Claims that a restriction on the number of portals estate agents can list properties on is competitive are “completely absurd”, a hearing was told yesterday.
However, the answer of the barrister representing agent Gascoigne Halman as to why his client had signed up in the first place to OnTheMarket was apparently unclear.
The Competition Appeal Tribunal has been examining possible competition issues around OnTheMarket’s ‘one other portal’ rule imposed by Agents’ Mutual portal OnTheMarket after issues were raised by the Connells-owned brand Gascoigne Halman.
Counsel for both parties yesterday made closing submissions as the three-week public hearing came to a conclusion.
Paul Harris QC, for Gascoigne Halman, told the tribunal that it did not matter “one jot” that Gascoigne Halman had entered into the agreement voluntarily because it was “still illegal”.
He highlighted the “negative impact the central restriction has had on Gascoigne Halman”.
He said: “The central restriction is OOP.”
He added that it was “indisputable” that online property portals were a “key parameter of competition for estate agents.
“It goes without saying that the OOP rule has restricted the ability on the part of my client to compete on that parameter.”
Mr Harris claimed there had been a direct adverse effect, not just on his client, but on other estate agents with “further adverse effects further downstream”, namely to consumers.
Mr Justice Marcus Smith asked: “Why did your client sign up in the first place?”
Mr Harris replied:”Well, that is very easy to answer, sir.
“That is because the evidence has been quite clear, including from the estate agents adduced by my learned friend’s side, that they regard it as a means to restrict competition between them, therefore reduce their costs, and that’s the answer.
“There is an anti-competitive motive. It wasn’t just on the part of my client, but it was on the part of Mr Symons, Mr Wyatt and all the others.
“What they knew full well was that costs were rising and they didn’t like that. The last they wanted was for costs to rise, so how do you reduce cost as a collective? What you do is you collectively restrict your output, therefore you reduce what you’re spending on it.
“Per se there is nothing wrong with acting for profit. One wouldn’t expect Agents’ Mutual to be doing anything less, but what is completely wrong because of its anti-competitive object and its anti-competitive effect is to deliberately disrupt and change the structure of the market so as to reduce output by a means of restricting competition between yourself, and by that method to increase your bottom line.
“So that’s what’s pernicious. It is not going for profit per se, it is excluding other people from the market and then taking the economic rents that they would otherwise be able to obtain and instead bringing them back to your bottom line. So the people being excluded are here twofold; there are other members of the estate agency market, in particular non-traditional estate agents — we call them online agents, but you know what I mean. So otherwise they would be taking some money from the market, but we know from all the foundational documents and the business plans that is the last thing Agents’ Mutual wanted, so they are excluded
“The other one of course is the other portal, in particular…..
“There was an analysis of how much money was being generated by both Rightmove and Zoopla and the estate agents as a collective, through this mutual company, wanted to bring that back to them. They don’t want this money going out to the shareholders of Zoopla and Rightmove.
Mr Harris replied: “It’s because the evidence is quite clear that they regarded it as a means of restriction of competition.”
Mr Harris added that there was a clear “anti-competitive motive”.
He said: “It is not going for profit per se, it is excluding other people from the market.”
He added that Agents’ Mutual wanted to “bring [Rightmove and Zoopla’s profits] to them.
“They didn’t want money going to shareholders of Rightmove and Zoopla.”
He added that Agents’ Mutual wanted money brought back into the club of traditional agents.
Mr Harris said that, to win this case, Agents’ Mutual had to “establish actual pro-competitive benefits” of the OOP rule.
He said: “They have not established any pro-competitive benefits,” further stating that OOP restricted agents’ output because they were limited to a total two portals by OOP.
That meant that agents “are not putting out as much advertising”.
Mr Harris claimed that it “matters not one jot” to the outcome of the case whether Gascoigne Halman entered the arrangement with Agents’ Mutual voluntarily.
He said that 99.9% of Article 101 cases “are likely to be cases where there’s a voluntary entering into [an agreement].
“It doesn’t matter [whether it is] object or effect, it’s still illegal.”
Mr Harris said that terms of membership were not limited in time “at all by this membership agreement,” which was “fatal” to Agents’ Mutual’s case because Ian Springett said he thought it was put in place for a five-year period.
Responding to questions from the panel about hypothetical alterations to the contract, Mr Harris said: “I’m attacking the agreement as it is, I’m not attacking agreement that might be altered or changed in some way.
“My client is a contractual counterpart to the agreement as it is.
“That cannot be unilaterally waived on the part of Agents’ Mutual.”
He said an amendment was “by definition a new contract provision.
“My client has not agreed to changing the very nature of certain things that were sold to it as benefits to it.”
Mr Harris referred to an arrangement with agents in Northern Ireland where Agents’ Mutual had to “create a formal contractual variation” to amend terms, which he said proved that a similar arrangement was necessary in this case also.
He said, if that were not the case, then “in any anti-competitive agreement, the offender would just say: ‘I will just unilaterally waive it,’ and then no agreement would ever be illegal.”
Mr Harris claimed that Agents’ Mutual could have chosen to insert into the contract a specific point at which the rule would not longer apply, such as a threshold of market power, as defined by the Competition and Markets Authority, a certain number of agents subscribed or a certain level of turnover.
He said that if Agents’ Mutual had done that, it could have been a problem for Gascoigne Halman’s case.
He told the tribunal: “They could’ve done this, but they didn’t. Now it’s too late.”
He said they could have also inserted fall-back clauses to replace the five-year limit, which would remove the OOP rule after three or four years where appropriate.
But Mr Harris said Agents’ Mutual had not and “now they have to live with the consequences”.
Rebutting the claim that OOP was pro-competitive, Mr Harris described it as completely absurd.