Britain’s competition regulator said it was still concerned that JD Sports’ proposed takeover of rival Footasylum “could lead to a worse deal for buyers.”
It comes after the Competition and Markets Authority (CMA) blocked the £ 90million acquisition last year but was forced to reassess its decision following a company appeal of sportswear.
The CMA said it tentatively found in its reassessment that blocking the deal and forcing JD Sports to sell Footasylum to new owners might be “the only way to resolve” its competition concerns.
JD Sports, which first agreed to buy the 64-site retail brand in March 2019, said it was “puzzled and again disappointed” by the CMA’s findings, accusing the regulator of failing to take appropriate account of its observations on the market for direct-to-consumer sportswear. .
The CMA said it believed a merger between retailers could see customers face “higher prices, fewer discounts and fewer product choices in-store” due to reduced competition.
He added that there were concerns that the move would also lead the group “to invest less in improving customer service”.
Kip Meek, chairman of the CMA group investigating the Footasylum buyout, said: “Since our initial investigation, we have gathered a significant amount of additional evidence, including on the impact of the coronavirus, and we have still worries about the takeover of JD Sports by JD Sports. Footasile.
“This deal would see Footasylum acquired by its closest competitor and, as a result, buyers could face higher prices, less choice and an overall worse shopping experience.
“While many stores were closed during the lockdown, online sales in this market have been stronger than ever, and in-store sales revenue is rebounding as people return to Main Street.
“JD Sports, Footasylum and others in the industry now have the opportunity to give us their opinion, both on our interim decision and on our suggested solution. “
Peter Cowgill, Executive Chairman and Founder of JD Sports, said: “We have made compelling submissions on the engaged positioning of global brands vis-à-vis the direct consumer and the resulting impact in an extremely competitive market.
“I am puzzled and once again disappointed that these were rejected.
“I don’t know what additional evidence the AMC needs to appreciate the extent of this dynamic change which has been dramatically accelerated by Covid-19. “