The takeover of Footasylum by JD Sports could mean shoppers “lose out”, the UK’s competition watchdog has warned, with younger consumers and students hit the hardest.
The deal could mean fewer discounts and less choice for shoppers, the Competition and Markets Authority said.
Following an in-depth probe into the £90m deal, the CMA said its provisional ruling was to block the deal.
However, JD Sports called the decision “flawed”.
“The competitive landscape described by the CMA is one which neither I, nor any experienced sector analyst, would recognise,” said JD Sports executive chairman Peter Cowgill.
“Just take a walk down any major UK High Street or search for Nike or Adidas trainers on Google and you can see for yourself how competitive this marketplace really is.”
He also suggested that the CMA had “lost sight of its objective to protect consumer interests”.
JD Sports has about 400 stores and owns a number of other High Street brands such as Size?, Scotts, Tessuti and Footpetrol.
Footasylum is a smaller chain and has about 70 stores in the UK.
Kip Meek, chair of the independent inquiry group looking at the investigation, said the merger could “particularly affect younger customers and students, who shop in JD Sports and Footasylum”.
The CMA said it looked at surveys of more than 10,000 JD Sports and Footasylum customers, as well as documents from the companies and their competitors, during the investigation.
It also said shoppers spent more than £5bn on sports clothing and footwear in 2018, which is becoming increasingly popular with younger consumers.
The watchdog is now asking for views on its findings and suggestions on ways to address its concerns over less competition.
It added that blocking the deal by forcing JD Sports to sell the Footasylum business might be the only way to do so.
The deadline for its final report on the merger has been extended to 11 May.