The testy battle between JD Sports and the competition watchdog ratcheted up today as the retailer was hit by a record fine.
JD Sports and its largest shareholder Pentland have to pay £300,000 after the Competition and Markets Authority said they had breached obligations relating to the probe into JD’s takeover of smaller rival Footasylum “without reasonable excuse”. The fine is the biggest ever for a one-off infringement, it is understood.
JD bought Footasylum for £90 million last year but watchdogs probed the deal, ordering the chains to be run as separate companies. It then blocked the deal earlier this year and demanded JD sell off the chain. JD is appealing that decision.
Today the CMA said JD had breached an initial enforcement order (IEO) issued in May 2019 which demanded no Footayslum assets were sold without approval. The footwear chain enforced a break clause and exited a store in Wolverhampton.
The watchdog said: “The CMA finds that JD Sports and Pentland failed to comply with the IEO by not procuring that: a) except with the CMA’s prior written consent or in the ordinary course of business for the separate operation of the Pentland business and the Footasylum business, none of the assets of the Footasylum business were disposed of; and b) each of their subsidiaries (including Footasylum) complied with the IEO as if the IEO had been issued to each of them.”
JD said it disagrees with the CMA’s decision and that the store decision was made by Footasylum’s “separate” management. JD has 28 days to appeal the penalty.
A JD Sports spokesman said: “We strongly disagree with the CMA’s decision to fine JD Sports for an alleged breach of the ‘hold-separate’ order. The terms of the order legally oblige JD and Footasylum to be operated as separate businesses by separate management teams, with the consequent alleged breach relating to an independent decision made by Footasylum management without JD’s knowledge or involvement. We are carefully considering our options.”
