JD Sports and Footasylum fined £4.7m for competition breach

Sportswear retailers JD Sports and Footasylum have been fined almost £4.7m after breaching the rules around an attempted merger last year.

The deal, which was later blocked, was put under investigation and the firms were told not to exchange commercially sensitive information without consent.

But the competition regulator said there was a "black hole" regarding meetings between the businesses.

It said they had also "deleted" some records of their talks.

JD admitted "inadvertently" breaking the rules but accused the Competition and Markets Authority (CMA) of making incorrect conclusions with "inflammatory language".

After the regulator began investigating the £90m merger last May, JD and Footasylum were told to immediately alert the CMA if there was "any chance" sensitive information may have been shared.

Robust measures to stop this happening should have been put in place, it said.

But after a review, the CMA found "information exchanges were almost inevitable" at both firms.

It said that during two meetings, on 5 July and 4 August 2021, the bosses of JD Sports Footasylum, Peter Cowgill and Barry Bown, exchanged commercially sensitive information and then "failed to alert or promptly alert the CMA".

It added that "no notes, no agendas, no emails and poor phone records, some of which were deleted before they could be given to the CMA".

Later, it transpired the bosses had discussed:

• Footasylum's issues with stock allocations from key brands

• Information about Footasylum's financial performance

• The planned closure of six Footasylum stores, with the locations of at least two being revealed

• And contract negotiations for the renewal of Footasylum's head office space.

"Had there been proper safeguards in place, we would have been alerted to these breaches in good time and would have had the necessary information to tackle them head on," said Kip Meek, chair of the CMA inquiry group investigating the merger.

"It jeopardised our ability to maintain the benefits of a competitive market for shoppers and ensure there is a level playing field for other businesses."

JD Sports boss Peter Cowgill urged the CMA to reconsider its position

For failing to have proper safeguards, JD Sports must pay £2.5m and Footasylum £200,000.

For sharing commercially sensitive information, and then failing to alert the CMA, JD Sports will be fined £1.8m and Footasylum £180,000.

The CMA blocked the merger in November 2021, ruling that the takeover could lead to a "worse deal" for customers. At the time, JD Sports Mr Cowgill called the decision "inexplicable".

Commenting on the latest fines, his firm said: "JD does accept that, inadvertently, it was in receipt of limited commercially sensitive information and that this was not reported to the CMA immediately.

"However, JD believes that a number of the further conclusions which the CMA have drawn are either incorrect or have been presented in a misleading manner through the use of inflammatory language.

"In particular, JD notes that the CMA are suggesting, for the first time, that phone records have been deleted and, whilst JD accepts that some phone records were not available, it absolutely refutes any allegation that this was due to records being deliberately deleted."

JD, which agreed to buy Footasylum in 2019, said adhering to the CMA's rules had been "complex and not without challenge" over such a long period.