Bennetts must be ‘held separate’ from Ardonagh pending probe outcome, competition authority rules

The Competition & Markets Authority (CMA) has issued Ardonagh with a ‘hold separate’ order while it completes its phase 1 investigation into the purchase of motorbike broker Bennetts.

This means Ardonagh will not be able to integrate the Bennetts business until at least September, when the first phase of the investigation is due to complete.

Ardonagh had announced its intention to buy the motorbike broker for £26m in February, but in July the CMA launched a probe into the deal after having previously invited comments.

The broker already owns motorbike brokers Carole Nash, Footman James, Autonet and Swinton.

The CMA published the hold separate order, also known as an ‘initial enforcement order’ under the Enterprise Act 2002 which “does not prohibit the completion of the transaction” on the proviso that Ardonagh, Ardonagh UK and Atlanta observe a series of restrictions.

These are any actions that could:

• lead to the integration of the Bennetts business with the Ardonagh business
• transfer the ownership or control of the Ardonagh business or the Bennetts business or any of their subsidiaries
• otherwise impair the ability of the Bennetts business or the Ardonagh business to compete independently in any of the markets affected by the transaction

The CMA also stipulated that:

• the Bennetts business is carried on separately from the Ardonagh business and the Bennetts business’s separate sales or brand identity is maintained
• the Bennetts business and the Ardonagh business are maintained as a going concern and sufficient resources are made available for the development of the Bennetts business and the Ardonagh 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 Bennetts business or the Ardonagh 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
• there is no integration of the information technology of the Bennetts or Ardonagh businesses, and the software and hardware platforms of the Bennetts 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 Bennetts business will be carried out by the Bennetts business alone and for the avoidance of doubt the Ardonagh business will not negotiate on behalf of the Bennetts business (and vice versa) or enter into any joint agreements with the Bennetts business (and vice versa)
• all existing contracts of the Bennetts business and the Ardonagh business continue to be serviced by the business to which they were awarded

Ardonagh must also inform the CMA on ”details of key staff who leave or join the Bennetts business or the Ardonagh business”.

The CMA has the power to intervene and prevent deals happening, or order that dominant players sell businesses to create fair competition.

In a statement, Ardonagh said: ”The announcement on Friday follows receipt of FCA approvals enabling the completion of the acquisition transaction.

”Bennetts will be held as a separate and independent company and continue to operate independently of Ardonagh, as required by a ‘hold separate’ order (an Initial Enforcement Order or “IEO”) imposed by the UK Competition and Markets Authority whilst it continues its phase 1 investigation.

”Further updates will follow in due course.”