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(Alliance News) - JD Sports Fashion PLC said on Thursday that it is committed to "improving Footasylum's resources" after the UK Competition & Markets Authority said it is considering blocking the deal altogether.
Lancashire-based sportswear retailer JD Sports proposed the GBP90.1 million acquisition of Footasylum in March 2019. However, CMA opened a probe that July as it felt that the merger may lead to a worse deal for shoppers.
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, a Competition Appeal Tribunal ruling meant that the CMA had to reconsider its decision.
As part of CMA's remittal action, it considered the effects Covid-19 had on the direct-to-consumer and wholesale sales ratio in the sportswear market, and whether this made the merger damaging to competition.
However, the watchdog on Thursday revealed that it still thinks the only way of addressing competition concerns may be by requiring JD Sports to sell Footasylum.
CMA feels the deal will drive prices up, invite fewer discounts and limit product choice in store. "It could also result in the merged company investing less in improvements to customer service," it added.
JD Sports assured that it is committed to improving Footasylum's resources, product offering and differentiated customer proposition.
JD Sports Chair Peter Cowgill said: "If the CMA's mission is indeed to 'make markets work well in the interests of consumers, businesses and the economy' then I urge the CMA to reconsider its position before making its final determination. This transaction will simply not 'lessen' competition, let alone 'substantially'.
"On the contrary, clearance would enable JD to invest in Footasylum and work with its management team to increase the quality, range and choice of products available to its consumers which will bring wider benefits to a UK High Street decimated by a number of high-profile closures."
JD Sports noted that the findings are provisional and will continue to make its case ahead of October's final report.
Shares were up 0.2% at 1,042.50 pence in London on Thursday.
By Josie O'Brien; josieobrien@alliancenews.com
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