The ‘one other portal rule’ was the best and most realistic opportunity for OnTheMarket’s entry into the property portal market, the Competition Appeals Tribunal has heard.
But it also heard – from the QC representing agent Gascoigne Halman – the rule described as defensive and protectionist.
The hearing is examining competition issues over the ‘one other portal’ rule, with arguments being advanced by both Agents’ Mutual and Gascoigne Halman – a gold member of Agents’ Mutual. When Gascoigne Halman signed up to Agents’ Mutual in January 2014, it was an independent and is now in the ownership of Connells, which bought Gascoigne Halman in October 2015.
The Competition Appeal Tribunal hearing, which is scheduled to last until February 20, is dealing with the competitive issues arising from counter-claims in response to cases brought by Agents’ Mutual against Gascoigne Halman and another agent, Moginie James, as it seeks to enforce their contracts.
In the hearing, which opened on Friday, QCs for Gascoigne Halman and Agents’ Mutual advanced skeleton arguments. Moginie James is not a part of this procedure.
Appearing for Agents’ Mutual, Alan Maclean said the ‘one other portal’ rule had support, including initially from Gascoigne Halman.
He told the hearing that there was evidence of estate agents being fed up with the ‘duopoly’ of Zoopla and Rightmove.
Mr Maclean said evidence would be shown during the hearing on why the ‘one other portal’ rule was crucial to entry.
He said it was “essential that the launch of the portal disrupts the market”.
Suggesting that there might have been total exclusivity, he added: “The ideal way to do this is to get agents to do it exclusively. However the directors did not consider a requirement would be viable.”
Mr Maclean said that Primelocation – which is now part of ZPG – and Rightmove first had exclusivity agreements when they launched.
Appearing for Gascoigne Halman, Paul Harris QC was first to address the tribunal, and spoke about Agents’ Mutual’s business plan.
He said that this had forecast that Zoopla would lose 5,000 offices by 2015 and a further 2,000 in 2016, while Rightmove would not lose any in the first year.
Mr Harris alleged that the objective was to create a tipping point against Zoopla, which would “wither away and die” before going on to “undermine” Rightmove.
But Mr Maclean said these were “stylised” numbers. He said there was nothing wrong with being number three and working towards number two.
Mr Harris said: “Far from being a pro-competitive market entry story, this is a defensive, protectionist, anti-competitive story.”
Mr Harris also alleged that Agents’ Mutual had wanted to know the collective decisions of agents joining OnTheMarket and being informed of the other portal being used.
He said: “The contracts (with agents) are the fruits of this illegal concerted practice.”
The hearing continues.
Agents and Agents’ Mutual square up to each other in High Court
Comments (31)
Not sure if I’m missing the point here, but surely if having the one other portal rule is deemed ‘anti competition’ then so is a sole agency or sole selling rights contract?
Time will soon tell. There are around 4-5 anti competitive issues at the trade base of how AM and OTM operates.
So even in Connells due dilligence. Maybe they felt that the ‘One Other’ rule didnt work for them. But maybe they felt it shouldnt be there anyway.
Were still in the EU, so any breaches have happened under UK and EU law. Artivles 101 and 102 are very clear about anti-trust matters.
Additionally, the One Other rule allowing OTM + RM or OTM + Z has tried to damage other new portals starting. As the One Other rule has meant most other portals.
Its time for the Springer Band to face the music.
Trevor,
You really are a nasty piece of work.
Its about time you and your silly INEA face the music ….. Coming on here spouting your poison and your unqualified reading of the law is not winning you any business.
Trevor
You are right in saying that the one portal rule didn’t work for Connells. Of course it didn’t because as I said earlier they’d have to ditch Zoopla (which they have a £63m worth of shares in) or Rightmove.
As for maybe they didn’t think the one portal rule it should be there anyway, do you honestly think they’d risk the massive costs of a lawsuit if they didn’t have that stake in ZPG?
Either they sat around the boardroom table and had an altruistic epiphany or they didn’t fancy losing a big chunk of that £63m.
Don’t know about anybody else but I know where my money is.
@ Smile: For real 🙂
Sticks and stones as the saying goes. Please can you concentrate on the story and not mud flinging.
“Please can you concentrate on the story and not mud flinging.”
I was brought up to be polite – so here goes:
Sir… please – after you.
Mr Mealham
You talk about facing the music.
You want people to think you are conducting an entire orchestra, and that you have composed your own score that everyone will follow under your direction.
But now the problems surface. Your score is illegible.
Please don’t get crotchety with me for pointing this out – but your notes all seem to be in the wrong order. Which, when done by Eric Morecambe is comedic genius… but by yourself we struggle to raise an embarrassed smile.
Your orchestra haven’t turned up. Maybe they found a better gig elsewhere – came quickly to the conclusion that the only way your concert would go down a treat would be if they played the ballroom of The Titanic.
SO – it looks like the only one in the pit is you – and it is one you have been digging yourself for some time now.
You’re left pretty much in there alone. with your baton in your hand – and no-one to wave it at.
If you want to hear your music – looks like you’ll have to raise your own horn and blow it.
Oh dear PeeBee. I wont be getting many record sales this week then. But the Titanic Gig sure was a fancy venue, even if short lived for those who played on, till it came to an icy end.
But, I did get an INEA agent a property to multi-list in Marylebone today though at 2% to sub out at 1% when the seller turned down sole agents at 1% and 1.5%
And another in a typical 1% zone in Kent at 1.5% to pace with a main agent to sub out to 1/2 dozen sub agents.
Have a great evening. We can only watch the OTM case with interest and see what the outcome is by the 20th.
As the outsider who used to attract dislikes for simply existing and making comment that questioned the fervent OTM groupthink of 30 months ago I would like to question the hypocrisy of the agents taking the project they supported and created to court over practices they helped to formulate.
Clive Rook of Rook Matthew Sayer was portrayed in the trade press as the standard bearer cheerleader for Agents Mutual in the North East very much leading the call to smash the duopoly, he was the one calling agents to join him in the greater good. It seems a bit odd that agents like him; in at the beginning and all up for it suddenly think they were wrong and should be hauled through the courts for their anti competitive agenda
What happened to the rumoured attempt an alliance between OTM and Zoopla, does the fact that never came to anything erase the attempt from history?
If the plan was to have 7000 agent leave Zoopla by 2016 and it actually has happened because of OTM there might be a case to answer but from where I’m sitting the weekly stag rutting between Zoopla and OTM did more to damage the support & standing of ZPG than the plans & rhetoric to smash them which realistically was never going to happen because of OTM.
It is easy to blame other people for failures but what all this comes down to is a failure of due diligence in buying a firm with a 5 year contract in place or an anti-competitive attempt to cripple an organisation that wouldn’t play ball in smashing a mutual competitor.
Let’s take this back to the start.
Agent: I’d like to join OnTheMarket
OTM: You can if you are prepared to accept the one other portal rule.
Agent: Ok
Need I say more?
Yes actually I do. When Connells were buying Gascoigne Halman, part of their due diligence would have been to look at all agreements GH had in place. One of those was the OTM agreement.
It’s not the one other portal rule that Connells object to, it’s the fact that they are shareholders in ZPG which means if they abided by the agreement GH had, they’d have to ditch either the company they have a stake in or the market leader Rightmove.
They aren’t the Lone Ranger riding in to save us poor old estate agents and it’s nothing to do with GH.
If OTM succeeds, it’ll do so at the expense of Zoopla not Rightmove which means Connells shares, all £63m worth, will go down the Swanee.
Spot on El Burro. Yours and Thomas Flowers comments are the most succinct and accurate assessments of the situation.
Spot on.
If you bought a new hatchback car that broke down would you risk losing the price of a new Roller in legal fees to sue the manufacturer, if they failed to resolve the issue?
No?
Nor would I.
Unless a kindly benefactor, who happened to own a competing car manufacturing company, stepped in an offered to pay the legal fees as it would highlight an issue that has lost his company lots of sales?
Would that not be the smart move?
Crikey Thomas Flowers. Are you psychic or have you been peeking at the barrister’s brief in the OTM case. Coz the Stop Press story above this suggests you are absolutely on the money!
Was it supposed to be some kind of secret – like a ‘worst-hidden secret ever’ kind of secret, AgencyInsider?
It appears I may well be AgencyInsider but I didn’t expect them to admit it!
You would have thought that Connells would have negotiated a better contribution than the fractional £250,000?
James your “3. I’d like to think that with the appearance of OTM, it helped slow down the constant price increases from RM” hits the nail on the head.
If OTM just stopped this ridiculous two portal rule, many agents, hitherto only use Z & RM, would probably want to try the site and possibly support it, even if it doesn’t produce many leads because as you say it will keep RM in check, particularly if they see a natural following.
If OTM used this high ground, along with the no hybrid agents I suspect they would be a much bigger player by now.
The leads we get are split fairly evenly between RM and Z, and OTM has next to no properties listed with any agents in the areas we cover. So even though I support the idea of OTM how can I disadvantage my vendors purely for my own gain? I would happily list all my properties on OTM if I were allowed to (by them dropping the OOP rule)…. and I could do it on a pay per lead basis….or a low fee until a certain level of leads had been reached (perhaps two thirds of the average number per property received by existing OTM agents). If many other agents are in a similar position to us, surely doing this would vastly increase stock levels and therefore site traffic…and that would benefit all existing members. In my view it would enable OTM to grow a lot bigger, a lot quicker. That is what everyone wants isn’t it?
So lets say for arguments sake they do drop the OOP rule and you sign up to OTM as well. What will make Joe Blogs decide to use OTM instead of Z or RM when the property is listed on all three?
The answer is nothing, the three portals have for the most part, nothing unique about them so he will continue in his current trend and use whatever portal he’s used weeks and months before hand. There may be, for arguments sake, a handful of people who embrace OTM as well as their regular portal but people are inherently a lazy bunch and the majority will not.
OTM will not generate the traffic it requires to become the bigger name, it will not become better known and agents will simply continue along their merry way, this time paying for 3 portals instead of 2.
This is the problem. We (the letting agents) want OTM to succeed. For OTM to succeed it needs to have a unique selling point, which it does with it’s current members listing properties in advance of other portals and shouting about it from the roof tops.
But plan A doesn’t appear to be working anymore does it?
And I so want OTM to succeed…but I think they are now losing ground to Zoopla!!
Doesn’t bother us and I cannot see why it should bother any other agent who is with OTM at the moment. If they had launched as ‘just another portal’ then…
1. agents would be paying for three portals per month instead of just RM and Z as they would be too ‘scared’ to drop either of them
2. there woud be no unique selling point to the public as they could see all of the properies on any other portal they wished
3. I’d like to think that with the appearance of OTM, it helped slow down the constant price increases from RM
RM still provide us with more leads, we cannot deny that and I think any agent would be extremely brave to drop RM at this moment in time for just OTM or OTM and Z.
Anybody who expected OTM to be the number 1 portal in the space of a few months or even a year must of been high on something. But having a go at OTM because you are ‘loosing business’ just screams ‘lets blame something other than ourselves’
Aren’t Connells linked to Zoopla in anyway?
http://www.propertyindustryeye.com/landmark-deals-done-with-zoopla-countrywide-and-connells-with-software-firm/
the only way to break the duopoly is to do the one other portal rule. its right in practice and should work in theory but the market turned and hasn’t helped OTM. cases like this just undermine the whole project. we voted and agreed for it and should embrace it….. too many crocodile tears
Interesting!
I’ve worked in anti competition for over 15 years and this rule does, unfortunately sound quite anti-competitive in my opinion, especially if it led to zoopla losing numbers through a ‘collective’ between agents as suggested by mr harris.
The chairman in the case as i recall favours pro competitive practices so it will be interesting to see what happens in this case.
If the rule is found to be illegal then the judge could theoretically veto every single ‘anti competitive’ contract created by AM which in my opinion would be disastrous to agents mutuals chances of success (agents would in theory be free to leave on that basis – assuming they are unhappy with the situation).
Its all about the chairman’s interpretation of the law…..lets see what happens.
How lucky we are…
Estate agent news site just so happens to have an individual who works in anti competitive behaviour who comes across this story as it hits the news!
What’s the chance?!
I guess I am just cynical and thinking you are just here to try and bias people’s views.
I read this publication regularly as i have interests in property – not sure i should have to justify this?
I also have vast knowledge of many other areas of the law…but this story happens to be about anti competition.
It seems from my post that i have somewhat touched a nerve…As mentioned before, just my opinion..not factual per-se.
Morning Justmyopinion – In your opinion what for the fact: each individual agent made up their own mind and were not collectively forced to join, it was never I case of if you don’t it will be the end of you.
Surely agents simply decided to back a “NEW” business and one with “No chance of success” as most people branded it, including Z to be fair.
If this was RM saying Drop Z or your prices go up, I would agree, or even if Z said that, but this is a small unknown laughable portal breaking in to the unbreakable market with a business plan to assist in doing so.
Could this not have made an unfair portal market, slightly more fair and could have finally ended up with a choice of three portals not one as it is today, knowing the only way a 3rd player could get anywhere close was to have a plan.
then I always start to think and forgive me, but in your opinion, when I say to a vendor my agency agreement restricts you from using another agent during the agreed period, am I anti-competitive towards that vendor and other agencies? Soon we will see the end of agency agreements as we know them and “winner takes all” will be the only agreement type out there.
Ric,
An excellent point. Both parties knew what was agreed on the contract when joining OTM.
No company was influenced to choose one portal or the other.
I made the choice a few months prior to joining OTM to drop Z. My decision was simply based on the QUALITY and quantity of leads. After careful analysis of the leads over a 12 month period, it was an easy decision.I would not go back either if OTM fails. I will not succumb to the pressures of the sales people ‘Well your competitor is doing this so you need to..’
Hi Guy’s
I believe both of you are missing the points of the case.
The agents mutual vs gasgoine halman case is not about whether agents were or were not aware of when they signed the contract, its about the on rule itself being anti-competitive.
Agents were of course not forced to sign up, but the suspicion is they were pushed towards a particular option..the cma did warn against suspected collusion – which is a feature of the case..(be it they did not find any findings on AM).
To prove the rule is not Anti competitive, agents mutual would have to demonstrate that Rightmove and Zoopla had potentially lowered pricing as well as result of the rule…and also determine that similar amount of Estate agency numbers lost between the two…can this be proved?
If the precedent is set in this case for anti competive clauses to be put into place to weaken competitors then this could be done across any industry which would not be a good thing… this is why i believe the chairman will rule against agents mutual so a precedent is not set moving forward.
Isn’t the wider view that this action could be seen as an attempt to kill OTM? which is a bit pot calling the kettle black.
I wonder what the vote is out there amongst the rest of independent agents……are you for or against the one other portal rule?