(Reuters) - Britain's competition watchdog on Tuesday said it believes JD Sports Fashion's (L:JD) acquisition of smaller rival Footasylum may stem market competition and has referred the deal to an in-depth investigation.
The Competition and Markets Authority (CMA) said JD Sports, Britain's biggest sportswear retailer, had failed to address its initial concerns that the takeover could be bad for shoppers.
"This transaction will not result in any price increases or a reduction in product ranges or service quality," JD Sports Chairman Peter Cowgill said.
JD, which valued Footasylum at up to 90 million pounds ($110.48 million), said it had earlier informed the authority that it did not consider there were any "appropriate remedies" that could be offered at the time to avoid a Phase 2 investigation.
The company, which has made a number of acquisitions over the past two decades to build out more than 2,400 stores, said the acquisition of 70 Footasylum stores in the UK will not hurt competition.
The owner of Footpatrol and Cloggs has outperformed the struggling UK retail sector, getting a boost from millennials' fondness for so-called athleisure wear, an international presence and a strong online operation.
"JD's rationale for carrying out this acquisition was to retain Footasylum's position as a multichannel retailer ... while ensuring that Footasylum's diverse and complementary offer remains available to its consumers," the company said.
($1 = 0.8146 pounds)