Trainer Trouble: JD Sports to Sell Footasylum​

By Curtley Bale​


The Story

After a second investigation by the UK’s Competition and Markets Authority (CMA), JD Sports is being forced to sell Footasylum, the sportswear retailer that it acquired in 2019.
JD Sports bought its smaller rival Footasylum for £86 million in April 2019, just under a year before the Covid-19 pandemic.


What It Means For Businesses and Law Firms

The CMA cited a "substantial lessening of competition" should it allow the merger to proceed, with JD Sports being the “closest alternative for Footasylum shoppers”.

The CMA initially blocked the merger of JD Sports and Footasylum in May 2020, but it was forced to reconsider its decision after JD Sports appealed on the grounds of the pandemic significantly changing the playing field. The CMA rejected JD’s appeal and upheld its decision, saying that “innovative businesses drive healthy competition” and help to provide choice to the consumer (CMA).

JD Sports believes that the increased business-to-consumer sales seen during the pandemic threaten its business model, which justifies its acquisition of Footasylum. The retailer sells global brands such as Nike and adidas and has highlighted how these brands are ramping up their efforts to sell directly to consumers, thus increasing the competition facing JD Sports’ own sales model. While the CMA agreed with the growth in business-to-consumer sales, it did not believe this negatively impacted JD Sports enough to consolidate the market in this way.

JD Sports has six weeks to devise a plan for the sale of Footasylum, with the process being overseen by the CMA. JD Sports originally sought the legal advice of Addleshaw Goddard when the deal was approved in May 2019, with the firm handling the initial bid and structuring the entire takeover deal. Ashurst advised JD Sports' financial adviser Rothschild & Co.