OFT said its investigation mainly focused on replica kit business.

The UK Office of Fair Trading (OFT) said Wednesday that it has cleared Nike Inc’s forthcoming acquisition of Umbro plc, stating that the merger raises no competition concerns.

OFT has made the decision despite the fact each company has a high combined market share – over 45% – in replica kit sales, claiming that the figure “overstates rivalry between them.”

In the UK, as well as Nike and Umbro’s activities overlapping in the supply of replica football kits, they both produce athletic apparel, sports footwear and sports equipment. Each company also bid for kit deals with football teams.

According to OFT, club kits and England kits are not significant competitive alternatives as Umbro’s leading position is principally based on its England kit deal, while Nike’s sales are derived from club kit deals.

In addition, OFT’s investigations found that bidding data for securing kit deals with European football teams showed that both companies – with a combined share of around 26% – have not been closely competing rivals.

Chris Walters, OFT’s Assistant Director of Mergers said: “Our principal focus was replica kits, not least given Nike’s high post-merger share. But as market share is only a starting point, we went on to conduct quantitative analyses due to a wealth of data provided by the parties and other market participants. This confirmed other evidence that the merger will not harm competition at any level of the sportswear supply chain.”

By Natasha Piscitelli