OFT probe puts JJB sale on hold

JJB Sports headquarters at Martland Park, Wigan
JJB Sports headquarters at Martland Park, Wigan

THE PARTIAL sale of JJB Sports to rivals Sports Direct is to be examined by the Office of Fair Trading (OFT) - potentially putting the jobs safeguarded as part of the deal at risk.

Earlier this month, more than 250 jobs at the Wigan based company’s Martland Mill headquarters were saved as Sports Direct announced a £23.8m deal to take on 20 JJB stores and their website domain.

But the OFT will now probe whether the deal causes any significant competition concerns in the sport retail sector.

An OFT statement read: “We are considering whether this acquisition has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002.

“And, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any markets for goods or services.”

The government regulators could potentially force Sports Direct to renegotiate their pre-pack administration deal if they deem that competition rules have been breached.

Debt-laden JJB’s demise into administration had led to 2,200 redundancies across the UK, including 27 at their Robin Park outlet, although 258 jobs were saved as their rivals agreed to take over the Wigan HQ.

The potential sale of the remaining 153 stores not taken on by Sports Direct is still ongoing. Administrators KPMG confirmed to the Evening Post this week that it may take months rather than weeks before a deal is agreed.

Business insiders had speculated that any further acquisition by Sports Direct, controlled by Newcastle United owner Mike Ashley, would be subject to investigation by competition regulators but that the original pre-pack deal would not be under consideration.

The OFT has now invited third party comments from within the retail sector until the November 2 deadline. A decision as to whether there will be a further investigation by the Competition Committee will then be determined.

A spokesman for KPMG, JJB’s administrators, would not be drawn on how the OFT investigation would affect either the Sports Direct deal or the future sale of the remaining stores.

A KPMG statement read: “We cannot comment on individual circumstances but KPMG engages with regulatory authorities as required.”