British sports apparel retailers, JD Sports Fashion plc and Footasylum PLC, have been reportedly fined a total of £4.7 million ($6.4 million) for having secretly held a merger meeting and therefore breaching the Competition and Markets Authority (CMA) orders.
As per the orders from CMA, the two high streets rivals were prohibited from exchanging commercially sensitive information last year following their attempt to merge in 2019.
However, the CEOs of JD Sports and FootAsylum were filmed having met secretly in a car park in July last year, instead of having ceased communication, which prompted an investigation by the CMA.
The competition watchdog said that a ‘black hole’ was found in the record of meetings held between the two retailers during the probe. It added that both bosses were unable to recall important details about these meetings that had no notes, agendas, or emails, and only poor phone records, some of which may have even been deleted.
The two companies were specially ordered to install safeguards during their merger talks in order to prevent that kind of information exchange, which was ultimately blocked due to anti-competition concerns.
Kip Meek, Inquiry Chair at CMA, stated that due to the lack of safeguards and noncooperation with its investigations by the two retailers, CMA’s ability to maintain the benefits of a competitive market for consumers, along with ensuring a leveled playing field for other companies, was jeopardized.
Peter Cowgill, CEO of JD Sports, stated that the group admits to having received commercially sensitive information and not immediately reporting it to the watchdog.
However, Cowgill stated that the group believed that many of the conclusions made by the CMA are either incorrect or presented in a misleading manner via inflammatory language.
JD had first unveiled its intention to acquire Footasylum in March 2019 through a £90 million deal, which from the moment it was announced, faced constant CMA opposition. The CMA had instructed JD to divest from Footasylum back in November of 2021, a ruling that Cowgill had labelled ‘inexplicable’.