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The Competition Appeals Tribunal has overturned the Competition and Markets Authority (CMA) decision to block JD Sports Fashion PLC‘s (LON:JD.) acquisition of Footasylum.
The competition watchdog previously said the merger would result in a substantial lessening of competition in sports clothing and footwear in the online and physical stores space, which would damage shoppers.
READ: JP Morgan initiates coverage of JD Sports with ‘overweight’ rating
The Tribunal said that CMA “acted irrationally” in drawing conclusions of the likely effects of the COVID-19 pandemic “without having the necessary evidence from which it could properly draw those conclusions”.
The judgement also said the CMA did not understand the risk posed by the own channels of brands JD Sports distributes such as Nike and Adidas.
Regulators initially opened an investigation into the purchase shortly after it was completed last year, ordering that Footasylum and JD be run as separate companies in the interim period, however, earlier this year the CMA blocked the merger outright and order JD to sell off the footwear chain citing concerns over a lack of discounts for shoppers and lower quality customer service.
In August, the FTSE 100 retailer and its largest shareholder Pentland were slapped with a record GBP300,000 fine by the UK’s competition regulator for breaching obligations.
Shares in JD were little changed at 808.32p on Friday before close.
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