1 May 2009 13:00
RNS Number : 5866R
Office of Fair Trading
01 May 2009
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OFT CONSIDERS DIVESTMENTS INĀ SPORTS DIRECT'S ACQUISITION OF JJBĀ STORES
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The OFTĀ is considering an offer byĀ Sports Direct International PlcĀ toĀ divestĀ stores inĀ fiveĀ local areas followingĀ its acquisition ofĀ 31Ā stores from JJB Sports Plc.Ā Ā
Sports Direct and JJBĀ are the two largest specialist retailers of sports-relatedĀ clothing, footwear and equipment in theĀ UK.Ā Ā Sports DirectĀ purchasedĀ theĀ stores from JJB in a series ofĀ separateĀ transactionsĀ over a two year period, but underĀ merger legislation,Ā the OFTĀ wasĀ able toĀ review these acquisitions as one individual transaction.
The OFTĀ investigation, which was carried out under its own initiative,Ā foundĀ that theĀ acquisitionsĀ raised competition concernsĀ inĀ fiveĀ local areasĀ whereĀ Sports DirectĀ already hadĀ existing stores.Ā Ā
Sports Direct hasĀ offered to divestĀ outletsĀ in these areasĀ to up-front buyersĀ approvedĀ by the OFT.Ā Ā
Amelia Fletcher,Ā OFTĀ Senior DirectorĀ ofĀ Mergers said:
'The OFT used its discretion in this case to roll a number of separate acquisitions of JJB stores by Sports Direct over the last two years into a single investigation, given that the overall impact on consumers had the potential to be significant.Ā
Although our investigation indicated that the purchase of these stores had not reduced competition at a national level, we identified concerns in five local areas that needed to be addressed.'
If the divestments are not accepted, then a referral to the Competition Commission will be necessary.
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NOTES
1. For reasons of confidentiality, the OFT will not currently disclose which stores Sports Direct has proposed to divest. Details on how the OFT identified the local areas to be divested will follow in the full text of the decision and in public consultation on the undertakings in lieu.
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2. Own-initiative merger inquiries ā while the majority of mergers reviewed by the OFT arise from voluntary notification by the parties, the OFTās own-initiative inquiry programme has led to remedial action by the OFT or CC in a number of cases under the Enterprise Act 2002 regime.Ā In some of these cases, it is always possible that the parties would have voluntarily notified the OFT of their merger at a later date. The OFT has a dedicated Mergers Intelligence Officer responsible for monitoring non-notified merger activity and liaising with other competition authorities. That person can be contacted confidentially at mergers.intelligence@oft.gsi.gov.uk if any interested party wishes to make the OFT aware of a merger that it considers might potentially be anti-competitive.
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3. The reference testĀ - the OFT has a duty to make a reference to the Competition Commission if it believes that it is or may be the case that a relevant merger situation has been created, and the creation of that situation has resulted or may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
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4. Under the Enterprise Act, a relevant merger situation is created if two or more enterprises have ceased to be distinct, and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds Ā£70 millionā or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
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5. Section 27(5) of the Act also gives the OFT the ability to treat a series of transactions between the same parties or interests as having occurred simultaneously on the date on which the latest of them occurred.
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6. Undertakings in lieu of reference - under section 73 of the Enterprise Act, the OFT may, instead of making a reference to the Competition Commission, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. The OFT is required to consult publicly before accepting any such undertakings.
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7. Upfront buyer - the OFT considered that, given the limited number of potential purchasers that might be interested to acquire the divested stores and who would be able to do so in the five local areas, the divestiture of these stores should be made to a suitable purchaser approved by the OFT. This means that the OFT will consult publicly on the suitability of the proposed purchaser, as well as any other aspects of the draft undertakings, during the public consultation period.
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8. The text of these decisions will be placed on the Office of Fair Tradingās web site at www.oft.gov.uk as soon as is reasonably practicable.
MEDIAĀ enquiries: 020 7211+
Corinne Gladstone 8899Ā Kasia Reardon 8901
Jonathan Marciano 8898 John Fearn 8708
Out of hours: mobile: 07774 134814 fax messages: 020 7211 8961
Copies of press notices: Ext. 8993Ā
http://www.oft.gov.uk
PUBLICĀ enquiries: 0845 7224499Ā enquiries@oft.gov.uk
OFT reports and consumer information leaflets are available free from:Ā
OFT,Ā PO Box 366,Ā HayesĀ UB3 1XBĀ 0800 389 3158Ā oft@ecgroup.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
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