Interviews
News Flash
UK's CMA blocks JD Sports, Footasylum merger
13 May '20
3 min read
Pic: JD Sports
Following an in-depth Phase 2 investigation, the UK Competition and Markets Authority (CMA) recently concluded that JD Sports’ £90-million takeover of Footasylum would lead to a substantial lessening of competition nationally. This would leave shoppers with fewer discounts or receiving lower quality customer service, a statement from the UK government said.
It is obvious that COVID-19 has led to retailers facing uncertain and challenging trading conditions and the CMA has considered how this might affect the competition concerns surrounding this transaction, the statement said.
While it is significantly affecting the sector, the CMA has not found evidence that the impact of the novel coronavirus would remove its competition concerns. However, the CMA does believe that the continuing uncertainty means that JD Sports should be allowed sufficient time in which to sell Footasylum, given the additional challenges associated with the novel coronavirus.
In reaching this final decision, the CMA analysed a wide range of evidence looking at how closely these firms compete as well as competition from other retailers, whether they are online-only or also have stores, and the constraint from suppliers like Nike and Adidas.
The evidence included more than 2,000 of the companies’ own internal strategy and decision-making documents, which showed that JD Sports and Footasylum monitor each other’s activity closely. Additionally, the CMA conducted two large surveys of together more than 10,000 of the companies’ customers.
These surveys showed that many JD Sports and Footasylum shoppers see the other firm as their next best alternative. For example, more than two thirds of Footasylum’s in-store customers said that they would shop at JD Sports if they could no longer shop at Footasylum—substantially higher than for any other retailer.
The CMA also found that Footasylum store openings negatively impacted footwear and clothing sales at nearby JD Sports stores. The evidence generally showed a consistent picture: JD Sports and Footasylum are close competitors.
Although JD Sports is a larger retailer than Footasylum, they have millions of customers in a fast-growing sector. Therefore, the loss of competition between them is important. Both companies are among a small number of retailers that sell the latest sports-inspired casual footwear and clothing across the UK, typically to younger, trend-conscious consumers, said the statement.
During Phase 2 investigations, decisions are made by independent inquiry groups chosen from the CMA’s panel members who come from a variety of backgrounds, including economics, law, accountancy and business. In this case, the group decided that the only way to address the competition concerns is for JD Sports to sell Footasylum, in full, to an approved buyer.
It is obvious that COVID-19 has led to retailers facing uncertain and challenging trading conditions and the CMA has considered how this might affect the competition concerns surrounding this transaction, the statement said.
While it is significantly affecting the sector, the CMA has not found evidence that the impact of the novel coronavirus would remove its competition concerns. However, the CMA does believe that the continuing uncertainty means that JD Sports should be allowed sufficient time in which to sell Footasylum, given the additional challenges associated with the novel coronavirus.
In reaching this final decision, the CMA analysed a wide range of evidence looking at how closely these firms compete as well as competition from other retailers, whether they are online-only or also have stores, and the constraint from suppliers like Nike and Adidas.
The evidence included more than 2,000 of the companies’ own internal strategy and decision-making documents, which showed that JD Sports and Footasylum monitor each other’s activity closely. Additionally, the CMA conducted two large surveys of together more than 10,000 of the companies’ customers.
These surveys showed that many JD Sports and Footasylum shoppers see the other firm as their next best alternative. For example, more than two thirds of Footasylum’s in-store customers said that they would shop at JD Sports if they could no longer shop at Footasylum—substantially higher than for any other retailer.
The CMA also found that Footasylum store openings negatively impacted footwear and clothing sales at nearby JD Sports stores. The evidence generally showed a consistent picture: JD Sports and Footasylum are close competitors.
Although JD Sports is a larger retailer than Footasylum, they have millions of customers in a fast-growing sector. Therefore, the loss of competition between them is important. Both companies are among a small number of retailers that sell the latest sports-inspired casual footwear and clothing across the UK, typically to younger, trend-conscious consumers, said the statement.
During Phase 2 investigations, decisions are made by independent inquiry groups chosen from the CMA’s panel members who come from a variety of backgrounds, including economics, law, accountancy and business. In this case, the group decided that the only way to address the competition concerns is for JD Sports to sell Footasylum, in full, to an approved buyer.
Fibre2Fashion News Desk (DS)
Popular News
Leave your Comments
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
