JD Sports Fashion is questioning a fine of almost £5 million (€5.9m) imposed by the British anti-trust authority for “sharing of commercially sensitive information” with Barry Bown, CEO of the Footasylum chain it acquired in May 2019. On the other hand, it confirmed that it will “continue to work constructively” with the authority on the process to divest Footasylum, in compliance with a recently confirmed order to do so, instead of appealing the authority’s verdict again.
The Competition and Markets Authority (CMA) had first ordered the divestiture last May 19, following an anti-trust investigation, asking to stop its integration to ensure that the two companies would continue to compete against each other. In response to an appeal, it confirmed its verdict on Nov. 5.
Expanding on a recent media report, the CMA said it found that Peter Cowgill, executive chairman of JD, had met Bown twice on July 5 and Aug. 4 without promptly alerting the authority. According to the CMA, the two executives discussed, among other things, Footasylum’s issues with inventory allocations from key brands, information about Footasylum’s financial performance, and the planned closure of six of its stores. The CMA said sharing this information could potentially affect competition in the market.
The CMA went so far as to allege that some phone records were deleted before being given to the authority. While admitting that “inadvertently, it was in receipt of limited commercially sensitive information and that this was not reported to the CMA immediately,” JD said it “absolutely refutes any allegation that this was due to records being deliberately deleted. In this regard, JD can also confirm that it voluntarily submitted all of its relevant devices to a third party for expert forensic analysis.”
JD pointed out that there was no prohibition on the meeting of the two CEOs, that it was not required to take notes on such meetings, and that JD was required to retain the employment of key Footasylum employees. Bown had previously been the CEO of JD, and Cowgill said he had known him for over 25 years.
As recently reported, Frasers Group, the parent company of Sports Direct, is now bidding to take over Footasylum.