In later proceedings yesterday, the tribunal heard from economic experts with David Parker, for Gascoigne Halman, explaining how the markets have changed in the last decade.
He said: “The relevant portals operate across Great Britain as a whole.
“There are some differences in the UK market, but from an economist perspective, the market definition side doesn’t add much to the debate, but from a competition perspective, it is rather different to Northern Ireland.
“Estate agents have a small share of the market, they aren’t tied to a specific geographical area.
“Maybe in the future that might change development definition of estate agents in the market, but we still have, at least for now, house hunters still looking in specific areas, and a quarter of estate agents are still in specific areas.
“A hypothetical monopolist of all of the estate agents in the area would still have enough of a presence, they are important enough at this stage to change from a geographical market definition.
“You might find a tin of beans in a supermarket in north London, but that’s not a substitute for a tin of beans in Aberdeen.”
Tribunal chair Mr Justice Marcus Smith then raised the issue of how estate agents advertised to the expert witnesses, Mr Parker, and Simon Bishop for Agents’ Mutual.
He asked: “I want to ask now about whether we are being a little bit narrow in viewing portals in isolation and let me unpack that a little bit before I ask you to comment.
“There is some evidence, and I am thinking particularly of answers that Mr Springett gave in the course of his cross examination, that estate agents, that side of the market, regard portals as substitutable for other forms of advertising, for example, print media advertisements, their own wesbites, shared property newspapers or magazine.
“And I wonder, before we proceed to other participants in the market, as regards estate agents how far you consider that to be a material factor when considering the market position of the portals.”
Mr Parker replied: “I think estate agents look at a variety of routes when advertising their property – portals, newspapers, magazines, maybe radio stations. A range of routes are used to get to customers, and it is of course the case they will look to optimise their marketing budget.
“You can see that in my first report.”
Mr Parker then pointed the tribunal to a report on total advertising expenditure using different channels across a number of years.
He said: “As you can see, they have split that up by channel over time.
“Online expenditure, since 2002, has gradually grown over time, and from round about 2013 more is spent on online advertising than it was on local newspapers.
“What you see from this is as different types of marketing outlooks become more or less attractive they shape their spend.
“There is a trend of people looking online, and if that continues to grow we will see an increase in the share of online portals.
“The markets are competitive today, but that doesn’t mean you can’t make them more competitive tomorrow.
“If you come in with a new business model tomorrow that’s much, much then that could completely change the competitive dynamics.”
Mr Bishop said: “The question is how does the entry of OnTheMarket with the OOP rule alter, chance, Zoopla’s competitive constraint on Rightmove or indeed, actually to be more precise, what are the overall competitive constraints operating on Rightmove’s pricing, pre-entry and post-entry, and how are those changing?”
Mr Parker then addressed the matter of dominating a market.
He said: “One can certainly get more dominant after they pass the threshold, but I think a new dominance will still be competing in a market.
“The level of competition is largely decided by the overlap of the housing size.
“Mr Bishop rightly pointed out if one portal has access to a group of unique house hunters and another party has access to another, they are two separate areas of the market, and they are both monopolist over their markets.
“Both can charge what they have, and there isn’t really any competition.
“Opposite of this, with both having access, competition is extremely strong, if one charges more than the second portal, agents can trade off those portals against each other for the best margin of cost, which would be essentially zero.
“So instead we have a range of intermediate scenarios. You have a set of unique customers for this group, Zoopla, unique customers for this group Rightmove, and some others.
“[The] selling point for Rightmove is that these are agents you can meet and not get anywhere else. You get some surplus, but I also get some surplus.
“The same happens for Zoopla. They would do a deal, charge a certain amount to agent, customers can’t get elsewhere.
“The competition is driven by the overlap.
“You’d expect to find people listed on both, but that doesn’t mean they aren’t competing.”
Meanwhile, two new documents have been made publicly available at the links below:
Order (Prohibiting disclosure of confidential information)
The hearing continues.
I hope this expert has a degree in ‘stating the obvious in a way that’s hard to understand’….guess that’s why this court case is going to cost so much money….because what I could say in two plain English sentences is made out to be far more complicated than it actually is!!
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Hogwash? One minute there is no dominance and then he confirms there is. The big corporates made RM and other large agents keep Z going. They hold the key to dominance, however there are more small and independent agents who up to now have to follow their lead … that is until OTM came along and is why it happened. Agents are not interested in third party marketing on portals, they reap no benefit financially from it and customers do not go to a particular portal because of that advert. We use portals to show our properties and until OTM came along there was only two portals of worth RM & Z and were financially benefitting the big agents, leaving the small agents to follow behind to try and survive. What I am not hearing is the tribunal being told why OTM came about and why it is so necessary for the industry and take on the competition that is a monopoly. Also right from the start there has been a great deal of effort, as witnessed on EYE to prevent OTM gaining ground, sometimes allegedly by persons that are the competition. The OOP is a red herring, if you don’t ant to be on OTM, what’s the problem for you, don’t join!
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Questions:
Is sole agency anti-competitive? Is it restrictive?
Is tied-in (e.g. 12 week) contract anti-competitive? Is it restrictive?
You may an a reason for their existence, but that is not the question.
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At time of posting this evening, none of the anti-brigade have chirped up, when they would normally be shouting loud and clear what is restrictive practice when it pleases them. Yet this is fundamentally restrictive practice and acceptable within the industry. Many including Connells (did when I checked earlier today) do all the above and they may say, I certainly have heard from those that try to justify it (normally the corporates) this is to protect their business and we are supposed to be consumer end freedom of choice. Double standard to say they can hold consumers to restrictive practice and then argue anything that is anti-competitive doesn’t apply to them, such as after GH freely entered into a contract with AM. I do hope this is put before the tribunal … someone would have red faces.
I also note that GH haven’t come forward to say they were part of a conspiracy to rig OOP with other agents or AM! Just innuendo from a barrister twisting information to make it look like other agents could have done?
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This is a breach of contract case, the only get out of jail card is to have the contract declared unenforceable, the best option is the restrictive practice nature of the OOPR.
GH signed the contract knowing the restrictions and what they meant, they along with 26% of the industry signed up to the OOPR well in advance of the launch date before the portal or its impact could be known, believing that an agents affinity groups with its OOPR would help to control the duopoly of two dominant portals.
When Primelocation, Findaproperty and Zoopla merged they referred themselves to the monopolies commission as a tacit admission of their inevitable power within the industry. Agents affinity groups to protect smaller agents were a natural kickback against that domination of the online advertising space. GH were part of that.
When GH were acquired by Connells the motivation changed, they wanted to become part of the 76% of the industry not governed by the OOPR.
I have to say I wouldn’t have had the OOPR in place, it didn’t work first time round and is now proven ineffective at controlling competition; as it has been pointed out by those knocking OTM it hasn’t had it desired effects. Digital expert really made a case for the defence when he said OTM hasn’t done anything has missed all its stated aims.
Perhaps the sudden silence is because all the over confident gloating is making points the defence barristers would prefer weren’t aired so publicly before the case is decided.
What seems unreasonable to me is how there is a focus on Ian Springett and always has been, what he earns, what he’s going to get out of the project, what he has or hasn’t done yet the defence is not about the GH executives but the company. It all seems a bit one sided.
Anyway the case isn’t over yet, let’s see what happens next.
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Just HANG ON a cotton pickin’ minute…
‘David Parker, for Gascoigne Halman… said “You might find a tin of beans in a supermarket in north London, but that’s not a substitute for a tin of beans in Aberdeen.” ‘
Say WHAT??
The last time I checked, a tin of beans was exactly that – nothing else.
Said tin of beans would be a 100% substitute for an identical tin of beans; not only at distances of those quoted – it would be just as perfect a substitute anywhere in the Universe.
Only logistics would stop the tin of beans in London that Mr Parker makes reference to from being a substitute for one needed somewhere beyond the Kuiper Belt. No good if they need it there and then – but assuming they are prepared to wait for their beans then it’s just the very fellow to look forward to.
I fail to understand why beans have been brought into this issue unless it has been decided to make it even more farcical than it was without such reference.
Maybe – just maybe – the smart money would have been to advise to stock up with at least as many tins of the right brand of beans that were required, Mr Parker – and avoid the need for a long wait for delivery of an appropriate topping for one’s toast, jacket potato, or simple form of… ahem… roughage (as one may require)?
Some would think the bloke’s Heads Gone, coming out with that sort of “economic expertise”…
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Typical of the little boy at the back sniggering and exclaiming I can see the King’s winky, look at the King, look at the King ………
The object of this sort of stuff is to sway matey boy judge with a whole heap of gufferage. Stuff that makes no sense but leaves him with a single option for fear of him looking foolish.
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