JD Sports and Footasylum fined nearly £5m for breaking competition rules

British sports retailers JD Sports and Footasylum have been fined £4.7 million after breaching rules linked to a merger blocked by the UK’s Competition and Markets Authority (CMA).

The breaches include the sharing of commercially sensitive information between the two businesses' chief executives. Both CEOs claimed they couldn’t remember what had been said during meetings.

In November 2021, the regulator ordered JD Sports to sell Footasylum following an investigation into a merger between the two companies. The CMA found that the takeover could lead to a “substantial reduction in competition” and a worse deal for Footasylum customers.

JD Sports will pay £4.3 million in total, while Footasylum will pay £380,000 for the breaches.

The UK watchdog said that the retailers failed to have proper safeguards in place which made the breaches “almost inevitable”.

“There is a black hole when it comes to the meetings held between Footasylum and JD Sports," said Kip Meek, chair of the inquiry group investigating the merger. "Both CEOs cannot recall crucial details about these meetings.

“On top of this, neither CEO or JD Sports’ General Counsel can provide any documentation around the meetings – no notes, no agendas, no emails and poor phone records, some of which were deleted before they could be given to the CMA.
“Had there been proper safeguards in place, we would have been alerted to these breaches in good time and would have had the necessary information to tackle them head on."

According to the CMA, it is standard practice to issue an interim order during an in-depth phase two merger investigation. These orders prevent companies from integrating further and ensure they "continue to compete against one another as they would have before the deal took place".

The British regulator, which imposed the order on JD Sports and Footasylum in May 2021, prohibited the two organisations from exchanging commercially sensitive information without prior consent, and required the companies to "immediately alert the CMA of any chance that this information may have been shared".

The CMA revealed that during two meetings which took place on 5 July 2021 and 4 August 2021, Peter Cowgill, chief executive of JD Sports, and Barry Bown, chief executive of Footasylum, exchanged commercially sensitive information and then failed to alert or promptly alert the CMA.

During these meetings, they discussed:

> Footasylum’s issues with stock allocations from key brands
> information about Footasylum’s financial performance
> the planned closure of 6 Footasylum stores, with the locations of at least 2 being revealed
> Footasylum’s contract negotiations with its transport and delivery provider
> Contract negotiations for the renewal of Footasylum’s head office space

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