The UK’s competition watchdog has warned that JD Sports’ £90m move for rival Footasylum may hurt competition on the high street, referring it for a deeper investigation.
The Competition and Markets Authority (CMA) will begin a second phase of scrutiny into the acquisition.
It said the “merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom”.
JD Sports’ executive chairman, Peter Cowgill, said Footasylum would be a “positive addition” to the firm, bringing new customer demograpgics and fashion-led products.
“We also believe that there will be significant operational and strategic benefits from a combination of the two businesses,” Cowgill added.
Cowgill said the company is looking at whether it can propose “acceptable remedies” to the watchdog to avoid a so-called phase two investigation.
“We look forward to working constructively with the CMA in this regard and will provide further updates in due course,” he said.
The CMA opened its probe into the merger back in May, and today warned it could”result in a substantial lessening of competition”.
JD Sports bought Footasylum in March after hiking its stake in the firm to 19 per cent.
Footasylum was forced to make two profit warnings last year as it struggled to find its footing on UK high streets.