JD Sports may have to sell Footasylum following CMA investigation

Legal | North West | Retail

JD Sports has provided an update following the Competition and Markets Authority’s (CMA) announcement that it has competition concerns regarding the company’s acquisition of Footasylum.

In the view of  JD Sports, the CMA’s provisional findings do not reflect the competitive reality of the UK sports retail market today, where a large number of retailers selling third-party brands compete not only with each other but also with major online and direct to consumer operations of the international brands themselves.

The CMA said the £90m acquisition deal could mean shoppers “lose out”, with fewer discounts and less choice on the high street and online.

The CMA itself recognises that Footasylum has a less than 5% market share. Therefore, it is clear that this transaction is small, both in the context of our increasingly international focussed Group and the extremely crowded marketplace in which we operate.

Peter Cowgill, Executive Chairman of JD Sports said: “The CMA’s provisional decision is fundamentally flawed and demonstrates a complete misunderstanding of our market to an alarming extent, given its six-month review.

“The competitive landscape described by the CMA is one which neither I, nor any experienced sector analyst, would recognise. Just take a walk down any major UK high street or search for Nike or adidas trainers on Google and you can see for yourself how competitive this marketplace really is.

“The CMA’s provisional findings do not reflect the objective evidence, with excessive weight being placed on surveys asking hypothetical questions of a small sample of selected customers equivalent to less than 25% of the footfall of one JD store in Manchester for one week, rather than assessing the reality of how consumers actually shop on a national scale.

“When the Group made its offer in March 2019, it was our intention to support Footasylum and its employees to grow the business and increase the quality, range and choice of products available to customers. We remain convinced that a combination of the two businesses would provide significant long-term benefits to customers, colleagues and brand partners, while maintaining Footasylum’s presence on the high street as the music-inspired casual retailer which it is today.”

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