JD Sports says the CMA used ‘outdated and flawed’ surveys to reach its verdict © Bloomberg

JD Sports will appeal against the Competition and Markets Authority decision to block its acquisition of Footasylum in another sign of corporate frustration at the perceived interventionist stance of the regulator.

The intention to appeal to the ruling was confirmed in documents published on the CMA website on Thursday.

The Competition Appeals Tribunal has yet to publish the summary of notice, which spells out on what grounds JD Sports is contesting the decision, but lawyers expect that it will broadly reiterate the criticisms the company raised during the inquiry.

The FTSE 100 retailer said the CMA’s probe into the already-completed transaction had relied on “an inaccurate and outdated analysis of the UK sports retail competitive landscape” and that the surveys it conducted were “outdated and flawed”.

Those surveys suggested consumers regarded Footasylum as a major competitor to JD Sports, even though it is much smaller, and that the combined company would have even more control over high-end products from the likes of Nike and Adidas.

As a result, the CMA said last month that it would require JD Sports to sell Footasylum to an independent bidder in order to avoid a lessening of competition in the market for high-end sports footwear in particular.

JD Sports also said the watchdog had failed to take sufficient account of the impact of Covid-19 on Footasylum, which was already in financial difficulties last year when JD Sports acquired it, and that it had been swayed by “self-serving testimony” from rival Sports Direct.

The company said on Thursday that it could not comment further because of the legal process.

Lawyers said the watchdog had taken an increasingly tough approach to deals, spurring appeals.

Some 19 per cent of its total cases were referred to an in-depth investigation in 2018/19 according to data analysed by law firm Pinsent Masons — the highest proportion in five years. The watchdog has also blocked four deals since April 2019.

Including JD Sports, four of its merger decisions have been challenged. Technology companies Tobii and Smartbox unsuccessfully appealed to the CAT last year, and cleaning services group Ecolab failed to overturn the CMA’s ruling that it should sell chemical cleaning company Holchem.

Lawyers said JD Sports would have to meet a high bar to win its case because merger appeals were treated as judicial reviews. The company will have to prove that no reasonable authority would have come to the same decision as the CMA.

Mark Jephcott, competition partner at Herbert Smith Freehills said the CMA was becoming “increasingly interventionist” and was taking an increasingly “strict and thorough” approach to evidence including company internal documents when making its case.

Pinsent Masons partner Alan Davis said the CMA’s “forensic review of evidence, large document and email requests” meant the “burden, cost and duration of a UK merger filing is now significantly higher than most other EU jurisdictions”.

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