Mike Ashley's Sports Direct is unlikely to get the green light to go ahead with its proposed acquisition of House of Fraser in Dundrum, Dublin, until the end of October. The retailer, which is now under the oversight of administrators EY, will continue to trade as normal in the interim.
On Monday the Competition and Consumer Protection Commission started an investigation into the proposed acquisition of House in Fraser in Dundrum by Sports Direct, which it said it would acquire as part of a takeover of the 59-strong UK chain.
The retail chain, which filed for administration on August 10th, had debts of close to £1 billion (€ 1.1 billion) when it collapsed. It was quickly bought out by Mike Ashley’s Sports Direct for £90 million, but the deal did not include the Dundrum store, “ pending the resolution of local regulatory matters”.
These regulatory matters are understood to refer to an investigation by the commission, which must clear the proposed acquisition on competitive grounds before the deal can go ahead.
Submissions for the commission’s Phase 1 investigation must be made by September 10th, 2018, and the commission then must make a determination on or before the 30th working day following this date, which is likely to take until the middle/end of October.
During this time the commission will apply the “substantial lessening of competition” test, which means it analyses the potential effect on the price of products after the deal, as well as other impacts, such as changes to output (quantity), quality, consumer choice and innovation.
If the commission doesn’t green-light the deal at this point, it would move to a Phase 2 investigation.
Sports Direct
As part of its investigation the commission is likely to consider sports retailer Sports Direct's existing substantial presence in Ireland. This includes Heatons, the €230 million-a-year department store chain that in recent months has seen many of its stores rebranded to Sports Direct. Mr Ashley also has a 30 per cent stake in the listed retailer Debenhams, which has 11 department stores in the State, and is rumoured to have an interest in opening on the site of the old Clerys store.
Until a decision is made, the Dundrum store is expected to trade as normal, although customers still won’t be able to use their gift cards. When the announcement was first made, the administrator told customers it would not accept gift cards or vouchers at the Dundrum store for the “foreseeable future” and it’s understood that this is likely to continue until the new owners take over.
The retailer’s website is also down, thus making online shopping impossible, with visitors instead redirected to the Flannels chain operated by SportsDirect.
