CMA decision to block JD Sports’ acquisition of Footasylum overturned

The UK’s Competition Appeal Tribunal has overturned a decision made earlier this year by the country’s Competition and Markets Authority (CMA) to block an acquisition by JD Sports of rival sportswear retailer Footasylum.

The CMA announced in May it had blocked the 90 million pound deal after finding it would result in “substantial lessening of competition nationally” which could lead to fewer discounts or lower quality of customer service.

JD Sports appealed the decision, arguing that the assessment of the impact of the merger on competition was too broad and that the CMA hadn’t gathered enough information regarding the effects of Covid-19 on the wider retail sector.

The CMA announced Friday that it supported the “way in which the CMA assessed the effects of the merger on consumers” but found that it did not “go far enough” in its information gathering about the impact of the pandemic.

JD Sports-Footasylum deal back on the table

“The CMA welcomes the Tribunal’s strong endorsement of its approach to making sure that mergers don’t leave UK shoppers worse off. Today’s judgment reinforces the way in which we analyse and assess the evidence we receive in these cases, and the decisions we make to protect consumers,” CMA chief executive Andrea Coscelli said in a statement.

“However, we are disappointed that 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.”

Peter Cowgill, executive chairman of JD Sports Fashion Plc, commented: “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.

“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.”

Photo credit: Footasylum