4th Nov 2021 09:17
(Alliance News) - JD Sports Fashion PLC on Thursday hit out at the UK's competition watchdog after the retailer was forced to sell Footasylum.
JD Sports shares were 1.9% higher at 1,103.45 pence each in London on Thursday morning.
It was the latest twist in a protracted and frustrating process for JD Sports, which purchased the footwear seller back in March 2019 for GBP90.1 million. That July, however, the UK Competition & Markets Authority opened a probe on the tie-up.
The CMA on Thursday said the deal "could lead to a substantial reduction in competition and a worse deal for Footasylum's customers".
JD Sports is "by far and away" the closest alternative for Footasylum shoppers, the CMA said.
"The CMA expects this will continue to be the case even after taking into account the continued growth in online shopping, including on the websites and apps of brands such as Nike and Adidas," the watchdog added.
"The CMA's view is that requiring JD Sports to sell Footasylum is the only way to address its competition concerns and protect consumers. It will oversee the sale and approve the purchaser, in order to ensure that Footasylum will be run as a fully independent competitor."
JD Sports lashed out at the decision. The FTSE 100 company called the CMA's decision "extreme and unprecedented", saying it "defies logic". It said it will study the regulator's Footasylum report and consider its options.
The Bury-based firm added: "As a result of this merger, there would be no substantial lessening of competition for JD and so, consequently, JD has no incentive to raise prices or worsen its consumer offer.
"It is inexplicable to JD that the CMA remains of the view that one small competitor, Footasylum, with less than 5% of the market, is not subject to the same competitive pressures and discipline from Nike and adidas DTC that affects the remaining 95%+ of the market."
The CMA hurdle has proved a stiff and at times seemingly unassailable one for JD Sports to clear in regard to Footasylum.
In May 2020, JD Sports hit out at the monopoly regulator after the CMA flexed its muscles and blocked the retailer's acquisition of high street outfit Footasylum. In November of that year, however, a Competition Appeal Tribunal ruling meant that the CMA had to reconsider its decision.
Then in September of this year, the CMA once again placed the deal in doubt. The regulator cautioned at the time that the only way of addressing competition concerns may be by requiring JD Sports to sell Footasylum.
The Footasylum deal is not the only JD Sports matter which is currently facing CMA scrutiny.
In September, the watchdog launched a probe into "suspected breaches of competition law" by JD Sports and Premier League football club Leicester City. It relates to the sale of Leicester City-branded products.
By Eric Cunha; [email protected]
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