The ramifications of the case between Gascoigne Halman and Agents’ Mutual look set to continue.
There is the possibility of an appeal by the Connells-owned agent, while Agents’ Mutual said yesterday evening it will go after costs, and Zoopla took a swipe at the ‘one other portal’ rule operated by Agents’ Mutual portal OnTheMarket.
There is also little doubt as to just how bruised OnTheMarket feels, with chief executive Ian Springett yesterday evening telling member agents in an email: “The proceedings before the Tribunal have been running since July last year with the Trial completing in February. The manner in which our opponents conducted the case has caused us to divert considerable resources and management time, as was presumably intended by those who funded it, including Zoopla.”
The case – which resulted in a ruling in favour of Agents’ Mutual yesterday afternoon – revolved around Agents’ Mutual alleging breach of contract by Gascoigne Halman, which operates 18 offices in the south Manchester and Cheshire region.
As an independent, it had agreed to subscribe to Agents’ Mutual’s portal, OnTheMarket. It was subsequently acquired by Connells Group.
Gascoigne Halman denied the breach of contract, and claimed that OTM breached various provisions in the Competition Act 1998 – including OTM’s ‘one other portal’ rule.
Yesterday, however, the Competition Appeal Tribunal rejected Gascoigne Halman’s arguments, saying that the rule was in fact part of arrangements which were pro-competitive – in EYE’s understanding, the arrangements allowed a challenger portal to enter a market dominated by Rightmove and Zoopla, where other challenger portals had repeatedly failed.
A spokesperson for Connells Group yesterday evening said: “Gascoigne Halman is surprised and disappointed by today’s Competition Appeal Tribunal judgement. We are considering our position and will consequently not be making any further comment at this stage.”
A spokesperson for Zoopla said: “This outcome doesn’t change anything as far as we’re concerned.
“We welcome competition based on innovation and performance but firmly believe that OTM’s ‘one other portal’ rule is not in the interests of either agents or consumers.
“OTM has failed to gain traction precisely because they don’t allow agents a free choice in their own marketing decisions and limit consumer choice and exposure. We will continue to win back disillusioned agents who are not getting the performance and value they deserve from OTM.
“It is pretty amazing that OTM’s existence is dependent on restricting and suing their customers.
“We think it is high time that OTM let their agents freely choose where and how to market their clients’ properties and look forward to competing on a level playing field when they drop this rule.”
Paul Smith, CEO of Spicerhaart and an OTM member company, said: This judgment draws a line under this protracted matter and allows Agents Mutual, and its member agencies, to move forward together.
“Indeed, the judgment confirmed that rather than being anti-competitive, Agents Mutual has had the opposite effect, providing crucial competition to the major portals.
“This case underlines the need for all proper estate agencies, irrespective of size, to join force in further developing OnTheMarket as a leading portal which works for them and retains the value of listings and fees within the industry.”
City analysts at bank Jefferies – an adviser to Zoopla – said it was surprised by the decision.
It said the ruling had not changed its opinion of Zoopla, which “remains the highest conviction ‘buy’ of the stocks under our coverage”.
Anthony Codling of Jefferies said his take on the ruling was the the ‘one other portal’ rule was judged to be not anti-competitive because the “OTM proposition was too weak to succeed without such support”.
He said that Rightmove and Zoopla would both be sharpening their pencils to ensure they are chosen at the ‘one other portal’.
Another City analyst William Packer, of BNPExaneParibas, said: “The Agents’ Mutual court case decision has been announced in a dense 167-page document.
“Based on our reading of the document and conversations with industry contacts we understand that Agents Mutual has won all major counts vs Gascoigne Halman.
“The judge stated the rule ‘was objectively necessary and pro-competitive’. In summary, Agents Mutual’s ‘one other portal rule’ rule remains intact and Agents Mutual’s five-year contract remains valid. We note that the decision could be appealed.”
He continued: “Overall we view today’s news as negative for ZPG and neutral for Rightmove.
“Agents Mutual has been on the back foot for the last 12 months as the court case occupied management time and restricted financial resources for marketing – we believe AM lost a small portion of their agency base in this period, (although AM has not commented on losses).
“We expect the decision to herald a renewed marketing push from Agents Mutual and solidify its membership base.”
Packer forecast growth at Zoopla, but said: “This could prove more challenging in the context of a stronger Agents Mutual.
“We forecast property portal ARPA [advertising revenue per advertiser] growth at 5% next year which could also prove more challenging.
“Additionally the win of the court case also reduces the upside risk of a rapid return of members to ZPG which an Agents Mutual court case loss could have catalysed.
“We note however that ZPG’s business model has materially changed since 2015 through mergers and acquisitions.”
Packer said that the news was broadly neutral for Rightmove, and that he continued to rate Rightmove as ‘outperform’.