JD Sports Takeover of Footasylum Blocked by U.K. Regulators

(Bloomberg) -- JD Sports Fashion Plc's purchase of Footasylum was blocked by the U.K. antitrust regulator after finding it would leave shoppers for sneakers worse off.

The U.K.'s Competition and Markets Authority said the merger would leave shoppers with fewer discounts and poorer quality customer service. JD Sports criticized decision, saying the regulator failed to take proper account of the “long lasting -- and likely permanent -- impact that COVID-19 has had on our industry.”

The CMA said it did consider how the coronavirus pandemic might affect competition, but found no evidence that the crisis would remove its concerns.

In its in-depth probe, the regulator found “a consistent picture” that JD Sports and Footasylum are close rivals, making the loss of competition between them important. It also concluded that the level of competition from other companies -- both now and in the foreseeable future -- wasn't sufficient to protect consumers after the merger.

“This decision comes at a very difficult time for retailers and we have been careful to consider the effects of coronavirus,” Kip Meek, chair of the CMA inquiry group, said in a statement Wednesday. “However, we need to make sure we think about the impact of this merger on shoppers, both now and in the foreseeable future.”

JD Sports said that the “CMA has failed to meet its objective of protecting consumer interests.”

“We fundamentally disagree with the CMA's decision, which continues to rely on an inaccurate and outdated analysis of the U.K. sports retail competitive landscape,” Peter Cowgill, executive chairman of JD Sports, said in a statement.