CMA releases details of ZPG/Expert Agent enforcement order

The Competitions and Markets Authority has released more details of its ‘calling-in’ of the acquisition of Expert Agent by Zoopla Property Group.

The CMA issued an enforcement order last week urging there to be no further progress made on the acquisition of Expert Agent’s parent firm, Websky Ltd, by ZPG. 

The announcement of the acquisition was made by ZPG a month ago and it is uncertain whether the deal has been completed.

The CMA’s statement, issued on Wednesday but only known about widely on Friday, says the enforcement order allows the authority the opportunity to investigate “whether it is or may be the case that a relevant merger situation has been created and whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the United Kingdom”.

No timetable has been set out for the investigation. However, the enforcement order makes it clear that on April 12 and every two weeks thereafter a ZPG representative must confirm to the CMA that it is abiding by the details of the order. 

On Friday a statement from ZPG said that the firm “is now engaging in a consultation with the CMA and will make a further announcement in due course.”

The news of the enforcement order appeared not to have made any difference to the company’s share price - despite an initial dip on Friday morning, it closed for the week up 0.01 per cent.

While the investigation is ongoing the CMA says the companies must operate separately of each other, and key parts of the enforcement order include these paragraphs:

- the Websky Limited business is carried on separately from the ZPG plc business and the Websky Limited business’s separate sales or brand identity is maintained; 

- the Websky Limited business and the ZPG plc business are maintained as a going concern and sufficient resources are made available for the development of the Websky Limited business and the ZPG plc business, on the basis of their respective pre-merger business plans; 

- except in the ordinary course of business, no substantive changes are made to the organisational structure of, or the management responsibilities within, the Websky Limited business or the ZPG plc business; 

- the nature, description, range and quality of goods and/or services supplied in the UK by each of the two businesses are maintained and preserved; 

- except in the ordinary course of business for the separate operation of the two businesses: 

(i)  all of the assets of the Websky Limited business and the ZPG plc business are maintained and preserved, including facilities and goodwill; 

(ii)  none of the assets of the Websky Limited business or the ZPG plc business are disposed of; and 

(iii)  no interest in the assets of the Websky Limited business or the ZPG plc business is created or disposed of; 

- there is no integration of the information technology of the Websky Limited or ZPG plc businesses, and the software and hardware platforms of the Websky Limited business shall remain essentially unchanged, except for routine changes and maintenance; 

- the customer and supplier lists of the two businesses shall be operated and updated separately and any negotiations with any existing or potential customers and suppliers in relation to the Websky Limited business will be carried out by the Websky Limited business alone and for the avoidance of doubt the ZPG plc business will not negotiate on behalf of the Websky Limited business (and vice versa) or enter into any joint agreements with the Websky Limited business (and vice versa); 

- all existing contracts of the Websky Limited business and the ZPG plc business continue to be serviced by the business to which they were awarded; 

- no changes are made to key staff of the Websky Limited business or ZPG plc business; 

- no key staff are transferred between the Websky Limited business and the ZPG plc business; 

- all reasonable steps are taken to encourage all key staff to remain with the Websky Limited business and the ZPG plc business; and

- no business secrets, know-how, commercially-sensitive information, intellectual property or any other information of a confidential or proprietary nature relating to either of the two businesses shall pass, directly or indirectly, from the Websky Limited business (or any of its employees, directors, agents or affiliates) to the ZPG plc business (or any of its employees, directors, agents or affiliates), or vice versa, except where strictly necessary in the ordinary course of business (for example, where required for compliance with external regulatory and/or accounting obligations) and on the basis that, should the transaction be prohibited, any records or copies (electronic or otherwise) of such information that have passed, wherever they may be held, will be returned to the business to which they relate and any copies destroyed.