The Competition and Markets Authority (CMA) is investigating JD Sports' merger with Footasylum, it confirmed today.
JD Sports recently completed the acquisition of Footasylum in a deal worth £90m.
Both JD Sports Fashion and owner of Footasylum, the Pentland Group, have been issued with an initial enforcement order under section 72(2) of the Enterprise Act 2002.
The CMA is considering "whether may be the case that a relevant merger situation has been created and whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition in any market".
JD purchased the competitor in March of this year, a month after taking its stake in Footasylum to 19 per cent and claiming it would not purchase the firm outright.
There had previously been restrictions on the shares that JD could acquire, but these were lifted in February.
The bid came on the back of two profit warnings from Footasylum last year, as the company struggled amid a difficult High Street climate.
JD's executive chairman Peter Cowgill said at the time of purchasing Footasylum that the business was “complementary” to its portfolio in the UK.
“We believe that there will be significant operational and strategic benefits through the combination of the very experienced and knowledgeable management team at Footasylum and our own expertise,” he added.
A spokesperson for JD Sports said:
A spokesperson for JD Sports said: “As stated in our Recommended Cash Offer on 18 March 2019, a review by the CMA was always a possibility. We have previous experience of working with the CMA and over recent weeks have had constructive engagement with them on this process.
"Both JD and Footasylum will, of course, cooperate fully with this review and further updates will be provided at the appropriate time.”
JD Sports' shares were down 0.5 per cent for the day to 631.20p.