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U.K.'s CMA Refers JD Sports' Footasylum Deal To In-depth Investigation

The UK's competition watchdog said Tuesday that it has referred JD Sports Fashion Plc.'s (JD.L) acquisition of Footasylum to an in-depth investigation, as it believes the deal may reduce market competition.

Meanwhile, JD Sports Fashion said it believes that there is clear evidence that the acquisition would not result in a substantial lessening of competition in the relevant clothing and footwear retail markets where the two businesses operate.

So, JD Sports said 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 U.K. Competition and Markets Authority or CMA has therefore confirmed that the transaction will be referred to a Phase 2 investigation.

Peter Cowgill, Executive Chairman of JD Sports Fashion said, "The CMA has referred their review of this acquisition to Phase 2 on the basis that it could be bad for competition and may have an impact on price. I strongly disagree with this. This transaction will not result in any price increases or a reduction in product ranges or service quality."

Last Month, the CMA said it was concerned that the loss of competition brought about by the merger could result in a worse deal for customers, both in-store and online, through higher prices, worse choice in stores or reductions in service quality. So, JD Sports must address the concerns identified or face a further, more in-depth, investigation.

JD Sports agreed to buy Footasylum in a 90 million pounds deal announced earlier this year.

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