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Frasers Group reported to have offered to buy Footasylum

Lauretta Roberts
26 December 2021

Sports Direct parent Frasers Group is reported to have made an offer for Footasylum, following the Competitions & Markets Authority's  (CMA) decision to force its rival JD Sports to sell the chain.

According to The Sunday Times, Mike Ashley's group has approached JD Sports with the offer and has informed the CMA of its intention.

Last month the CMA announced its decision to force JD Sports to offload the chain it bought in April 2019 for £90m citing a reduction in competition and choice for the consumer. JD said at the time that the decision "defies logic".

Following an investigation, the CMA said that Footasylum was "by far and away" the closest rival to JD Sports and said that a survey it had carried out revealed that 50% of shoppers would go to JD Sports if they were unable to shop at Footasylum.

JD Sports argued that the survey failed to take into account online competition, including that from major sports brands' own channels and argued that Footasylum's market share was less than 5%.

As part of the CMA's investigation into the buyout, it is understood that a number of JD Sports rivals had complained that the deal wow tighten JD's stranglehold on relations with the likes of Nike and Adidas, who allow JD to sell its most sought-after styles while preventing others from doing so.

At the time of the CMA's decision in November, Kip Meek, chair of the CMA inquiry group, said: “The UK boasts a thriving sports fashion market and today’s decision reflects our commitment to keeping it that way.

“We strongly believe shoppers could suffer if Footasylum stopped having to compete with JD Sports. It is likely they would pay more for less choice, worse service and lower quality.

“The pandemic may have altered the way we shop but innovative businesses, driven by healthy competition, will rise to the challenge and successfully cater to changing tastes and habits."

Peter Cowgill, Executive Chairman of JD Sports, commented at the time: "The CMA rightly concludes that, following the acquisition of Footasylum, JD would have no incentive to raise prices or worsen its offer as its most important competitors are the DTC operations of the international brands themselves.

"However, the CMA has then somehow concluded that the competitive threat from DTC does not extend to Footasylum and that JD would have an incentive to worsen the offer in Footasylum to the detriment of both consumers and suppliers. We would suggest that the CMA is in a minority of one in reaching this conclusion.

"Overall, the CMA's decision today continues to be inexplicable to anyone who understands what difference the pandemic has made to UK retail and how competition and the supply chain in our markets actually work. It is deeply troubling at a time when the UK high street has been seriously damaged already and is vulnerable to further closures."

Neither JD nor Frasers has issued a statement on the situation, while the CMA has told The Sunday Times that any purchaser would need to commit to running a “fully independent competitor”. While Frasers owns Sports Direct, its positioning is distinct from JD in that is specialises in performance sports kit and clothing, as opposed to JD's fashion focused approach.

 


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