OFT closed case: Acquisition by Sports Direct International plc of an interest in JJB Sports plc
Affected market: Sports retailing
The OFT’s decision on reference under section 22(1) given on 28 January 2009. Full text of decision published on 5 February 2009.
Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.
On the basis of the information available to it, the Office of Fair Trading (OFT) has decided that the arrangements under which Sports Direct International plc (Sports Direct) has acquired an interest in JJB Sports plc (JJB Sports) does not currently qualify for investigation under the mergers provisions of the Enterprise Act 2002 (the Act), because the transaction does not lead to the two enterprises ceasing to be distinct, as defined in section 26 of the Act. A relevant merger situation has, therefore, not been created.
The reasons for concluding that Sports Direct and JJB Sports will not cease to be distinct are summarised as follows:
- On 17 October 2008, Sports Direct subscribed for 11,994,360 ordinary shares in JJB Sports, representing approximately 4.76 per cent of the total voting rights attaching to JJB Sports’ issued share capital. An announcement of this subscription was issued by JJB Sports on 20 October 2008 pursuant to Listing Rule 10.4.1.
- As part of its disclosure obligations under Listing Rule 10.4.1, on 20 October 2008, Sports Direct also announced that it held long-only contracts for difference in respect of 42,897,806 ordinary shares in JJB Sports, potentially representing approximately 17.11 per cent of the total voting rights attaching to JJB Sports’ issued share capital.
- The OFT was in the process of considering whether the combination of the subscription of ordinary shares together with the contracts for differences would provide Sports Direct with the ability to materially influence the policy of JJB Sports.
- [ ], the OFT was informed that the contracts for differences held by Sports Direct in JJB Sports were [ ]. [ ], the OFT has therefore not taken account of the contracts for differences in determining whether Sports Direct has, overall, the ability materially to influence the policy of JJB Sports.
- Accordingly, on the basis of the information available to it, and given the level of shareholding Sports Direct holds in JJB Sports, the OFT does not believe that it is or may be the case that a relevant merger situation currently exists.
Finally, the OFT's investigation into the acquisition by Sports Direct of a number of stores from JJB Sports (ME/3986/08) is still ongoing.