The Office of Fair Trading has cleared the anticipated acquisition by Nike Inc of Umbro plc, claiming that the merger raises no competition concerns in any market.
According to the OFT, while both companies have a high combined market share (over 45 per cent) in replica kit sales, it found that this ‘overstates rivalry between them’. Club kits and England kits are not significant competitive alternatives, says the OFT, and Umbro’s market position is principally based on its England kit deal, while Nike’s sales derive from the company’s club kit deals.
The issue of collusion was also ruled out, as was competition concerns during bids to secure kit deals with domestic football teams.
“Our principal focus was replica kits, not least given Nike’s high post-merger share,” says Chris Walters, assistant director of mergers at the OFT. “But as market share is only a starting point, we went on to conduct quantitative analyses due to a wealth of data provided by other parties and other market participants. This confirmed other evidence that the merger will not harm competition at any level of the sportswear supply chain.”
Nike says it intends to operate Umbro as a standalone brand, with a focus on accelerating the company’s existing growth strategy.
