Agents’ Mutual could not possibly have successfully entered the UK property portals market without the ‘one other portal’ rule, intensive reading of Wednesday’s lengthy judgment implies.
The judgment suggests that any other challenger in the future will have to introduce the same rule in order to stand any chance of succeeding.
A number of other portals had tried to enter the market prior to OTM, but failed. These included the portal launched by the NAEA and NeedaProperty, said at the time to have the substantial financial backing required for success.
The ‘one other portal’ rule adopted by OnTheMarket could even have gone further, said the Competition Appeal Tribunal.
It said that considering the difficulties facing a new entrant to the UK’s portal market, it “would not have been unreasonable for Agents’ Mutual to require complete exclusivity from its estate agent members”, the ruling states on page 140 of its judgment.
But having settled for ‘semi-exclusivity’ with the implementation of the ‘one other portal’ rule, the Tribunal said this was ‘an essential part of OnTheMarket’s entry strategy and central to its chances of success. Without the rule, there would have been no entry.’ (Page 135)
Laying out their conclusions in a legal judgment the panel said the rule was ‘objectively necessary’ (page 162) and ‘pro-competitive’ (page 150) because it increased competition between Rightmove and Zoopla to become the remaining portal choice for estate agent customers (page 150)
In addition, the Tribunal commented: ‘The notion that the entry of a new competitor onto a market should be anti-competitive is an inherently unusual suggestion’. (page 124)
The judgment appears to make a strong distinction between the concept of harming marketplace competition and harming an individual player in the market: ‘The fact that Agents’ Mutual’s entry onto the market harmed Zoopla is not the point.
“If, and to the extent that, Zoopla was (through Gascoigne Halman) contending that its business was adversely affected by the entry of Agents’ Mutual, then this is a an example of competition working, rather than failing.’ (page 124)
The judgment was handed down and released following a trial in February after Agents’ Mutual initiated legal action against Gascoigne Halman for breach of contract when it attempted to list at OnTheMarket.com as well as both Zoopla and Rightmove.
Gascoigne Halman denied breach of contract and argued the One Other Portal Rule was ‘void’ (page 6) because it was anti-competitive and Gascoigne Halman raised other competition law arguments.
However Wednesday’s judgment states: “It is our unanimous conclusion that the competition issues are to be determined against Gascoigne Halman.”(page 161)
Gascoigne Halman had voluntarily agreed in January 2014 to list its properties with Agents’ Mutual for a five year period after the launch of OnTheMarket.com. At that time it was an 18-office independent estate and letting agent. But in October 2015 it was acquired by Connells Group which had and retains a significant shareholding in Zoopla.
The judgment also states (page 100) that ‘Zoopla had assisted Gascoigne Halman… financially to the tune of £250,000”.
The full judgment – which does take some assimilating – is here: http://www.catribunal.org.uk/files/1262_Agents_Mutual_Judgment_CAT_15_050717.pdf
It is worth noting that Springett earlier headed agents’ owned Primelocation – now part of Zoopla.
In its early days, Primelocation insisted that agents used no other portal at all. This was never legally challenged, but the requirement was removed when Primelocation was acquired by the Daily Mail.