JD Sports’ merger with Footasylum edges nearer after appeal
The competition watchdog’s decision to block a merger between JD Sports and Footasylum has been overturned following an appeal.
The Competition Appeals Tribunal said today that the Competition and Markets Authority had acted “irrationally” when it ruled in May that the tie-up would lead to a “substantially” lessening of competition nationally.
The tribunal ruled that the CMA had failed to follow up inquiries with suppliers or Footasylum’s primary lender, meaning it drew conclusions as to the likely effects of the Covid-19 pandemic without the necessary evidence.
It also said the watchdog had not properly considered the ability of rival sportswear brands Nike and Adidas to boost their direct-to-consumer operations while stores were closed during lockdown.
The CMA said this afternoon that it is considering whether to appeal the decision, adding that the judgement endorsed its “approach to making sure that mergers don’t leave UK shoppers worse off”.
CMA chief executive Andrea Coscelli said: “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 slammed the CMA’s decision in June, saying it had failed to “take proper account of the dynamic and rapidly evolving competitive landscape in which we operate, as well as the long lasting — and likely permanent — impact that Covid-19 has had on our industry”.
The company said Footasylum was particularly vulnerable to the downturn for retailers during the pandemic, claiming that the high street chain may have been forced into administration without backing from the merger.
It also pointed to increased pressures from rivals such as Mike Ashley’s Sports Direct, and brands such as Adidas and Nike.