The Office of Fair Trading is examining whether a merger between JJB Sports and its rival Sports Direct is on the cards and whether any such merger would need to be referred to the Competition Commission.

In October Sports Direct founder Mike Ashley bought 11.9 million JJB shares, equal to 4.7 per cent of JJB’s share capital, raising speculation that he may make a bid for the beleaguered chain.

In a statement the OFT said it is “considering whether arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002.

“Should it be found to be a relevant merger situation, the OFT will further consider whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services that warrants reference to the Competition Commission for investigation and report.”

This week JJB exchanged the contracts for four of its stores with Sports Direct raising£3.4 million for JJB.