CMA blocks JD Sports’ purchase of Footasylum

JD Sports’ acquisition of Footasylum has been blocked by the Competitions and Markets Authority (CMA) due to concerns that the deal would significantly reduce market competition.

Following a Phase 2 investigation, the CMA concluded that if JD Sports purchased such a close competitor in the sports-inspired casual footwear and clothing market, there would be price increases and lower levels of customer service in the UK.

In making their decision, the competitions body looked at a wide range of evidence. This included the two parties’ internal strategy and decision-making documents, which demonstrated that JD Sports and Footasylum closely monitor one another's activity. The CMA also conducted two surveys of over 10,000 customers of the two brands, in which more than two-thirds of Footasylum customers stated they would start shopping at JD Sports’ if they couldn’t shop at Footasylum.

Due to the challenges posed by Covid-19, the CMA said JD Sports should be allowed sufficient time to sell Footasylum.

Kip Meek, chair of the CMA inquiry group, said: "Our investigation analysed a large body of evidence that shows JD Sports and Footasylum are close competitors. This deal would mean the removal of a direct competitor from the market, leaving customers worse off. Based on the evidence we have seen, blocking the deal is the only way to ensure they are protected.”

He continued: "We never take decisions to block mergers lightly, but in this case the evidence has shown it is necessary for JD Sports to sell Footasylum, so that they can continue to compete against each other as independent businesses."

JD Sports has responded to the verdict, stating it “fundamentally disagrees” with the decision, arguing that the CMA has failed to recognise the “long-term societal and behavioural change in how consumers shop” as a result of Covid-19.

Peter Cowgill, executive chairman of JD Sports added: “We will now carefully consider whether to formally challenge today's decision in the Competition Appeal Tribunal."