The Competition and Markets Authority (CMA) has officially launched a phase-two probe into the £90 million merger between JD Sports and Footasylum.
The regulator launched the investigation after JD Sports failed to adequately address its concerns over the deal, with concerns over the lessening of competition.
JD has rejected these claims, stating that there were no “appropriate remedies” that it could offer that would have avoided an in-depth investigation.
Peter Cowgill, Executive Chairman at JD Sports, said: “JD firmly believes that there is clear evidence that the acquisition would not result in a substantial lessening of competition in the relevant clothing and footwear retail markets where the two businesses operate.
“JD’s rationale for carrying out this acquisition was to retain Footasylum’s position as a multichannel retailer, both on the UK high street and online while ensuring that Footasylum’s diverse and complementary offer remains available to its consumers.”
JD Sports has more than 400 stores in the UK and is the leading sports footwear and fashion company in the country. In 2018 the company saw revenues grow to more than £2.1 billion.
Footasylum generated revenues of almost £200 million last year, and has more than 70 stores in the UK, experiencing significant growth since its first store opened 13 years ago.
The CMA had previously expressed concern that the loss of competition as a result of the merger could result in customers seeing higher prices, a reduction in the quality of service and less choice both in-store and online.
Nigel Fry, General Practice Partner at Milsted Langdon, said: “The CMA has now taken action by opening a Phase two investigation after it felt that JD Sports had not sufficiently remedied its queries into the deal. The deal has particular significance as it involved two of the UK’s leading sportswear stores.
“For advice on matters relating to mergers and acquisitions, contact our expert team today.”