JD Sports Fashion Says CMA’s Provisional Decision Is Fundamentally Flawed
JD Sports Fashion Plc. (JD.L) on Tuesday provided an update following the UK Competition and Markets Authority or CMA’s announcement that it has competition concerns regarding the Group’s acquisition of Footasylum Limited.
The company called the CMA’s provisional decision “fundamentally flawed” and said it demonstrated a complete misunderstanding of the company’s market to an alarming extent.
JD Sports agreed to buy Footasylum in a 90 million pounds deal announced last year.
According to JD Sports, the CMA’s provisional findings do not reflect the dynamic competitive reality of the UK sports retail market, where a large number of retailers selling third-party brands compete with each other as well as with major online pure-players, and importantly, the increasingly powerful direct to consumer or DTC operations of the international brands themselves.
The CMA has failed to recognise and accept clear evidence of the rapidly changing nature of this market, which has materially altered even during the period of the CMA’s review, JD Sports added.
“We feel that, in its findings, the CMA has lost sight of its objective to protect consumer interests. We still firmly believe that bringing Footasylum into the Group will deliver significant benefits for both consumers and the UK high street, and we will continue to make our case strongly to the CMA in the coming weeks,” the company said.
According to JD Sports, the CMA itself recognises that Footasylum has a less than 5 percent market share, and therefore, it is clear that this transaction is small.
The company expects Footasylum will contribute less than 2 percent of the Group’s earnings in the year to January 2020, which is now expected to be at least equal to the top end of current market expectations, which after adjusting for IFRS 16, will range from 403 million pounds to 434 million pounds.
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