Sports Direct (LON: SPD) today notes the CMA’s announcement of 19 September 2019 that the completed acquisition of Footasylum plc by JD Sports Fashion plc is likely to result in “a worse deal for customers, both in-store and online, through higher prices, worse choice in stores or reductions in service quality” as, inter alia, “the merging businesses are 2 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”.
Although the full text of the CMA’s decision is not yet public, Sports Direct’s board has received legal advice that the issues identified by the CMA in its announcement regarding brand relationships specifically, are likely to be a key focus of any Phase II 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.
Sports Direct International has consistently aimed to provide the widest range of products at attractive prices and will continue to work constructively with all of Sports Direct’s third party suppliers to enhance its product offering for the benefit of its consumers.
