Sports retailers JD Sports and Footasylum have been fined almost £5 million for breaching rules following their blocked merger, the UK competition regulator has announced.
Last year, before it ultimately blocked the merger in November, the Competitions and Markets Authority (CMA) ordered an in-depth phase two investigation into the proposed deal.
Amid the investigation process, the firms were prevented from integrating at all and were expected to put measures in place to prevent any potential breaches of these rules.
However, the CMA said the bosses of the two businesses “exchanged commercially sensitive information and then failed to alert or promptly alert the CMA” during the investigation period.
Kip Meek, chair of the inquiry group investigating the merger at the CMA, said: “There is a black hole when it comes to the meetings held between Footasylum and JD Sports.
“Both CEOs cannot recall crucial details about these meetings.
“On top of this, neither CEO or JD Sports’ general counsel can provide any documentation around the meetings – no notes, no agendas, no emails and poor phone records, some of which were deleted before they could be given to the CMA.
“Had there been proper safeguards in place, we would have been alerted to these breaches in good time and would have had the necessary information to tackle them head on.
“It jeopardised our ability to maintain the benefits of a competitive market for shoppers and ensure there is a level playing field for other businesses.
“This fine should act as a warning – if you break the rules, there will be serious consequences.”
JD Sports said in a statement that it accepts it “inadvertently” received commercially sensitive information and failed to highlight this to the Competition and Markets Authority, but criticised some comments from the watchdog.
“JD has been subject to hold separate measures in relation to Footasylum since May 2019, and balancing the obligations of separation and business stability over such a long period, which has also coincided with the Covid-19 pandemic, has been complex and not without challenge,” the company said.
“At no point has there been any intention to breach the rules, although JD does accept that, inadvertently, it was in receipt of limited commercially sensitive information and that this was not reported to the CMA immediately.
“However, JD believes that a number of the further conclusions which the CMA have drawn are either incorrect or have been presented in a misleading manner through the use of inflammatory language.
“In particular, JD notes that the CMA are suggesting, for the first time, that phone records have been deleted and, whilst JD accepts that some phone records were not available, it absolutely refutes any allegation that this was due to records being deliberately deleted.”
