The Office of Fair Trading has referred Sports Direct’s acquisition of 31 stores from rival JJB Sports to the Competition Commission.

The deal had raised concerns about competition in five places where Sports Direct already had shops, and the retailer agreed to divest stores in those areas. However, Sports Direct has made “no significant progress” in shedding the stores, the OFT said.

The watchdog refused Sports Direct an extension to unload the outlets and said it does not believe that Sports Direct “would be able to arrange sales to suitable buyers even if given a reasonable period of additional time”.

OFT senior director of mergers Amelia Fletcher said: “We insisted on an upfront buyer provision in this case because we were uncertain that there were suitable buyers for the stores Sports Direct offered to divest.

“Its failure to make any real progress towards a sale demonstrates that our caution in requiring an upfront buyer was justified.

“After careful consideration, we have rejected Sports Direct’s request for additional time to try to achieve a sale.

“We are not persuaded that an extension would make a difference in this case and, in these circumstances, the proper course is for the OFT to refer the matter to the Competition Commission.”

Singer analyst Matthew McEachran, Sports Direct’s house broker, said: “There is the possibility of more drastic action with implications for all 31 stores. It remains to be seen whether or not the leases might have to revert back to JJB Sports.”