JD Sports Fashion Plc was fined 4.3 million pounds ($5.8 million) after Britain’s merger watchdog said the retailer broke confidentiality rules during its vetoed bid for rival Footasylum.
The Competition and Markets Authority said Monday that the two sports retailers failed to put sufficient safeguards in place to avoid sharing commercially sensitive information.
The CMA said that in meetings between JD’s chief executive officer Peter Cowgill and Footasylum counterpart Barry Bown, the two discussed Footasylum’s issues with stock allocations, financial performance and plan to close stores, revealing at least two locations.
“There is a black hole when it comes to the meetings held between Footasylum and JD Sports,” said Kip Meek, chair of the CMA’s inquiry group investigating the merger. “Both CEOs cannot recall crucial details about these meetings.”
The CMA ordered JD Sports to sell smaller rival Footasylum in November to address competition concerns and protect consumers after initially blocking the 90-million-pound merger in May 2020. A few days later JD Sports responded to reports of Cowgill meeting with Bown in a car park in Greater Manchester, saying “it is not unusual or in any way suspicious or illegitimate” for the two to meet from time to time.
JD denies intentional wrongdoing
JD Sports, (No. 24 in the 2021 Digital Commerce 360 Europe 500) said Monday that while it was “inadvertently” in receipt of some commercially sensitive information and it did not report this to the CMA immediately, the company refutes that any records were deliberately deleted. The company submitted all relevant devices to a third party for forensic analysis.
“JD has always acted honestly and in good faith in its efforts to comply with the order and in responding to inquiries from the CMA,” the company said. Footasylum couldn’t immediately be reached for comment.
For failing to have safeguards in place, JD Sports must pay 2.5 million pounds and Footasylum 200,000 pounds, according to the CMA’s statement. For sharing commercially sensitive information and failing to alert the CMA, JD Sports must pay 1.8 million pounds and Footasylum 180,000 pounds.