On 13 November 2020, the Competition Appeal Tribunal (CAT) partially upheld JD Sports’ appeal against the CMA’s decision to prohibit its completed acquisition of Footasylum requiring it to fully divest Footasylum.[1] The CMA found that the parties were close competitors in sports-inspired casual clothing and footwear in stores and online. The CMA concluded there was no evidence that the impact of COVID-19 would remove its competition concerns.

JD Sports raised three grounds of appeal. The CAT upheld the second ground, finding that the CMA’s conclusions on the likely effect of the COVID-19 pandemic was not based on sufficient evidence. The CAT concluded that the CMA should have sought further information, especially from principal suppliers and Footasylum’s primary lenders, on the possible or likely effect of COVID-19. This failure meant the CMA was not in a position properly to answer the statutory questions required in a merger investigation. The CAT dismissed the CMA’s argument that it had not sought out further information given the late stage of its review and that the information provided by the parties was too generalised and speculative to be reliable. The CAT found that this should not have deterred the CMA from seeking out further information and that its file showed that it was able to collect other evidence at a later stage. The CAT also dismissed the CMA’s argument that any information that could be collected would be too uncertain to be useful, finding that dealing with uncertainty is inherent in the CMA’s assessment in merger cases. The CAT also partly upheld the third ground of appeal, finding that the CMA had erred by declining to inform itself on the post-merger constraints of Nike and Adidas’s own direct to customer retail in light of the COVID-19 pandemic. The CAT quashed the CMA’s decision in so far that it was based on the CMA’s assessment of the likely effects of the COVD-19 pandemic and required the CMA to reconsider the case.

[1]      See UK Competition Newsletter, April-May 2020 and UK Competition Newsletter, February-March 2020.