JD Sports and Footasylum, two of the UK’s largest sportswear retailers, have been fined £4.7m for improperly discussing a merger when ordered not to.
The order, from the Competition and Markets Authority (CMA), prohibited the two high street giants from exchanging commercially sensitive information while the pair were attempting to merge.
But instead of ceasing communication, the bosses of JD Sports and Footasylum were filmed meeting secretly in a car park in July 2021, triggering an investigation by the competition watchdog.
The CMA said in a statement on Monday that its probe had found there was a “black hole when it comes to the meetings held between Footasylum and JD Sports”.
“Both CEOs cannot recall crucial details about these meetings… no notes, no agendas, no emails and poor phone records, some of which were deleted,” the regulator added.
The CMA’s order had specifically required the two companies to install safeguards to prevent this kind of exchange of information during merger talks. The merger was ultimately rejected by the CMA over anti-competition concerns.
The lack of these safeguards or co-operation with the CMA’s subsequent investigation “jeopardised our ability to maintain the benefits of a competitive market for shoppers and ensure there is a level playing field for other businesses”, said Kip Meek, chair of the inquiry group investigating the merger.
He added: “This fine should act as a warning – if you break the rules there will be serious consequences.”
JD Sports boss Peter Cowgill said that the company accepted it had received commercially sensitive information that was not reported to the CMA immediately.
“However, JD believes that a number of the further conclusions which the CMA have drawn are either incorrect or have been presented in a misleading manner through the use of inflammatory language,” Mr Cowgill said.