FTSE 100 retailer JD Sports Fashion is looking to sell up its Footasylum chain to the Aurelius Group following months of talks with the UK competition watchdog.
As first reported by Mark Kleinman for Sky News, JD Sports is in exclusive talks with the private equity titan, with a source suggesting that the retailer’s position as a ‘forced seller’ has inevitably reduced the price of the mega deal.
JD Sports and Footasylum were jointly fined £4.3m by the Competition and Markets Authority (CMA) earlier this year for sharing commercially sensitive information despite an order not to do so.
JD Sports may also be facing hefty penalty after the watchdog found it broke rules by fixing retail prices of some Rangers Football Club branded clothes.
The CMA said it had provisionally found that Elite Sports and JD Sports fixed the retail prices of a number of Rangers-branded replica kits and other clothing products from September 2018 until at least July 2019.
JD Sports said it intends to recognise a provision of approximately £2m in its financial statements for the year to 29 January 2022, which was its “best estimate of the liability payable in respect of this matter,” including legal fees.
After the football club noticed the high street retailer was selling a replica top for a cheaper price than Elite, the club’s retail partner at the time, the CMA claims the three parties colluded.
The three firms are claimed to have come to an understanding so that JD Sports would up the price of an Rangers adult short-sleeved home replica shirt by nearly 10 per cent, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.
The watchdog also said it was concerned that Elite and JD Sports had colluded to fix prices of Rangers-branded clothing, including training wear and replica kit, over a longer period – without involvement from Rangers.
Collusion is thought to have included aligning the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect profit margins. This came at the expense of fans, the CMA said.
The retailer had admitted to cartel activity, alongside Elite, the CMA said.
“We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up,” Michael Grenfell, executive director of enforcement at the CMA, said.
He added: “Football fans are well-known for their loyalty towards their teams. We are concerned that, in this case, Elite, JD Sports and, to some extent, Rangers, may have colluded to keep prices high, so that the two retailers could pocket more money for themselves at the expense of fans.”
Companies discovered to have breached competition rules can face a fine of up to 10 per cent of their annual worldwide group turnover.
JD Sports said it was hopeful it would receive a reduction on any financial penalties as it had co-operated fully with the watchdog.
The company recently ousted chair Peter Cowgill.
Neither Aurelius Group nor JD Sports would comment on reports.