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Highlights
- JD Sports and Footsylum have been fined a combined £4.7 million by the Competition and Market Authority (CMA).
- The competition regulator announced that the two retailers exchanged commercially sensitive information and failed to report this to the CMA.
Leading retailer and distributor of branded sportswear and fashionwear JD Sports Fashion Plc (LON: JD.) has been in news for breaching the rules in Footsylum acquisition, which is a lifestyle fashion retailer. JD Sports has been fined £4.3 million (US$5.8 million) on 14 February 2022 by competition watchdog Competition and Market Authority (CMA).
The deal and the fine
JD Sports and Footsylum have been fined a combined £4.7 million on Monday for failing to comply in certain aspects with an interim order issued by the Competition and Market Authority (CMA) in May 2021. The competition regulator said that the two sportswear retailers exchanged commercially sensitive information and failed to report this to the CMA.
Footasylum CEO Barry Brown and JD Sports chief Peter Cowgill were found sharing information, such as issues with stock allocation from key brands, Footasylum’s financial performance, details regarding contract negotiations with logistics firms and the planned closure of six stores. The regulator has accused both companies for deleting sensitive records of the meeting before the regulator could find it out, as no documentation such as notes, emails, agendas, and phone records were provided by CEOs and general counsel.
The CEOs have admitted to inadvertently receiving commercially sensitive information but denied the claims of deleting records.
Following which, JD Sports was fined £2.5 million and Footasylum was asked to give £200,000 and for sharing commercially sensitive information and then failing to inform the CMA. Besides, JD Sports and Footasylum will have to cough up £1.8 million and £180,000, respectively.
In November 2021, the UK competition watchdog had asked JD to sell Footasylum after it found that the merger could lead to heightened online competition due to the pandemic situation.
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Stock Performance
The market cap of the FTSE100-listed company stands at £9,008.68 million. It has given a positive return of 3.77% in the last one year as of 14 February 2022, while its year-to-date return stands at -23.35%. JD Sports’s shares were trading at GBX 1,66.70, down by 4.55%, at 11:20 AM (BST) on 14 February 2022.
