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JD Sports successful in challenging CMA ruling against its Footasylum merger

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Image courtesy of Footasylum
Image courtesy of Footasylum
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JD Sports successful in challenging CMA ruling against its Footasylum merger

JD Sports has won its appeal against the Competition and Markets Authority (CMA) decision that its merger with Footasylum could reduce competition and leave customers shopping online or in-store worse off. The CMA had ordered that JD Sports must sell Footasylum, but following today’s appeal it must now reconsider its ruling.

 

The Competition Appeal Tribunal makes that ruling in findings published this afternoon, following a hearing in September.

 

Peter Cowgill, executive chairman of JD Sports Fashion, welcomed the news. He said: “We have always maintained that this merger would provide significant long-term benefits to customers, colleagues and brand partners, and so we are very pleased with the Competition Appeal Tribunal’s judgment today.

 

“The entire case will now go back to the CMA for re-consideration and we look forward to presenting further evidence which demonstrates the true extent to which the competitive landscape has evolved, in particular as a result of the unprecedented challenges caused by the Covid-19 pandemic.”

 

JD Sports bought Footasylum for £90m in June 2019 in a deal that was referred for an in-depth investigation three months later, in October. In May 2020, the CMA ruled to block the acquisition and said it could order Footasylum to be sold, and JD Sports said it might appeal. Ten days later it did so, citing three grounds, including that the CMA failed to apply its merger assessment guidelines to the decision of whether the reduction in competition would be substantial. JD Sports argued that the the CMA had not properly considered the effect that suppliers and competitors would have on merged business – especially as they sell direct to consumers – and that it had not properly considered the effect of Covid-19 on Footasylum.

 

Today’s findings show the Competition Appeal Tribunal dismissed two of JD Sports’ grounds for appeal, but upheld the contention that the CMA had not fully taken into account the effect of Covid-19. As a result, the case must now be reconsidered.

 

CMA chief executive Andrea Coscelli said: “The CMA welcomes the tribunal’s strong endorsement of its approach to making sure that mergers don’t leave UK shoppers worse off. Today’s judgement reinforces the way in which we analyse and assess the evidence we receive in these cases and the decisions we make to protect consumers.

 

“However, we are disappointed that the tribunal disagreed with the CMA’s approach to information gathering about the specific impact of coronavirus on the sector given the circumstances at that time. We will now take stock of today’s judgment and carefully consider our next steps, including whether to appeal.”

 

JD Sports is ranked as a Leading retailer in RXUK Top500 research, while Footasylum is Top50.

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