Business
Update on CMA review of Footasylum acquisition
Update on CMA review of Footasylum acquisition.
About this update from Jd Sports Fashion Plc
[{"type":"text","content":"\n \n \n \n RNS Number : 2843R\n JD Sports Fashion Plc\n 04 November 2021\n \n \n \n \n 4 November 2021\n \n \n JD Sports Fashion Plc\n \n \n Update on CMA review of Footasylum acquisition\n \n \n JD Sports Fashion Plc (\"JD\") notes the announcement earlier today from the Competition and Markets Authority (\"CMA\") that it has again prohibited JD's acquisition of Footasylum Limited (\"Footasylum\"). \n \n \n However, the CMA agrees with JD on a number of critical aspects:\n \n \n · JD's most important competitors are now the Direct to Consumer (\"DTC\") operations of the international brands themselves rather than Footasylum with a market share of less than 5%.\n \n \n · As a result of this merger, there would be no substantial lessening of competition for JD and so, consequently, JD has no incentive to raise prices or worsen its consumer offer.\n \n \n This is the first time ever that the CMA (including its predecessors) has decided to block or remedy a deal between competitors where it found that there will be no \"substantial lessening of competition\" in relation to the acquiring business. \n \n \n Prior to this, in every other case under the UK merger regime between competitors, including its first review of this merger with Footasylum, the CMA has justified its intervention on the basis that the merger eliminated important rivalry for both the acquiring and the target business.\n \n \n Given the critical areas in which the CMA agrees with JD and the fundamental change in its conclusion between the two inquiries, the decision to prohibit the acquisition defies logic.\n \n \n Background to the Second Inquiry\n \n \n After the Competition Appeal Tribunal ruling that the CMA's original inquiry had made irrational errors, the CMA was instructed to go back and reconsider the impact of the COVID-19 pandemic. A key issue was to examine the degree to which the structural \"digital shift\" to online shopping during the pandemic has fundamentally increased competition from Nike's and adidas' own DTC retail offers on JD and Footasylum. At the same time, both parties rely on these competitors, Nike and adidas, for access to and supply of a significant number of key products.\n \n \n JD agrees with the CMA's revised conclusions in relation to some of the impacts of the pandemic:\n \n \n · \n Overall, ...