CMA tells JD Sports to sell Footasylum after investigation identified competition concerns, especially in relation to online shopping.
Footasylum was purchased by JD Sports in a deal announced in April 2019. Both companies sell sports-related fashion, including clothing and footwear, in stores around the UK and online, through their respective apps and websites.
The Competition and Markets Authority has found that the takeover by JD Sports of Footasylum could lead to a substantial reduction in competition and a worse deal for Footasylum’s customers. Over the course of its inquiry, the CMA found that JD Sports is by far and away the closest alternative for shoppers at Footasylum. It carried out a survey of online customers of the two companies in May 2021. Over 40% of Footasylum customers for footwear and half of Footasylum customers for apparel said they would go to JD Sports if they could not shop at Footasylum. These figures were substantially higher than for any other retailer. Another CMA survey of in-store shoppers showed similar results.
The CMA expects this will continue to be the case even after taking into account the continued growth in online shopping, including on the websites and apps of brands such as Nike and adidas.
The CMA also found that, despite increased competition from firms like Nike and adidas, and the impact of Covid-19, Footasylum would remain in good financial health. The merger means that Footasylum would no longer face competition from JD Sports so customers would have fewer options and could face higher prices, fewer discounts, and less choice of products in-store.
The CMA’s view is that requiring JD Sports to sell Footasylum is the only way to address its competition concerns and protect consumers. It will oversee the sale and approve the purchaser, with the aim of ensuring that Footasylum will be run as a fully independent competitor.
To inform the decision, a group of independent CMA panel members considered a range of evidence from both companies, as well as their competitors, customers and suppliers. The panel also assessed internal and decision-making documents to gain detailed insights about the merger and conditions in the sports fashion market more generally.
As separate, rival entities, the CMA says that the companies can continue to compete for shoppers online and as they return to the high street.