Sports Direct has said that the Competition and Markets Authority’s (CMA) investigation into rival JD Sports’ acquisition of Footasylum could have implications for the wider sector, by restricting supply and increasing prices.
In a statement released on the London Stock Exchange this morning, Sports Direct said it had received legal advice regarding the CMA’s investigation into its rival, saying the result of the probe could lead to increased prices, highlighting the “power of the ‘must-have brands’”.
The retailer said: “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 2 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.”
The CMA announced yesterday that it had referred JD’s £90m acquisition of Footasylum to a phase 2 investigation, after revealing it was “concerned” that the deal could lead to a loss of competition.
JD, which already operates more than 400 stores in the UK, agreed to acquire struggling shoe retailer Footasylum in March.
The watchdog said JD Sports “must now address the concerns identified or face a further, more in-depth investigation”.
Sports Direct said it would continue to work constructively with all of its third-party suppliers.