The Competition and Markets Authority has been looking at the £90m deal between JD Sports and Footasylum and is referring it to a so-called phase 2 stage of investigation.
It says it has “decided, on the information currently available to it, that it is or may be the case that the following Merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom”.
Peter Cowgill, Executive Chairman of JD Sports, said: “We continue to believe that Footasylum would be a positive addition to the group, bringing a differentiated customer demographic and fashion-led product range that is complementary to our existing business. We also believe that there will be significant operational and strategic benefits from a combination of the two businesses.
“Our discussions with the CMA are ongoing as we consider whether to proceed to Phase 2 or if acceptable remedies can be agreed at this stage. We look forward to working constructively with the CMA in this regard and will provide further updates in due course.”