The Competition and Markets Authority (CMA) today ordered JD to offload Footasylum, saying the deal threatened to leave customers facing higher prices and less choice.
Kip Meek, who led the CMA’s inquiry, said: “We strongly believe shoppers could suffer if Footasylum stopped having to compete with JD Sports. It is likely they would pay more for less choice, worse service and lower quality.”
JD said the decision “defies logic” and called it “extreme and unprecedented”. Cowgill said the CMA was “in a minority of one” and called the regulator’s decision “inexplicable”.
Cowgill and the CMA have been locked in a bitter war of words over the Footasylum deal for years.
JD first announced plans to buy Footasylum for £90 million three years ago. The CMA attempted to block the deal but was forced to reassess its decision following an appeal. The Competition Appeal Tribunal said the watchdog had not properly considered the impact of the pandemic and sent the case back for further review in March.
The CMA said in September it was minded to stick by its original decision and today reaffirmed that verdict.
Meek said: “The pandemic may have altered the way we shop but innovative businesses, driven by healthy competition, will rise to the challenge and successfully cater to changing tastes and habits. The evidence we have analysed shows that JD Sports and Footasylum are adapting well to market conditions and would continue to be profitable should the merger not go ahead.”
Cowgill said: “The CMA’s decision today continues to be inexplicable to anyone who understands what difference the pandemic has made to UK retail and how competition and the supply chain in our markets actually work. It is deeply troubling at a time when the UK high street has been seriously damaged already and is vulnerable to further closures.”
Cowgill argues that JD Sports faces much greater competition from brands like Nike and Adidas selling directly to consumers and the merger will help both Footasylum and JD compete.
Russ Mould, investment director at AJ Bell, said: “Peter Cowgill’s blood is boiling.
“He has been fighting the competition authority for some time, arguing that even after absorbing Footasylum into JD there still is plenty of competition in this sector, particularly from shoe manufacturers which are increasingly selling direct to consumers.”
JD said it was “studying the report in detail and will carefully consider its options accordingly.”
Investors shrugged off the news, which had been expected. JD’s shares rose 18p to 1101p. Mould said: “Footasylum is not really a material part of JD and was an opportunistic purchase in the first place.”