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JD Sports hits back at car park video as scrutiny of Footasylum deal mounts

·3-min read
A JD Sports store  (jd sports)
A JD Sports store (jd sports)

JD Sports has hit out at what it claims is "potentially illegal covert surveillance” of its executive chairman, after a video emerged of him meeting the boss of the chain’s Footasylum business in a car park.

​JD said today there was no “wrongdoing” by boss Peter Cowgill and Barry Bown, his opposite number at Footasylum.

JD bought Footasylum for £90 million in 2019 but the transaction has faced intense scrutiny from the Competition and Markets Authority, which has ordered the two businesses to stay separate while it probed the deal. Last week the CMA ordered JD to reverse the takeover on competition grounds.

Cowgill and Bown were recorded meeting in a car park in Bury, near Greater Manchester, on July 5 2021. The video was leaked to the Sunday Times over the weekend.

The article said the CMA has launched an investigation into a possible breach of its rules relating to the takeover.

A CMA initial enforcement order, implemented in May 2019 and still in place, bans the two retailers from integrating Footasylum into JD or in any way hindering Footasylum from competing with the bigger company.

The order does not ban meetings but says that “no business secrets, know-how, commercially sensitive information, intellectual property or any other information of a confidential or proprietary nature” can be shared. There are some exceptions.

JD Sports today said: “The CMA has already been fully apprised of the content of the meeting and the reasons for it and JD firmly believes that its actions in participating in this meeting do not amount to wrongdoing or a breach of the order and does not see how it would be reasonable to accuse JD of such.”

JD Sports told the Sunday Times the meeting was arranged to discuss Bown’s future involvement in the Footasylum business, a personal issue involving a family member of Bown that Cowgill knew, and “to reassure JD that Footasylum was doing everything it separately could to assist in obtaining CMA merger clearance”.

The newspaper said a source close to Cowgill said the pair met in the car park because a nearby café was shut due to Covid and that no business secrets were discussed.

Cowgill has known Bown for more than 25 years.

JD Sports said: “As a result, it is not unusual, or in any way suspicious or illegitimate, for them to meet from time to time, including in relation to the ongoing review by the CMA of JD's acquisition of Footasylum.”

The trainers retailer said it was disappointed that The Sunday Times “has not reported in a more balanced way on the highly irregular and potentially illegal covert surveillance undertaken by a third party for their own interests.”

JD Sports declined to comment on whether it has, or will, contact the police over the footage.

JD Sports “hopes that a regulator, tasked with acting in the wider public interest, is able to more critically regard the actions of the third party for what they are”.

The chain added: “Any suggestions with regard to corporate governance breaches are totally refuted.”

The CMA said: “These rules [around enforcement orders] are put in place to protect consumers and other businesses operating in that market as we investigate a merger. We take compliance very seriously and thoroughly investigate any potential breaches. Where there is clear evidence that a breach has occurred we do not hesitate to take action.”

The tie-up between JD Sports and Footasylum has faced a number of hurdles. The competition regulator previously attempted to block the takeover but was forced to reassess its decision following an appeal.

Last week the CMA once again ordered JD to offload Footasylum following that review. The CMA believes the deal threatens to leave customers facing higher prices and less choice.

JD is studying the report considering its options. The firm said last week the CMA decision “defies logic” and called it “extreme and unprecedented”.

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