JD Sports Ordered to Sell Footasylum by U.K. Watchdog
JD Sports Ordered to Sell Footasylum by U.K. Watchdog
(Bloomberg) --
Britain’s antitrust regulator ordered JD Sports Fashion Plc to sell smaller rival Footasylum, dealing a blow to its plans to compete with online retailing rivals.
JD Sports is “by far and away” the closest alternative for shoppers at Footasylum and this will continue to be the case “even after taking into account the continued growth” by online rivals Nike Inc. and Adidas AG, the Competition and Markets Authority said in a statement Thursday.
The regulator, which has taken a more muscular approach to reviewing mergers post-Brexit first blocked the 90 million-pound ($123 million) deal in May 2020, but that decision was overturned by an appeals tribunal. It decided to provisionally block the deal again in September.
“The CMA’s decision today continues to be inexplicable to anyone who understands what difference the pandemic has made to U.K. retail and how competition and the supply chain in our markets actually work,” Peter Cowgill, JD Sports executive chairman, said in a statement.
JD Sports said it couldn’t understand how the CMA believed that Footasylum, with less than 5% of the market is not subject to the same competitive pressures and discipline from Nike and Adidas that affects the remainder of the market.
The decision “defied logic,” the company said, given the pandemic also meant the CMA “no longer considers Footasylum to be the ‘strong’ competitor to JD that it was pre-pandemic.”
The company said it was weighing its options after the CMA’s announcement.
Shares in JD Sports rose 0.9% in early trading in London.
The CMA said a sale of Footasylum was the only way to address its competition concerns and protect consumers, and it will oversee the sale in order to ensure that Footasylum will be run as a fully independent competitor.
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