Opposing property portals ‘complemented each other’ by listing houses that did not appear on alternative platforms, a tribunal heard.
The Competition Appeal Tribunal yesterday heard that as much as 30% of visitors to one of the two market-leading property platforms, Zoopla and Rightmove, did not visit their direct rival, which were “reaching different audiences”.
The tribunal was also told that Zoopla had offered to pay as much as £250,000 of the legal costs of Connells – the company that acquired Gascoigne Halman in 2015.
Agents’ Mutual (AM) is accused of being “defensive, protectionist and anti-competitive” in placing restrictions on the number of portals estate agencies can list their properties on at any one time.
The dispute centres around the ‘one other portal’ (OOP) rule on AM’s property listing portal OnTheMarket, which was characterised as “classic protectionism”.
OnTheMarket (OTM) was launched in January 2015 as an attempt to challenge the perceived duopoly of rival portals Zoopla and Rightmove.
Gascoigne Halman challenged the OOP rule after AM brought legal action against it for listing properties on Rightmove and Zoopla, which AM argued constituted a breach of their agreement.
The Cheshire-based estate agency made counter-allegations that AM had engaged in anti-competitive behaviour, contrary to the Competition Act 1998.
It further claims that Ian Springett, chief executive of AM, suggested to other agencies that they collectively join them as opposed to Zoopla, which is denied.
Alan Maclean QC, appearing for AM, previously said there was a “very high barrier to successful entry” to the property portal market, describing OTM as an “essentially speculative venture”.
The tribunal yesterday heard from David Livesey, group chief executive of Connells, a post he had held since 2008, having been a director since 1995.
Connells acquired Gascoigne Halman in October 2015, at which point Mr Livesey also became a director of Gascoigne Halman.
The tribunal heard that Connells was funding Gascoigne Halman’s defence in the case, with the effect that Gascoigne Halman was “completely insulated from the costs of this litigation”.
Mr Livesey added that Zoopla had “offered to meet a small proportion of our legal costs”, which he said was £250,000 and a “very small fraction”.
Mr Maclean asked him why he thought Zoopla would make such an offer.
Mr Livesey replied: “I have no idea, I’m not here to speculate.”
Mr Maclean then asked if he thought Ian Springett would “in effect let Gascoigne Halman list on Zoopla, or come to some sort of arrangement”.
Mr Livesey said that he did “expect him to have a conciliatory approach because he recently approached me with a view to Connells joining OnTheMarket”.
Mr Maclean said: “What you did not expect was for my client to hold Gascoigne Halman to their contractual obligations”.
He added that protection of OTM’s terms was “critical to the future” of the platform.
Mr Maclean noted that Mr Livesey had been appointed a non-executive director of Zoopla in July 2010, when Connells, Countrywide and LSL Property Services – the “big three” – signed a strategic partnership with the portal.
The deal meant that each of the ‘corporates’, as Connells, Countrywide and LSL were referred to, had to advertise each of their properties on Zoopla, but received a “discount per volume”.
Mr Livesey conceded that a “small agent [would have a] higher concern” in relation to the smaller discount available to them.
Mr Maclean suggested that the purpose of the partnership was to “strengthen the position of Connells, Countrywide and LSL”, but Mr Livesey said: “No, not at all, that wasn’t the object.”
Mr Maclean replied: “I didn’t say it was the object, but that was the effect. I’m not suggesting there was some dastardly plan to do in the other side, [but] the effect of the partnership on Connells, Countrywide and LSL was to strengthen their position relative to the independent estate agents.”
Mr Livesey conceded: “It helped Zoopla achieve critical mass.”
Mr Maclean noted that, in January 2013, 29% of Zoopla’s online audience did not visit Rightmove, while 37 % of Rightmove’s audience did not visit Zoopla.
Mr Maclean said: “What that means is that, if you are an estate agent, you are not in a position of Zoopla simply reaching the same people as Rightmove.”
He added they were “reaching different audiences”, which he said meant they “complement each other from an estate agent’s point of view”.
Mr Livesey said visitors and users of property sites were not necessarily looking to immediately buy or sell property and there were “many different types of consumers coming into these portals”.
He said that many users may be researching how much a property they planned to buy or sell in the future might be worth, or may simply be curious about how much property on their street was worth.
He added that meant that leads, contacts from prospective vendors, landlords, purchasers or tenants generated by any given portal, may not reflect an actual intention to buy or sell.
He said: “They may register with the portal, but they are not [a buyer] here and now.”
Mr Livesey went on to note that Rightmove could have “120m [online] hits in one month, but there were only 64m people in the UK”, suggesting that many were repeat visitors and many may be visiting out of curiosity.
He said he believed Gascoigne Halman was “forced to delist” from OTM and had been “forced to do this by its anti-competitive practice”.
But Mr Maclean said: “Only because it chose of its own free will to sign up to the proposition it found attractive.
“They voluntarily signed up to the one it found commercially attractive.”
Mr Maclean asked about the preliminary discussions which led to the founding of OTM and the use of the word ‘replace’.
Mr Livesey said that being number one was simply their “objective”.
“We want to be the best and biggest. Replacing Zoopla [means] removing Zoopla. It’s a very straightforward word.”
He added: “You can cause plenty of disruption [in the market] without overtly trying to damage your competitors.”
Mr Livesey also said that he felt there were “plenty of ways of raising money without being reliant on fees”, pointing to online estate agency Purplebricks as an example.
Mr Maclean suggested that online-only estate agents posed a “significant threat to bricks and mortar agents”.
But Mr Livesey said that there were “virtually no internet-only estate agency firms”.
He conceded that any new competitor does pose a threat to traditional agents, but added: “I don’t see them as a big threat.”
Mr Livesey also said that, when he met Mr Springett, he asked him to “stop talking about your competitor”, saying: “When I’m playing golf, I can’t worry about how the other guy is playing.
“What is it that you can sell to me? It was about kill Zoopla, join us, sell your shares in Zoopla.”
He added that Mr Springett “did say if you left Zoopla they would put together an equitable proposition and then some to compensate us”.
The hearing, which is due to last for two weeks, continues.
Mr Maclean appears to be digging a deep whole suggesting placing a restraint was to hit other portals, competitors and online only agents.
Equally had other portals and platforms had a one other rule it would have hit AM/OTMs entry. Which again would have been unfair and anticompetitive.
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Sorry ‘hole’ auto corrective spelling struck again.
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You would think that mr salmon and rosalyn would be a bit more impartial on the article (for which they wont even specify a name). But nope! a misleading headline supporting one of their key sponsors (shock horror).
Funny that you didnt highlight the bit about mr springett offering compensation to OTM to leave zoopla..hmmm
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Connells* 🙂
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Or Zoopla offering to pay a cool £¼m of Connells legal fees . . . .
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Well if that’s what you take from the article ngibson then that’s your opinion. What I take is the complete disregard Zoopla had for independent agents effectively robbing smaller agents to subsidise the corporate ones.
Then to add insult to injury, under the banner of an independent agents name (Gascogne Halman) to add authenticity to their claims, used subdefuge financing the legal fees in the hope of creating a ruling that would again attempt to force independent agents to subsidise their corporate contributors by returning following them quashing a portal run by independents that they saw as preventing this. It will be a different set of corporate agents though (do you really believe Purple Bricks are paying the same rate as we are asked for?!)
If after these revelations there are any independent agents that believe Zoopla are supporting your businesses then I say think again and that extends to their software acquisitions as well. There is no way on this earth that they will be getting my data!
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Competition Act 1998 states:
Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which—
(a)may affect trade within the United Kingdom, and
(b)have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom
If found to be true. Such contracts become VOID
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So sole agency and sole selling rights contracts are therefore illegal and void by that very definition?
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Agents serve consumers.
Portals are there to support agents to do their job.
The agents job is to act in the best interest of consumers, which cant be done under restraint.
As such there is a difference.
The same as agents come under UK gov laws and regulations that allow main, sole, joint, multi agencies.
UK Competition law doesnt suggest it allows one business restraining another from consumer obligations.
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Sounds like your up to your back street lawyer shenanigans again Trev. A little bit of research but no professional qualification … leave it to the professionals to work it out.
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I trust you can see ive referred to exactly what the professionals have said Woodentop.
Correct me if im wrong?
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Hi Trevor, Got to say, I don’t agree with you on this!
In terms of the “Consumer” when we refer to the portals, the “Customer” well that is me…… by definition the person who pays for the service….. “joe public” are simply end users and do not pay to visit RM, Z or OTM and simply choose to use the portals they are not forced to. So when you spin the next bit, My view is:
My clients pay me to promote and sell their property in the best way possible! In fact they don’t! They pay me nothing to do this and only pay when I sell the property and have a choice when I pitch to them and tell them “what services I use” to assist in promotion of their property, Ie they don’t have to use me and the products I feel will help best. If at this point they want to be on RM, Z and OTM I would argue there is an issue with OTMs rule, however most vendors if not all I would argue are happy with RM or a RM&Z in my case most happy with RM & OTM but would lose no sleep if I dropped OTM.
In some ways the one other rule, protects the smaller less wealthy agents from the big corps spending on all three and dominating in that way.
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Where do AIM investor subsidised fees stand??? Isn’t that a distortion of the market?
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“defensive, protectionist and anti-competitive” – Is this the definition of Sole Agency?
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I posted something similar yesterday. By definition a sole agency or sole selling rights contract is anti-competition………….
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Unless it is No sale, No fee?
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Not sure that makes any odds, as by getting a vendor to sign one you are preventing anyone else from marketing the property during the term of the agreement. Not saying I agree that it’s anti-competitive, just saying that as an industry surely we need to be careful about pushing the ‘anti-competition’ thing when we are asking people to sign contracts that are technically ‘anti competition,
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There is not the slightest chance that sole agency could be interpreted in law as being anti competitive or against the interest of a vendor.
However, Sole selling rights arguably could be.
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I agree gk1uk2001.
If the vendor agreed to a sole agency, seeing the financial benefit to them, then should be bound to the terms, as should those that signed up to the OTM proposition, who saw the financial benefit to them in winning the long term game plan.
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No but it might be for those who take advantage of naive clients and sign them up to months and months of sole agency so they can overvalue and reduce the price when it doesn’t sell.
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The corporates around us try and do 6 month contracts!!!
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How long is your mobile phone contract AgentV?
I queried a Trading Standards officer over contract tie in periods a while back. The above was his response.
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Tied-in periods in sole agency has always been considered anti-competitive, however the OFT fudged the issue many times when it was brought to their attention.
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Is that a professional legal view Woodentop. On what authority sir?
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Yep, been around for a few decades now, well publicised. Unlike you I have 18 years in law behind me and 30 years in practising estate agency.
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Gosh nearly as long as me in agency them. Have you had any advisories adopted by government bodies.
I have that now form parts of the regulation and regulation guidance agents follow.
What have you had published. Any links?
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Go on Mr M, do please tell us exactly what ‘advisories’ you are responsible for in parts of the regulation and regulation guidance. What ‘regulation and regulation guidance’?
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No problem. I started with advisories to the OFT which were brought forward into the current NTSEAT Guidance on Property Sales. In particular p.37 re sub agency. Again I requested mention of BMV operatives should come under agent redress as many rogue operatives who werent regulated. Again in their along with other bits. I spent two weeks breaking consultation down.
I have been involved with Treasury and BIS re AML. HMRC were charge small agents a full rate per office on licencing whilst capping corps being charged on just their first 20 offices. For independents it would have raised their bill by £hundreds each year, but HMRC took my advisory as an option which was voted in.
So theres but a few.
I also helped embed the flaw which sunk TESCO Property Market due to then the 79 Estate Agents Act and definition of passive models. I took the flaw to the Ombudsman (then Bill McClintock) who confirmed my finding which I took to the papers. TESCO pulled the plug 6 weeks later.
Im there very much for independents and fair play.
Now Woodentop. What bits have you done.
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On the HMRC licencing my advisory was to remove the corp 20 office cap. So instead a corp.with 100 or 1000 office had to then pay for all. It meant the spread cross on 20,000 office reduced the licence unit cost per single office. As such most independents have 1 to a few offices.
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They appear to have misspelt the phrase “…critical mass c.ck swinging excercise” as “…critical mass connells boss concedes”
haha
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Oh helped over 1000 independent agents. See I’m more front line, walk the walk rather than talk the talk. I don’t see you have any qualifications to be an expert on our industry, certainly not law or to sit on such ministerial panels as our representative. Who asked you to represent us? Please don’t tell me that little organisation of yours, less than 100 members last time I looked compared to over 20,000 agencies in the UK. That same organisation that had to be winkled out of you as the most probable cause why you hate OTM/AM so much? A conflict of interest!
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er 15, 3 and 1 years = 18 years as practising agency according to Linkedln. That’s not 30 years. That last 17 years your a web portal for multi-listing which hasn’t exactly taken the country by storm with approx. 100 agents. Still can’t see why you are qualified to sit on advisory panels if you haven’t been a practising agent for the last 17 years.
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19!
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Stop! stop, all this anti competition waffle, since when was it against the law to have contracts for periods of time once you have checked out the competion without restriction? it happens in all walks of life, from your phone, to your media, to your electric, etc etc. Stop trying to confuse the issue; estate agents are no different to most other providers of goods and services. Once the client has made their choice we merely ask them to make a commitment to us, and us alone, for a specific period. This is not, and never will be ‘anti-competitive’. The law does in most cases offer guidance on how long is ‘reasonable’ for such agreements to last.
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So on that basis then, how can the OTM contractual terms, which those who signed up were aware of and agreed to at the time, be deemed anti competition? That’s the point I’m trying to make, Beano.
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Because the restraint tries to restrain other commercial operatives.
What makes it worse is there is consumer protection regulations that introducing commercial restraints from a company (AM/OTM) undermine.
Its like Uber making their drivers sign to say in rush hour their drivers must drive on public paths to get passengers home earlier.
Highways and the police would go nuts, as UK law doesnt allow drivers on the paths.
Regulation and lwgislation is there to protect businesses from other businesses and to protect consumers.
Imagine if AM/OTM stipulated what floorplan or EPC or photo companies you could or couldnt use.
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So does this apply to PB as well then when they tie a vendor into using their astronomically priced conveyancing for a lower up front fee?
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Will OTM win or not?
A number of reasons I hope OTM wins.
The biggest though is to prove Trevor wrong and even more reason to ridicule him in the future.
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Game on a Smile
Now what if I’m right? It has been known before.
AM OTM has already admitted it was a ploy.
To me Articles 101 and 102 EU and the Competition Act 1998 ( UK ) read pretty clear about operatives restraining market places.
As a supporter of the rules, would you be aligned to account as well? Or just the AM/OTM directors and manager drivers. Cartel action typically carries a 10% of revenue fine!
Look up the milder Three Counties agents and Trinity Anti Trust case in recnt years. The agents and Trinity got a £775k fine reduced by 10% for early payment.
The OTM and Connells case is going to cost one side £millions.
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