The Competition & Markets Authority (CMA) last week referred the deal to a deeper phase-two investigation as it thought the combination may result in a “substantial lessening of competition”.
One aspect of the market that the CMA has flagged in its initial probe has been the power of the 'must-have' brands in the market for what it calls “sports-inspired casual apparel and also footwear”.
JD’s tie-ups with big brands like Nike and Adidas allow it to gain access to limited releases of trainers and other 'ath-leisure' garments from the sportswear giants, which are much in demand.
Market share estimates 'inaccurate'
The initial results of its examination of the UK sports-inspired-casual-apparel-and-also-footwear sector, the CMA judged that JD had a 30-40% share in-store and 10-20% online, Footasylum no more than 5% in store and online, while Sports Direct’s share was 30-40% in-store and online.
Ashley, who has been “watching this from the side lines”, said that the CMA has published “inaccurate estimates” of Sports Direct's market share in this area of the sector, so “wrongly suggest that Sports Direct would have a comparable share of supply to the merged parties”.
Ashley, in a regulatory news statement on Wednesday, said he felt the estimates “substantially overstate” Sports Direct’s presence on the markets that are the subject of the investigation.
Sports Direct argued that it “does not have a meaningful, if any, presence in these markets for the reasons articulated by the CMA in the decision”.
Ashley offered the example of the Adidas Originals trainers, saying “our market share …in Sports Direct is virtually zero”.