JD Sports ‘perplexed’ as Footasylum deal knocked back by CMA

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JD Sports faces the prospect of having to sell Footaysylum following renewed concerns about the deal from the Competition and Markets Authority (CMA).

The sports retailer’s boss Peter Cowgill said he was ”perplexed and again disappointed” by the latest ruling by the CMA.

The decision marks the second occasion that the competition regulator has provisionally ruled against the £90m deal by JD Sports to acquire Footasylum. In November 2020, the watchdog’s initial ruling was overturned following an appeal from the retailer, with the appeals tribunal finding the CMA did not fully investigate the effects of the pandemic on competition.

Despite this, the CMA’s findings are unchanged following reconsideration, with the regulator’s provisional conclusion indicating that the completed acquisition could result in a substantial lessening of competition in the sportswear retail market in-store and online.

The regulator said the only way of addressing competition concerns would require JD Sports to sell on the Footasylum brand.

JD Sports said it would continue to strongly make its case to the CMA before the competition watchdog releases its final report in October.

Kip Meek, chair of the group that conducted the inquiry around the deal, said: “Since our original inquiry, we have gathered a significant amount of additional evidence, including on the impact of coronavirus, and we still have concerns about JD Sports’ takeover of Footasylum. 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.

Cowgill questioned the ruling that the merger could result in a worse deal for Footasylum shoppers. He said: “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.”

JD Sports also said the CMA’s verdict failed to account for the substantial impact that Nike and Adidas’ respective direct-to-consumer strategies had on the competitive landscape in the sports and leisure retail sector.