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CMA notifies intention to accept JD Sports undertaking to sell Footasylum

Subject: Competition law/ Merger control

Source: Competition and Markets Authority (CMA)


The Competition and Markets Authority (CMA) has announced its intention to accept the formal Undertakings given by JD Sports Fashion plc (J D Sports) to divest itself of the business of Footasylum pc (Footasylum) within a specified (but non-disclosed) period.

In April 2019, J D Sports Fashion plc acquired 78% of the shares (having previously bought an 8% stake) in the share capital of Footasylum plc at a total price of around £70 million, nearly double of the market capitalisation of the company on the AIM market.

After completion of the acquisition, the CMA took the view that the acquisition might lead to a substantial lessening of competition (‘SLC’) in relation to the supply of sports-inspired casual footwear and apparel both in-store and online in the UK. The Competition and Markets Authority (‘CMA’). This view was contested by J D Sports. In October 2019, the CMA referred the case to CMA panel to determine whether a relevant merger situation has been created and, if so, whether the creation of that situation has resulted, or may be expected to result, in a SLC in any market or markets in the UK for goods or services, in accordance with section 22(1) of the Enterprise Act 2002. The CMA published its final report on 6 May 2020 which concluded that the acquisition had created a relevant merger situation which had resulted in, or might be expected to result, in SLCs in relation to the supply of sports-inspired casual footwear and apparel both in-store and online in the UK.

JD Sports applied to the Competition Appeal Tribunal on 17 June 2020 for a review of the CMA’s decision. The CMA has now reached agreement with JD Sports, Footasylum and is former majority shareholders, Pentland Group Limited (Jersey) and Pentland Group Limited, as to the terms of Final Undertakings for the purpose of remedying, mitigating or preventing the SLCs. The undertakings require JD Sports to dispose of the Footasylum business. The formal acceptance by the CMA of the undertakings is subject to consideration of any written representations on the proposed Final Undertakings which should reach the CMA via email by 5pm on Friday 3 July 2020.

Comment: Although there may be reasons not known to outsiders, it is surprising that a firm like JD Sports with experienced management has allowed itself to get into the difficult position of being forced to sell a business it only acquired one year ago.


While there is no obligation on parties to a proposed merger or acquisition transaction to notify the CMA in advance with a view to obtaining a clearance, the consequences of not doing so and completing the deal and later being forced to unwind it are demonstrated by this case. It may be that discussions did take place and the CMA informed the parties that there would be competition concerns if the deal were to proceed. There are procedures available for parties to a proposed merger or acquisition to have informal pre-notification discussions with the CMA, and a formal notification process whereby the CMA has a statutory 40 day period (‘Phase 1 investigation’) in which to decide whether to clear the deal or to refer the deal to a panel for further review (‘Phase “ investigation’).


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