JD Sports and Footasylum fined £5m over car park merger meeting Business

Trainer sellers JD Sports and Footasylum have been fined £5million after their chief executives unlawfully discussed commercially sensitive information without informing the merger regulator.

The Competition and Markets Authority (CMA) says JD Sports’ Peter Cowgill and Footasylum’s Barry Bown held two undisclosed meetings last summer as the former sought a takeover of the latter.

They had been ordered to keep their businesses separate while the CMA decided whether to block the merger to protect consumers from the threat of reduced competition and higher prices. The £90million deal was eventually banned in September.

The regulator said that when Messrs. Cowgill and Bown met, they discussed Footasylum’s financial performance, its key brand equity allocations and store closures, which were prohibited.

They have been criticized for their failure to keep notes of their meetings, at least one of which took place in a parking lot, and for allegedly destroying some of the recordings that were created.

JD Sports and Footasylum were fined a total of £4.7million. The penalty is the second largest of its kind imposed by the CMA, after Facebook was asked to pay £50million in November after breaching a similar order following its purchase of Giphy.

JD Sports was fined £4.3million and Footasylum £380,000.

Kip Meek, chairman of the investigative group investigating the merger, said: “There is a black hole in relation to the meetings held between Footasylum and JD Sports. The two CEOs cannot remember the crucial details of these meetings.

“On top of that, neither the CEO nor the General Counsel of JD Sports can provide documentation of the meetings – no notes, no agendas, no emails and poor phone recordings, including some were deleted before they could be turned over to the AMC.”

JD Sports said it had always acted “honestly and in good faith” and that there were no rules preventing chief executives from meeting.

In November, video footage emerged showing Mr Cowgill meeting Mr Brown in a car park near Bury in Greater Manchester. The material was shared with CMA by a third party.

The FTSE 100 company also admitted it “inadvertently” received limited commercially sensitive information and that some phone records were unavailable.

However, the retailer accused the regulator of publishing incorrect or misleading information and using “inflammatory language” regarding some of its findings. He denied deleting the phone records.

It is understood that the CMA’s decision to fine JD Sports and Footasylum is supported by hundreds of pages of evidence, which will be released in the coming weeks.

The move comes after the deal between the two sportswear companies collapsed, with the CMA demanding in November that JD Sports offload the retailer.

The CMA’s Mr Meek added: “This fine should serve as a warning – if you break the rules there will be serious consequences.”