CMA: 'JD Sports must tackle poor customer shopping habits following £90m acquisition'
The Competition and Markets Authority (CMA) has raised concerns about the acquisition of Footasylum from JD Sports.
The CMA is addressing that it could be a significant issue for shoppers, both in-store and online. This is due to higher prices, poor choice in stores and reductions in service quality.
JD Sports must now address these concerns or face an in-depth investigation. The two sports brands both sell casual clothing and footwear across UK stores, their apps and websites.
JD Sports and Footasylum both sell sports-inspired casual clothing and footwear in stores across the UK, and through their apps and websites. JD Sports agreed to buy Footasylum in a £90m deal earlier this year.
In 2018, UK consumers spent over £5bn on sports clothing and footwear. Sportswear is currently a significant influence on fashion trends, with sports styles replacing traditional casualwear, particularly among younger shoppers.
JD Sports has over 400 stores, and owns several fashion brands including Size?, Footpatrol and Tessuti.
Meanwhile, Footasylum - since opening its first store in 2006 - has experienced strong market share growth and now operates around 70 stores across the UK. The brand generated revenues of close to £200m in 2018.
The CMA’s initial Phase One investigation has found that the merger could remove one of JD Sports’ closest competitors.
Colin Raftery, the CMA’s senior director, added: “JD Sports is already by far the largest player in the growing sports fashion sector, so any deal that results in it buying up one of its closest competitors could clearly give cause for concern.
“Our investigation has shown us that JD Sports and Footasylum have been competing strongly across the UK, with a sports fashion offering that few other retailers are able to match.
“That’s why we’re concerned this deal could lead to higher prices, less choice and a worse shopping experience for customers.”
JD Sports must now address the CMA’s concerns. If it is unable to do so, the merger will be referred for a more in-depth Phase Two investigation.
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