CMA raises JD Sports/Footasylum merger concerns
Written by Peter Walker
The Competition and Markets Authority (CMA) has raised concerns that the loss of competition brought about by the merger of JD Sports and Footasylum could result in a worse deal for customers, both in-store and online, through higher prices, worse choice in stores or reductions in service quality.
JD Sports must now address the concerns identified or face a more in-depth Phase 2 investigation.
The retailer agreed to buy Footasylum in a £90 million deal announced earlier this year.
With over 400 stores, JD Sports is well-established as the leading UK retailer of sports fashion footwear and clothing. It already owns sector brands Size?, Scotts, Tessuti and Footpatrol, generating revenues of over £2.14 billion in 2018 in the UK.
Since opening its first store in 2006, Footasylum has experienced strong market share growth and now operates around 70 stores across the UK. Footasylum generated revenues of close to £200 million in 2018.
The CMA’s initial investigation has found that the merger could remove one of JD Sports’ closest competitors. While a wide variety of retailers sell sports clothing and footwear, the merging businesses are two of a smaller number of firms which have the brand relationships and market presence to be able to credibly meet the demands of sports fashion customers.
Colin Raftery, senior director at the CMA, said: “JD Sports is already by far the largest player in the growing sports fashion sector, so any deal that results in it buying up one of its closest competitors could clearly give cause for concern.
“Our investigation has shown us that JD Sports and Footasylum have been competing strongly across the UK, with a sports fashion offering that few other retailers are able to match – that’s why we’re concerned this deal could lead to higher prices, less choice and a worse shopping experience for customers.”