UK Watchdog Blocks Sports-Fashion Merger

The CMA has blocked JD Sports’ purchase of close competitor Footasylum after finding it would leave shoppers worse off.

Following an in-depth Phase 2 investigation, the Competition and Markets Authority (CMA) concluded that this transaction would lead to a substantial lessening of competition nationally. This would leave shoppers with fewer discounts or receiving lower quality customer service.

It is obvious that coronavirus (COVID-19) has led to retailers facing uncertain and challenging trading conditions and the CMA has considered how this might affect the competition concerns surrounding this transaction. While it is significantly affecting the sector, the CMA has not found evidence that the impact of coronavirus would remove its competition concerns. However, the CMA does believe that the continuing uncertainty means that JD Sports should be allowed sufficient time in which to sell Footasylum, given the additional challenges associated with coronavirus.

In reaching this final decision, the CMA analysed a wide range of evidence looking at how closely these firms compete as well as competition from other retailers, whether they are online-only or also have stores, and the constraint from suppliers like Nike and adidas. This evidence included more than 2,000 of the companies’ own internal strategy and decision-making documents, which showed that JD Sports and Footasylum monitor each other’s activity closely. Additionally, the CMA conducted two large surveys of together more than 10,000 of the companies’ customers. These surveys showed that many JD Sports and Footasylum shoppers see the other firm as their next best alternative.

During Phase 2 investigations, decisions are made by independent inquiry groups chosen from the CMA’s panel members who come from a variety of backgrounds, including economics, law, accountancy and business.

Full Content: Gov UK

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