On 14 February 2022, the CMA imposed fines of c.£4.7m on JD Sports Fashion plc and Footasylum plc for having breached an interim order (IO) that the CMA issued in the context of its merger control investigation into JD Sports’ completed acquisition of Footasylum. The IO prohibited the parties from exchanging commercially sensitive information (CSI) without prior consent and required them to alert the CMA if any CSI had been shared.

The CMA found that the CEOs of the parties exchanged CSI at one meeting and during a telephone call after the IO was issued without reporting it to the CMA and without having taken steps to prevent such exchanges or implementing procedures for meetings. The fines were issued under s94A of the Enterprise Act 2002, under which the CMA can impose a fixed penalty of up to 5% of a company's worldwide turnover for failure to comply with an IO without reasonable excuse. 

Moreover, once aware of the meeting, the CMA requested further information from the parties, including whether any documents had been exchanged during their meeting but the parties stated that no documents were exchanged. However, the CMA pointed to “video footage of that meeting, which the CMA has shared with JD Sports”, which showed that “during the meeting which took place in [a] black Mercedes”, the CEOs shared and discussed a document, which appeared to be a spreadsheet. The CMA has not yet confirmed any further details on how the video footage referred to was produced or obtained but media reported in late 2021 that the parties had been covertly videoed, allegedly by a third party. 

The CMA considered the failure to properly respond to the request was “flagrant and serious” and imposed a fine of £20,000 on each of the parties. The maximum fixed penalty for failing, without reasonable excuse, to comply with an information request is £30,000.

The highest individual fine for breaching the IO in this case was £2.5m but the CMA stressed the total fines were well below the legal maximum. However, this fine is the second highest to date of this type - albeit dwarfed by the CMA’s £50m fine on Facebook in October 2021 in a similar case - and again demonstrates the CMA’s interventionist approach, particularly as regards un-notified completed mergers.

Background

JD Sports acquired Footasylum in August 2019 without pre-notifying the CMA, which then investigated the merger and referred it for a Phase 2 investigation, ultimately blocking the merger on 6 May 2020, as it was expected to result in a substantial lessening of competition (SLC). JD Sports appealed the decision to the Competition Appeal Tribunal, which on 13 November 2021 quashed the CMA's decision as regards its assessment of the likely effects of the Covid pandemic on the relevant markets, the parties and the competitive constraints likely to apply to the merging parties. The CMA then reconsidered the remitted case but again confirmed its SLC findings and, on 4 November 2021, required JD Sports to divest Footasylum.