Sports Direct warns JD Sports’ deal with Footasylum could increase prices
Sports Direct has weighed in on the competition watchdog’s concerns over rival JD Sports’ attempted £90 million takeover of Footasylum.
The retailer, controlled by billionaire Mike Ashley, said it had taken legal advice and believes the deal could lead to Sports Direct getting less access to top brands from Nike and Adidas.
Sports Direct had struggled in the past with getting exclusive lines from the two shoemakers – both of whom had preferred in the past to work with JD Sports over Mr Ashley’s stores.
Its assessment is similar to the Competition and Markets Authority (CMA), which said on Thursday that it would launch a lengthy Phase Two inquiry into the deal unless JD Sports addresses its concerns.
The CMA has warned the takeover could lead to higher prices and a “substantial lessening of competition” – a view now echoed by Sports Direct.
In a statement on Friday morning, Sports Direct 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 II 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.
“Sports Direct has consistently aimed to provide the widest range of products at attractive prices and will continue to work constructively with all of Sports Direct’s third-party suppliers to enhance its product offering for the benefit of its consumers.”
The company has been rebuilding relationships with Nike and Adidas in recent years, improving stores through its elevation programme and appointing David Daly, a former Nike executive, as its new chairman.
Sports Direct’s broadside at JD Sports comes a day after the company lost a High Court battle it funded against Debenhams’ CVA rescue package.
Mr Ashley had previously attempted to become chief executive of Debenhams, despite already owning House of Fraser.