The U.K. competition watchdog referred JD Sports Fashion PLC's acquisition of Footasylum PLC to a full-scale investigation over concerns that the merger may result in "a substantial lessening of competition" in the country.
The Competition and Markets Authority, or CMA, completed its phase 1 inquiry into the deal on Sept. 19 and found that the sports company's purchase of its competitor could lead to higher prices, limited options and poorer quality of service for customers. It warned JD Sports to make the appropriate adjustments to address the concerns, or else it would face further scrutiny.
The detailed inquiry was launched Oct. 1 after JD Sports told the regulator that "it does not consider that there are any appropriate remedies that can be offered at this time to avoid a reference to Phase 2 being made."
The phase 2 investigation would study if the transaction could lead to a substantial lessening of competition in the market and whether action should be taken to remedy, mitigate or prevent the impact.
Responding to the CMA's move, the company said it "strongly" disagrees with the decision. The company said the acquisition "does not adversely impact the competitive landscape" in a "challenging" U.K. retail market and will not result in any price increases or a reduction in product ranges or service quality.
