A shop sign for JD Sports in central London. The UK competition regulator has fined JD Sports and Footasylum almost £5m over breaking merger rules (Nick Ansell/PA)
(Picture: PA Wire)Retailers JD Sports and Footasylum have been fined £4.7 million by the Competition and Markets Authority after their bosses were found to have exchanged sensitive information during an investigation of the two companies’ proposed merger.
The CMA ordered JD Sports and Footasylum to pay fines totalling £4.3 million and £380,000 respectively for failing to have safeguards in place, sharing commercially sensitive information and failing to alert the CMA about meetings between the bosses of the two companies in July and August 2021.
Kip Meek, chair of the CMA group investigating the merger, was highly critical of the companies
“There is a black hole when it comes to the meetings held between Footasylum and JD Sports,” he said. “Both CEOs cannot recall crucial details about these meetings.”
Video footage emerged of JD Sports boss Peter Cowgill and Footasylum counterpart Barry Bown meeting in a car park months after the CMA started investigating a deal between the two. The CMA issued an interim order while investigating a merger between the two retailers, which prohibited members of the two companies from exchanging commercial information.
Footage of Cowgill and Bown meeting in a parked car was subsequently leaked to The Sunday Times. The two companies did not disclose details of the meeting until after the CMA had become aware of it in the press. JD Sports said there was no “wrongdoing”, telling The Sunday Times the purpose of the car park meeting was to discuss Bown’s future at Footasylum and a personal matter involving a family member. The bosses bosses of the two retailers have known each other for over 25 years.
But the CMA said the information shared in the meetings, including details of Footasylum’s financial performance and its planned store closures, were in breach of the order. It added that there were no notes or minutes of the meetings and phone records about the meeting were deleted.
Meek said the meetings “jeopardised [the CMA’s] 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,” he said.
JD Sports denied phone records were deliberately deleted.
In a statement, a spokesperson from JD Sports said: “JD does not believe that the description of events or the penalty that has been levied is a fair reflection of the Group’s efforts to ensure compliance with the order.
“JD has always acted honestly and in good faith in its efforts to comply with the order and in responding to enquiries from the CMA.”
JD first announced its intention to buy Footasylum in a £90 million deal in March 2019. The deal has faced constant opposition from the regulator since then. The CMA instructed JD Sports to divest of Footasylum in November 2021, a decision which Cowgill blasted as “inexplicable.”
