumer transition to online has accelerated at a meteoric rate. We are astounded that the CMA has failed to recognise that this isn’t just a short-term blip, but rather a long-term societal and behavioural change in how consumers shop.”

 

Cowgill also suggested that the CMA had been “taken in by the self-serving testimony of one notoriously vocal competitor, who has made numerous public announcements confirming their ongoing investment in their elevation strategy and who has blatantly participated in the process for their own commercial interests rather than for the benefit of consumers.”

 

The CMA warned in February that it could force JD Sports to sell Footasylum, a little under a year after JD Sports first announced it planned to buy Footasylum for £90m.

 

Image courtesy of Footasylum

 

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