Sports Direct weighs in on JD Sports/Footasylum deal
By Michele Maatouk
Date: Friday 20 Sep 2019
(Sharecast News) - A day after the competition watchdog said that JD Sports' proposed acquisition of Footasylum could be referred for an in-depth investigation, Sports Direct weighed in, arguing that a probe could have "wider market implications".
The Competition and Markets Authority said on Thursday that it could refer the JD Sports/Footasylum deal for a phase 2 investigation as it could lead to higher prices, less choice and a worse shopping experience for customers.
"While a wide variety of retailers sell sports clothing and footwear, the merging businesses are two of a smaller number of firms who have the brand relationships and market presence to be able to credibly meet the demands of sports fashion customers," the watchdog said.
Unless JD Sports addresses the CMA's concerns, the merger will be referred for an in-depth investigation.
Sports Direct said that while the full text of the CMA's decision is not yet public, it has received legal advice that the issues identified regarding brand relationships specifically, are likely to be a key focus of any phase 2 investigation, but are also likely to have wider market implications beyond this transaction, "as they appear to highlight the power of the 'must-have' brands and potential market-wide practices aimed at controlling the supply and, ultimately, the pricing of their products".
The company insisted that it has consistently aimed to provide the widest range of products at attractive prices and will continue to work constructively with all its third party suppliers "to enhance its product offering for the benefit of its consumers".
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