The ‘one other portal’ rule came under close scrutiny at the Competition Appeal Tribunal yesterday.
The panel heard evidence from two expert witnesses, both economists – Simon Bishop for Agents’ Mutual, and David Parker for Gascoigne Halman.
The Agents’ Mutual expert witness contended that the launch of OnTheMarket had engendered more competition between Rightmove and Zoopla; the Gascoigne Halman expert witness said it had created a distortion in the market.
The Tribunal is examining potential competition issues around the ‘one other portal’ rule imposed by Agents’ Mutual portal OnTheMarket after issues were raised by Connells-owned brand Gascoigne Halman.
Tribunal chairman Mr Justice Marcus Smith asked: “What factors cause estate agents to pay for services that are provided [by property portals]?”
Mr Bishop told the tribunal it was about reaching a bigger audience.
Mr Justice Smith asked: “What attracts the visitors, the property purchasers, to a particular site?”
Mr Bishop said that a serious house hunter will check several portals.
Mr Parker said it was all about access to leads.
He said: “If everyone in this area is on Rightmove then you need to be too, same with Zoopla.”
The issue of portal prices was then discussed.
Mr Parker said: “To use an analogy, if one shop sells apples for £1.50 with ten, and another with five in for £1, it’s clear that while one is less money, the £1.50 is the better deal.
“That’s if it’s just about price.
“I’m sure we’d all like cheaper prices, but I’m still happy to get the deal.
“If we ask if people are happy to pay £830 to use Rightmove, then yes, people are signing up and they are.”
He went on: “All the estate agents from which we’ve heard have mentioned value for money.”
Mr Parker added that it was not just about ARPA (Average Revenue Per Advertiser).
He said: “To throw this away is to move away from the economics of it.”
Mr Bishop challenged him, saying: “We aren’t throwing it away. An estate agent will pay more if it thinks it will get more.”
Mr Justice Smith then turned to the decision to leave one other portal when signing up with Agents’ Mutual.
He said: “That estate agent will have to make a choice between Rightmove and Zoopla down the line, they are voluntarily accepting that.”
Mr Parker replied: “They are accepting they have to make that choice, you are absolutely right . . . I’m not sure voluntary or not makes a difference.
“They don’t have to sign up. But people did sign up.”
Mr Parker claimed that as of about May 2015, there was stagnation, with agents not signing up to Agents’ Mutual.
He said: “[There were] great expectations to begin with, but when reality started to bite, OnTheMarket is hobbled by the one other portal rule.
“Its agent pool is starting to drop back.”
Mr Justice Smith asked: “What was the impact on Rightmove and Zoopla?”
Mr Bishop said that it had led to some negotiating power: “Rightmove and Zoopla know it’s only going to be on one of those.”
Mr Justice Smith then asked the expert witnesses if the one other portal rule had benefits.
He asked: “Isn’t it a good thing at this stage to create a battle between portals, so they have to ensure they are creating an offering that has to be better?”
Mr Bishop agreed and said: “I can think of agents who signed up to OTM prior to entry, and their expectations.
“I agree, for those who have signed up there is more direct competition between Rightmove and Zoopla.
“On the Market has entered, I don’t know if it will be a success, no one does, but I agree, it is engendering more direct price competition between portals.”
Mr Parker disagreed and said: “It’s created a distortion in competition, there is a choice, but it’s an artificial choice.
“You used to be able to sign up to both quite happily.”
He went on: “Mr Bishop’s argument is that Zoopla should try harder, but that hasn’t worked.
“To encourage someone to come back, they have to encourage them to come off Rightmove.
“In a market where people regularly multi-list, I don’t think it’s helped competition.”
In later proceedings yesterday, Mr Parker was questioned by the QC for Agents’ Mutual, Alan Maclean.
Asked if he thought Agents’ Mutual was unlikely to establish a key market position after five years, Mr Parker agreed.
Asked by Mr Maclean if he thought the ‘one other portal’ rule does not stop from Zoopla from competing, Mr Parker said: “It doesn’t prevent it, but it does distort it.”