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’ in the early discussions that led to the setting up of OTM.
“This is not about competing fairly, trying to take Zoopla on then become the number one. It is about killing competition off,” Mr Maclean said.
But 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.