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Blow for Competition and Markets Authority as JD Sports overturns block on it takeover of Footasylum

 (Shezi Manezi)
(Shezi Manezi)

The Competition and Markets Authority was humiliated today after its controversial move to block JD Sports’ takeover of struggling Footasylum was overturned by a tribunal.

JD paid £90 million for Footasylum in March last year but the deal was blocked by the CMA after it had gone through.

Today, the Competition Appeal Tribunal ruled against the finding, saying the regulator had not gathered enough information about the impact Covid would have on Footasylum and the retail sector.

The CMA said it was considering an appeal.

JD had bitterly contested the CMA’s ruling, citing the cut-throat competition in the trainers market.

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The CMA’s decision to block the deal came despite Footasylum being in a precarious financial position. That can only have been worsened by the Covid-19 crisis hammering stores.

Some analysts said the regulator had been swayed by complaints from Mike Ashley of Sports Direct, who had reportedly argued that the two were both dominant competitors in premium priced footwear.

JD counters that Footasylum is a younger audience and that Adidas and Nike sell direct through their own stores and online already, providing strong rivals.

The Tribunal said the CMA’s first inquiry finding was now cancelled and the regulator must reconsider its decision.

Peter Cowgill, executive chairman of JD Sports Fashion, said: “We have always maintained that this merger would provide significant long-term benefits to customers, colleagues and brand partners, and so we are very pleased with the Competition Appeal Tribunal’s judgment today.

“The entire case will now go back to the CMA for re-consideration and we look forward to presenting further evidence which demonstrates the true extent to which the competitive landscape has evolved, in particular as a result of the unprecedented challenges caused by the COVID-19 pandemic.”

The CMA chief executive Andrea Coscelli said the tribunal had endorsed the regulator’s commitment to trying to ensure mergers do not make shoppers worse off.

"However, we are disappointed that the Tribunal disagreed with the CMA’s approach to information gathering about the specific impact of coronavirus on the sector given the circumstances at that time.

“We will now take stock of today’s judgement and carefully consider our next steps, including whether to appeal.”

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