The chief executive of Agents’ Mutual tried to incentivise the Big Three corporates to drop rival property portal Zoopla, a tribunal heard yesterday (Tuesday).
Ian Springett encouraged senior representatives from Connells, Countrywide and LSL to “all leave Zoopla at the same time”, it was said.
The Competition Appeal Tribunal heard he offered to “compensate [them] for the damage that would do to the value of [their] Zoopla shareholdings”.
The tribunal is examining competition issues around the ‘one other portal’ (OOP) rule on the Agents’ Mutual-owned OnTheMarket (OTM).
Gascoigne Halman, a Gold member of OTM, signed up in January 2014 when it was an independent. It was bought by Connells in October 2015.
OTM was launched in January 2015 as an attempt to challenge the perceived duopoly of rival portals Zoopla and Rightmove.
The tribunal was previously told that Zoopla had offered to pay as much as £250,000 of Connells’ legal costs.
David Livesey, group chief executive of Connells, yesterday continued his evidence and said that, at the Leighton Buzzard meeting of September 2015 along with Countrywide and LSL, Ian Springett “didn’t make a formal pitch”.
Mr Livesey said that he “made it very clear that we were only interested” if the OOP rule was dropped.
Alan Maclean QC, for Agents’ Mutual (AM), said Mr Springett’s position was that they would only consider dropping that rule if the Big Three signed up to OTM.
He added that the meeting was a chance to discuss the terms on which the corporates might choose to join OTM.
Mr Livesey said they agreed Mr Springett would bring a proposal to them at the next meeting which would include dropping OOP, but Mr Maclean said: “It was confirmed that [OOP] was essential to achieving the company’s aims and should not be compromised.”
Mr Livesey said that, at their next meeting, he became tetchy because it “couldn’t have been any clearer that the only basis I wanted to hear the proposal” was without the OOP.
Mr Maclean said AM’s position was that OOP was key to its success and that the market should decide what the best portal was.
He said AM “would not have entered the market on any other basis”, but added that “If and when my client obtained some degree of market power the OOP rule may have to be rethought”.
Mr Maclean said that, if the Big Three corporates did join OTM, it would have given a not insignificant boost to the number of listings.
Mr Maclean suggested there was “blue-sky thinking” in the presentation Mr Springett prepared, but Mr Livesey replied: “This wasn’t blue-sky thinking, he had come with a specific proposal in mind.”
He added: “He was trying to convince all three of us to come off Zoopla and at the same time join OTM.”
Mr Livesey said Mr Springett “didn’t talk to us at any point in the meeting about dropping Rightmove” and said he would “compensate us for the damage that would do to the value of our Zoopla shareholdings.
“He would give us equity to compensate us for that.
“He was encouraging us, incentivising us, to all leave Zoopla at the same time. Not forcing or coercing, but definitely incentivising.”
But Mr Livesey added: “We will not have a new supplier that coerces us to do anything negative to existing suppliers.
“We sent him away to consider it without the OOP rule.”
Mr Maclean said Mr Springett “wasn’t prepared to contemplate dropping the OOP rule unless the three corporates joined OnTheMarket”.
However, said Mr Livesey, “We were never going to do that” if it impacted in any way on closely embedded relationships.
He added that all three estate agents said the same thing.
Mr Maclean asked if Mr Springett had made it clear that there was no way OTM would even have got into the market other than on the basis of OOP.
Mr Livesey replied: “That may be what he says, but I think that’s fundamentally flawed.”
He also said he had “very strong suspicions” that employees of AM were involved in discussions about collective action.
Mr Maclean said he was calling Mr Springett a liar, but Mr Livesey replied: “There’s a difference between saying something might not be accurate and calling someone a liar. I think it is probably not accurate.”
Mr Maclean said: “This is a battle between my client and Connells, and the entity in which they have a significant shareholding, Zoopla.”
He claimed Gascoigne Halman was a proxy, adding: “The suggestion that this is all to do with little Gascoigne Halman with their 18 branches: you and I both know is complete nonsense.”
Mr Livesey replied: “Absolutely not, there’s no need for this litigation.
“OnTheMarket decided to take an injunction out against Gascoigne Halman and then went straight to the injunction.”
He added that AM had “leapfrogged all the dispute resolution clauses”.
Mr Livesey also said the total costs of the litigation would “probably be £6m by the time we get done”.
Mr Livesey said: “I think it is absolutely bonkers that this kind of money, this kind of litigation, to stop 18 branches in Cheshire from listing on their competitor when they could have been spending that on business development.”
Mr Maclean said: “You know if my client did not defend the OOP rule in this litigation, it will unravel like the proverbial ball of wool.”
Mr Livesey replied: “But they have already approached [Connells] with the view to unravelling it voluntarily.”
Please see our next story for continued coverage of yesterday’s hearing.
So it appears that the OOP rule has been up for negotiation previously, when there was a possible incentive involved. What I don’t understand is how the equity compensation would have worked. Perhaps someone has some idea?
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In my opinion probably something like “I’ll give you equity in OTM to make up for the drop in the price of your equity in Zoopla”. The problem being that OTM is private and Springett’s idea of the value of that equity was probably very different to those who were hearing his pitch.
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MagneticBullet35 – You say
‘Probably something like “I’ll give you equity in OTM to make up for the drop in the price of your equity in Zoopla”.’
How do you envisage that Mr Springett would have been able to do that – seeing as OTM is an ‘Agent-Owned’ portal, where one Member company has one share?
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I am simply waiting for the moment I assume MUST HAPPEN!
The Directors of GH (not any newly one appointed since the acquisition) the original board who are still there today to come to the stand and explain what has changed since their continued support of OTM up until a month or so before the completed merger.
The outcome should be, if GH are to continue to be portrayed as GH to the public in their local areas with absolutely no change to their branding then this is a case closed and OTM win…. ie you are GH or you are Connells…. and who is talking the most?
Otherwise, let em off and make em rebrand to Connells case closed, OTM lose and so do GH and Connells for the obvious reasons.
Surely those who were decision makers before the merge will be brought to the dock?
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Well said Ric that is after all what this is about. They were happy top sign up under the terms of the contract. It is only after Connells take over, which frankly is a competitor to OTM does it all go per shaped. There is a presence of taking the baggage terms when you buy a company and at the end of the day that is what this argument is all about?
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Like all court cases though this is about the law and what the courts will uphold. It’s pretty well established that you can’t enforce a contract that says “If you use us, you can’t you (insert competitor)”. You can have gentlemans agreements to do it but you can’t put it in a contract and then enforce it in court and get damages.
So I expect this to go against AM and Springett might grumble “but that’s what they agreed and signed up to” and he’s right but the thing with gentlemans agreements is that if the other side breaks it, they may no longer be a gentleman but you don’t get anything from them. They are back to being a business acquaintance who you don’t fully trust. And the way you protect yourself when dealing with such people is with a contract ie one that is enforceable. Sorry to see it go this way but the OOP always had the risk of ending up in court and losing if anyone broke it and AM actually took them to court.
The question now becomes can OTM learn and move on? Sounds like OOP was so central to their thinking that Springett’s lot will have trouble and maybe it’ll need a new captain if its going to change its ways and succeed.
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‘It’s pretty well established that you can’t enforce a contract that says “If you use us, you can’t you (insert competitor)”.’
Seems pretty much what a Sole Agency/Sole Selling Rights Agreement says – you saying that neither of those are enforceable either?
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Difference is in the detail. Sole Agency/SSRA don’t have an upfront or ongoing cost and can be ended by the customer for effectively no loss (other than a bit of time and maybe notice period) before they try another agent. I’d argue they’re reasonable as the agent/service provider has to expend resources to provide the service for no guaranteed income. The SSRA gives us a fair crack at success and fee but doesn’t bind the customer in the long-term. Another pretty important difference is that the customer has an option for multi agency, just paying more for it. Very different to the OOPR which was permanent, completely unrelated to resources spent by OTM and was “OOP or no business with us. No choice.”
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‘Very different to the OOPR which was… “OOP or no business with us. No choice.” ‘
And, despite that being the case… and without a single animal being harmed during the production of this entire farcical situation we now find ourselves as an industry embroiled in – THEY STILL SIGNED UP BY THE HUNDREDS.
Thousands, actually.
At what point does this particular penny drop – that should any action such as that which Mr Mealham suggests is hanging over Agents who entered into an agreement with AM/OTM, then the Gascoigne Halmans, Moginie James, Rook Matthews Sayers and their likes are just as answerable as any of us.
It’s tantamount to screaming for attention before shooting a chuffing great hole in yer own foot.
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What an absolute waste of money! What do all the agents around the country think about what their money is being spent on?
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Contract is a contract – and AM have every right to defend its contract.
OTM will survive or it won’t and this amount of money would have been wasted no doubt in the process anyway should everyone had dropped it in 2020 due to no increase in membership numbers so, why not fight this and if AM win, perhaps some of the other independents not on OTM now may realise how keen Z and the Corps are to bully the little folk out of the market.
If AM lose, then I suspect by 2018 the OTM agents will drop it and save some cash by remaining on just one portal. If nothing else it would have proved that is all that is required.
RM can then hike fees, Z can offer incentives to woo back its old members and we can get back to 2001 to 2014 with at some point us all moaning if only we could control this.
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Done it again Ric. Spot on assessment.
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Mr Livesey said: “I think it is absolutely bonkers that this kind of money, this kind of litigation, to stop 18 branches in Cheshire from listing on their competitor when they could have been spending that on business development.”
I agree with Livesey on this point.
How many Corporate member acquisitions are there each year?
Does this mean any future member sale to a corporate are now in jeopardy because of the OOP rule?
Was this scenario ever confirmed to the membership?
Things change, what if a member fell ill, had to sell, went bust or died?
OTM is a members site not a corporate institution. Springett should have created a new rule, far cheaper and more logical than the legal route:
Any future member sales may not be bound to their contract with OTM as it may materially effect the price that the member achieves.
Particularly as potentially far more new members may have been put off by the Boards own decisions to invest in Overses, Counrty Life, Commercial offerings etc that would benefited very few members.
This may have also have placated those Corporates when Z later announced their intention to plug mortgage products to their database which may have helped those Corporates to decide to significantly reduce or sell their shares in Z? Leaving the potential of joining OTM more viable?
Did this legal action prevent this consideration?
Or is it time the independent sector recognise that if rallied correctly we are big enough to go it alone if necessary?
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I think if GH rebranded to Connells in their villages AM may have said, off you go and goodbye… GH no longer exist as a brand which represented OTM.
Cake and eat it though…. the board remain the board, the brand remains the brand…. they get a big pay out and get out of contracts as a result.
Companies acquiring must look at legal contracts the company being acquired have agreed and this is the issue, GH have agreed, Connells don’t care and are using their cash to make a point.
Why did Connells not raise this fight in 2015? before and regardless of any acquisitions? They simply didn’t care about OTM and do now only for the income GH will generate Z and not OTM.
I will continue to say, where is the voice of the original board at GH who still exist today…. I would love to read a comment saying, look chaps, we don’t agree and if we had not been purchased we would still be a big OTM supporter, however we have cashed some chips and over to them and Z to fund the battle, we don’t actually care now.
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The acquiring company cannot simply ignore already in place and executed contracts arranged by the company they are buying – that is the whole purpose of due diligence to make those assessments prior to completion. Otherwise all contracts in all areas of life are worthless.
Agree or not with the “one other agent rule” from OTM, that was the rule, and if GH signed up to that, and Connell’s chose to flaunt it then action, followed by litigation should follow.
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I agree, unless Z used this as bait to draw in a much larger anti-competitive battle that may cost OTM members up to £6 million if they lose?
If so, did Springett fall for it?
Connells/Z may be able to afford that but OTM members cannot.
Some battles are worth avoiding. This was one of them.
For this reason, whatever the outcome, OTM need someone much more savvy, a Churchill and not a Chamberlain.
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Oh deary deary me mr springett!!
So clearly the OOP rule isnt that important to business if you’re allegedly prepared to give it up in a flash!
Proof of this ‘collective action’ could be Fatal to OTM…attempting to a destroy a rival company by collectively suggesting (in this case the big three) to leave JUST zoopla and not rightmove….in what world would this not be anti competitive?
But of course nonsical ‘estate agents’ including ric, woodentop, smile please, peebee will still find a way to defend this. *awaits absurd responses*
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Nothing absurd from me NGgibson, you asked me a question on the other story, I have answered…. lets debate? *awaitsasimpleanswer 🙂
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“So clearly the OOP rule isnt that important to business if you’re prepared to give it up in a flash!”
Except he wasn’t.
According to the article, Connells and the others suggested it. Springett went away, came back to the next meeting and said ‘no deal’ to dropping OOP and the conversation carried on from there.
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Irrespective of the original reason for AM’s action i.e.., GH reneging on the OOP rule, the damning evidence is Springett’s apparently blatant attempt to coerce the big three into collective and damaging action against Zoopla.
If that evidence is upheld by the Judge then it’s cased closed against AM.
Simple as that.
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spot on! I dont get what part of that my fellow commenters do not understand?
I would suggest anyone who does not understand the seriousness of mr springett’s alleged actions to read a book, namely on anti competitive practices.
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The dislikes are simply continuing the head in the sand attitude being adopted by those pro AM.
Just because two parties sign a contract doesn’t make it legal and enforceable – if conditions of the contract break the law it is an illegal contract and unenforceable. I recently got a client out of an auction contract without the stipulated penalty being applied for exactly this reason.
Whether you like it or not, or agree with it or not … the law states that you cannot coerce to harm a competitor in the way that Springett allegedly proposed to the big three.
Judges are there to take emotion and opinion out of the equation and decide a case simply on whether the action was legal or illegal.
IF the big three’s evidence is accepted AM will lose the case.
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AgentPink92 – if conditions of the contract break the law it is an illegal contract and unenforceable.
Bingo. Spot on.
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Two large corporate firms attempting to hamper and disable an affinity group that allows small agents an alternative to the effects of having just two firms dominating internet advertising isn’t anti competitive?
Duopolies are OK as long as we are one of the Duopoly?
A while back I did a consultancy with Local property Index; another portal attempting to provide an alternative to the domination of the Duopoly. For the 3 months of the contract I was up against the one other portal rule as I attempted to establish the viability of entering the UK portal market against the dominance of Rightmove and Zoopla. The OOP was mentioned but was no real barrier to signing up agents. When AM launched LPI had more stock than AM. The agents I was talking either liked the one other portal rule as they weren’t listing on both portals already, others saw it as a reason not to join AM.The one other portal rule had an affect sign ups to On the market as much as it had and effect on its competition. Gasgoine Halman signed up to the rule but as soon as the cash came along it was an inconvenient contract term they are now attempting to muscle out of the way.
I have no comprehension how the costs of paying off or writing off the 5 year contract could be more than the cost of litigation so I can only conclude this case is more about competitive manipulation of the industry than common sense.
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Mr May,
You are spot on again !
The cost of their membership – 18 offices x £301 x 60 (max payments) = £325,080. This is considerable less than the possible legal costs that are likely to arise.
So, why risk the potential costs of litigation ?
There is clear motivation, I suppose, if they are looking to purchase further agents that are listed with OTM, but it is clear it also assists other portals if the OOP rule was found to be not enforceable.
With regards to the dates implied of removing them from Z, we were all advised of the start date of OTM and were clearly aware that we could not continue with them after the start of OTM, this does not mean that they were asked to group together to remove at the same time.
The consumers of OTM all agreed to their terms before signing !
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Whatever the outcome of this case it is fairly clear that it has polarised the industry, an industry that has got a real fight on its hands for day to day business lets alone this sort of macho stag rutting.
Business ought to be about fair honest competition, those who offer the best service, value, ethics and integrity ought to come out on top. Sadly the firm with the biggest cheque book and appetite for litigation seems to be handed an unfair advantage these days, whether that is bullying to silence justified criticism, concerns and comment with aggressive litigation lawyers or reneging on contracts simply because a wad of buyout cash has come along.
It is the smaller agents of Agents Mutual who are funding this fight, they will be the ones who suffer, so what could justifiably be a case about competition rules could deal a very uncompetitive blow to 5000 or so smaller agents who very much have a stake in providing themselves with at least one fightback against the dominant pair of portals (formerly referred to as the duopoly) corporate spending power and secure salaries paid out revenues not reliant on selling property; that of having an viable alternative portal they have built and control themselves.
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Robert, the OOP rule was ALWAYS going to polarise the industry.
It was another ill thought out by product of AM’s strategy; along with strengthening RM’s No.1 position, motivating Z to diversify and diverting focus away from the rise of the onliners.
The OOP rule was a flawed sledgehammer to crack a pip, never mind a nut.
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The OOPR has created more polarised opinions and posts in the trade press than anything I can recall, from that point of view it is genius marketing that got the industry talking and talking and talking and……. in court.
From that point of view it isn’t so much a sledgehammer as an Achilles heel
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The saddest thing her is the fact that with bigger balls, mutual cooperation and less stubbornness and arrogance we could all be sitting here two years on, all on OTM, all paying sensible fees and the RM monster that’s taken the p**s for the last 17 years would have disappeared up it’s own greedy backside. The industry missed a huge chance that we won’t see again.
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Once this case is over we can assess its ruling, effects and fallout and then put the whole project back on track again. a few people have seen what I am doing and they are excited by it.
This case has dawn a line in the sand, forced agents and suppliers to show their hand, their strengths and weaknesses. It is going to be an exciting and interesting year but no opportunity has been missed…… yet!
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Yep. All OTM needed to do was provide a good service at a lower price – if RM and Z are really overcharging (obvious!) then that should have been easy. The goodwill + business sense of good agents would have meant they listed with OTM and being so close to the agents it could have listened and provided services for the agents that even RM and Z aren’t. It needn’t even have been expensive, just tweaks to make agent’s lives easier.
Instead they tried to turn the goodwill into an ironclad rule with OOP. It increased risk for the agents going on OTM as they had to give something up to do it and basically made it much harder for OTM to grow numbers. Then they burn all their money on a court case. If AM lose this, I don’t rate their chances of coming back to the industry asking for a bailout for “your portal” that tried to dictate your behaviour.
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Doesn’t matter how good the service would be MagneticBullet35 in my opinion! I deliver a good service, as I am sure you do in your field!
So together lets me and you: put an end to all this and promise all agents no OOPR and pay us £100 a month per branch to list their stock on MagnetRic.co.uk (like what I did there) and we promise the fees will always remain low and we will convince the buying public to visit us as much as RM & Z, thus creating a real challenge to the portal world.
Easy peasy… no reason why all the agents in the land will not support us as a never heard of portal promising good service. If we start by listing our own stock Magnetic then we can even show agents how we trust us.
I think whatever the result, we all have opinions and for me OTM was simply a chance to support a concept or not….. no reason why it should have ended where it has and instead lots of agents may be looking at their acquisition contracts, as if any companies were told they cannot trade for a said period after being acquired in full or part…. then “anti competitive that is in my opinion” and a contract means sod all.
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Overcharging (obvious!) you mean compared to newspapers the industry has used to many years you mean, for minimal exposure. Please remind me, how much cost vs exposure does/did that cost again? Come on, pull the other one.
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£200 for an advert and a 50,000 distribution drop for us NOT BAD!, plus the paper allows me to say almost what I want in the advert, the price per drop per letter box (0.004p) remains one of the cheapest ways to get a message across to a local audience. (assuming we are not still asking ourselves “do papers sell houses”, as we know they don’t and nor do the websites).
Different messages to different audiences – the papers can be good value at 0.004p from print to delivery. Order 25,000 leaflets and get a quote for delivery see how that compares! to the local paper.
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As always the real winners will be the lawyers on both sides whether they loose or win, and they will get their ‘commission’.
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The rise of OTM, resulted in Zoopla offering discounts and incentives to stay / come back. Even RM softened in relation to what they would do come renewal time and more importantly their attitude towards their clients.
Agents took advantage of this and stayed with or went back to Zoopla. Rather than being anti-competitive, OTM’s existence, actually triggered the other portals to offer more competitive packages, more so in Zoopla’s case. Those that wanted to take advantage of that did and those that did not want to, didn’t.
Much the same as agents made a choice with going with OTM and the OOP rule in the first place. If Zoopla were so good and looking after their clients so well in the first place, they would have held on to all of their clients would they not?
Whatever you say about it all, it’s clear that RM, Zoopla and the “big 3” aren’t interested in your well being and I am surprised its taken the reporting of this court case to bring that into focus for some.
Mr Notley talks of OTM entering the market and weakening Zoopla’s position, well the last time I checked, I’m in the market to weaken others and take as much share of the market that I can, all at the cost of my competitors, that’s business.
Interestingly, on the meeting that took place, that the “big 3” were happy to attend, but no one wanted to take credit for organising. What would have happened if Ian had said ok guys, shake hands now and I will drop the OOP rule?
The big 3 in a room with IP and the result is a move over to the other side? Sounds like a cartel to me!!!!!
Ric has mentioned it before, but what has changed for the board of GH since they signed up as GOLD members no less, from where I’m sitting all I can see is a payout, a new big brother with deep pockets to fight their, I mean fight Connells case and an offer from Zoopla to further underwrite costs to the tune of £250k. Smacks of collusion, manipulation and an attempt crush the only thing that posed a serious risk to Zoopla business. If this isn’t anti competitive what is?
The last time I checked, the OOP rule was a USP and it hasn’t put Zoopla out of business yet has it……………..
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There can hardly be a mainstream agent out there who does not have even a vague awareness of the the existence of rules about cartels and collusion. Why then did the Big 3 not throw up their hands in horror and run screaming from the table when the alleged conversation with Springett take place.
My guess is because it was not an attempt at cartel/collusion, it was actually a legitimate business discussion that all of them were perfectly comfortable partaking in.
Only after the event, and when it suits them, does the ‘cartel/collusion’ issue seem to have suddenly come to be so important to at least one of that Big 3. Odd that.
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Asking businesses to join AM is one thing, asking them to leave a rival and sell there shares in that business is a whole different thing.
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Interesting, I’ve just asked a local resident who is selling to leave that rival agent and asked them to tell everyone how unhappy they were and only to use me moving forward. I said, I would refund them any upfront monies they may have paid out already with the current agent on completion and also said make sure you give them a bad review as well to really stick the knife in.
I feel bad now, as the company involved very much relies on upfront fees as this props up their share value, and perhaps this may now damage the other companies chances of excelling in my area!
Spin this how you want….. us agents are VERY anti competitive! If we start going down the old technical route.
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Who exactly is disadvantaged by the Other Portal Rule? It will be interesting to see how the judge rules on this, no matter what the back street lawyers wish to happen and all the red herrings and smoke screen of who said what and when or didn’t. Agents were given an opportunity with a free choice to join AM/OTM or walk away. Not being on OTM as many have said doesn’t hinder your business and as such suggests it isn’t a restriction and in any event that choice is down to each individual high street estate agencies business plan. I note that membership hasn’t been raised by web only portals being prevented from advertising on OTM! Having a restriction in a mutual agreement is not illegal in isolation and is likely the reason why OFT and the like didn’t take action (they have known about it from the very start). I seem to recall the OFT actually commenting to this effect in 2016?
It does look like Connell’s hoped OTM would fold with the threat of legal action, a civil litigation but now wish they hadn’t gone that far, as their bluff was called? Does make you wonder, its the oldest legal trick!
I’m having difficulty in finding a case to answer by OTM as GH entered freely into an agreement (the judge will be remembering this throughout the hearing) knowing full well what was involved, as has all other OTM agents before they did so. No gun held to their head and as such can’t be construed as compulsory restrictive practice that a business has to join to operate. You could walk away and not sign up at anytime. There are many industries and organisations that have restrictions on members! There is a legal precedence of being enforceable contract, knowing full well what the terms were before singing. Trying to call it an illegal contract is the argument they are trying to get, “we knew what we were doing then but now wish to get out of it by saying is was anti-competitive, but knowing it was in the very beginning”. Connell’s took that liability on when they bought GH. It is for the judge to decide if it was a legal contract or not. Some may be surprised by the answer if he finds it isn’t anti-competitive, when he hears why OTM came about and many say OTM has actually made the market more competitive?
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@woodentop, some of the stuff you come out with ceases to amaze me. Of course you are finding it difficult to understand as you are as pro OTM as it comes.
You clearly have no clue on anti competitive practices.
The OOP rule is illegal and uninforcable – with a Suggestion of colluding from Mr spingetts end in there as well i have no doubt the judge will make the correct decision.
Then hopefully, back in your box!
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Stick and stones may break my bones, but names will never hurt me.
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You are correct I am pro OTM, not because of the contents of their contract or the people involved but because “the others”, the same people who wish OTM to fail, had a monopoly and were stuffing agents left right and centre, yet this point is forgotten by those anti-OTM. Now Z have waded in offering to contribute to Connells legal expenses which add fuel to the fire. I am very well versed in anti- competitive practices but as one is finding, it is open to interpretation otherwise we wouldn’t have the two sides to the argument. I still question how anyone can say they are disadvantaged when they freely accept the rule of membership before entering into the commercial agreement.
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