(Reuters) - Britain's competition watchdog made good on Wednesday on its threat to block sportswear retailer JD Sports' (L:JD) 86 million pound takeover of smaller rival Footasylum, saying it would leave shoppers worse off and requiring JD to sell the chain.
The sportswear retailer said it was considering an appeal and that, in the context of the coronavirus-driven pressures on retailers, the decision put at risk the future of Footasylum and its 2,500 employees.
"We do not see the effects of the current crisis changing the competitive dynamics in a way that diminishes the substantial lessening of competition that we need to remedy," the Competition and Markets Authority (CMA) said.
Consumers have shifted their spending exclusively online as stores shut in the UK, JD Sports Chairman Peter Cowgill said, adding that when the current lockdown measures are lifted it is "virtually certain" that footfall levels will not return to pre-crisis levels.
"We are astounded that the CMA has failed to recognise that this isn't just a short-term blip, but rather a long-term societal and behavioural change in how consumers shop," Cowgill said.
The CMA said an independent inquiry group decided that the only way to address competition concerns is for JD to sell Footasylum to an approved buyer, but the retailer should be allowed sufficient time amid additional challenges induced by the pandemic.