// JD Sports said the CMA’s final ruling to sell Footasylum “defied logic”
// The CMA revealed its decision following a protracted investigation
JD Sports has expressed its fury following the competition watchdog’s final ruling that it must sell Footasylum, the chain it purchased for £90 million in 2019.
The CMA revealed its decision following a protracted investigation that saw JD Sports appeal an original finding that it must sell Footasylum after concerns that it could lead to a worse deal for consumers.
JD Sports said the latest ruling “defied logic” and it was considering its options.
The CMA had been ordered to investigate again after facing criticism from a competition appeals tribunal that it had failed to consider the effects of the Covid-19 pandemic.
“Over the course of its inquiry, the CMA found that JD Sports is by far and away the closest alternative for shoppers at Footasylum,” the regulator said.
“The CMA expects this will continue to be the case even after taking into account the continued growth in online shopping, including on the websites and apps of brands such as Nike and adidas.”
Investigators added that they believed Footasylum would remain in robust health even if no longer owned by JD Sports.
CMA inquiry group chair, Kip Meek said: “The UK boasts a thriving sports fashion market and today’s decision reflects our commitment to keeping it that way.
“We strongly believe shoppers could suffer if Footasylum stopped having to compete with JD Sports. It is likely they would pay more for less choice, worse service and lower quality.
“The pandemic may have altered the way we shop but innovative businesses, driven by healthy competition, will rise to the challenge and successfully cater to changing tastes and habits.
“The evidence we have analysed shows that JD Sports and Footasylum are adapting well to market conditions and would continue to be profitable should the merger not go ahead.”
JD Sports executive chairman, Peter Cowgill: “The CMA rightly concludes that, following the acquisition of Footasylum, JD would have no incentive to raise prices or worsen its offer as its most important competitors are the DTC (direct to consumer) operations of the international brands themselves.
“However, the CMA has then somehow concluded that the competitive threat from DTC does not extend to Footasylum and that JD would have an incentive to worsen the offer in Footasylum to the detriment of both consumers and suppliers.
“We would suggest that the CMA is in a minority of one in reaching this conclusion.
“Overall, the CMA’s decision today continues to be inexplicable to anyone who understands what difference the pandemic has made to UK retail and how competition and the supply chain in our markets actually work.
“It is deeply troubling at a time when the UK high street has been seriously damaged already and is vulnerable to further closures.”