// Competition Appeal Tribunal overturns CMA’s decision to block JD Sports’ takeover of Footasylum
// The takeover was blocked by the CMA in May
// The tribunal’s decision means the proposed £90m takeover will be remitted to the CMA for reconsideration
The CMA’s decision to block JD Sport’s £90 million takeover of Footasylum has been overturned by the Competition Appeal Tribunal.
The tribunal agreed with JD Sports that the CMA did not follow up on inquiries with suppliers and failed to properly assess the likely impact of the Covid-19 pandemic in its decision.
It also found that the CMA did not fully understand the increased ability of Nike and Adidas to sell its products direct to consumers, which impacted the decision-making.
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The decision means the proposed takeover will now be remitted to the CMA for full reconsideration and the CMA’s previous order – handed down in May – which would have forced JD Sports to divest Footasylum, will be cancelled.
JD Sports executive chairman Peter Cowgill welcomed the news.
“We have always maintained that this merger would provide significant long-term benefits to customers, colleagues and brand partners, and so we are very pleased with the Competition Appeal Tribunal’s judgment today,” he said.
“The entire case will now go back to the CMA for re-consideration and we look forward to presenting further evidence which demonstrates the true extent to which the competitive landscape has evolved, in particular as a result of the unprecedented challenges caused by the Covid-19 pandemic.”
CMA chief executive Andrea Coscelli said the organisation welcomes the tribunal’s “strong endorsement of its approach to making sure that mergers don’t leave UK shoppers worse off”.
However, he added that they were “disappointed” the tribunal disagreed with the CMA’s approach to information gathering about the specific impact of coronavirus on the sector given the circumstances at that time.
“We will now take stock of today’s judgment and carefully consider our next steps, including whether to appeal,” he said.
The CMA highlighted how the its assessment of the impact of the pandemic and the likely future effects of the merger was decided in the context of “great uncertainty” about the longer term impact of the coronavirus on the retail industry.
“The CMA therefore decided in early April that asking suppliers, and Footasylum’s bank, for updated forecasts would not be fruitful because it would have been speculative and unreliable evidence on how the coronavirus would affect the retail sector over the longer term,” it stated.
with PA Wires