Agents’ Mutual chief executive Ian Springett said yesterday that it was “common sense” to introduce an element of exclusivity in contracts, the Competition Appeal Tribunal was told.
The market was dominated by two brands, and exclusivity was needed for the company to grow, it was said.
Continuing his cross-examination, Paul Harris QC, for Gascoigne Halman, asked Mr Springett about Clause Seven in the agents’ contracts.
Mr Springett said: “There are two parts to this. One of the obligations is to actively promote their own portal. I think you would largely understand that, doing anything they can to grow the brand.
“Secondly, they cannot go out promoting any other business.”
Mr Harris asked: “So there is one positive obligation to promote Agents’ Mutual, and secondly not to promote somebody else’s?”
Mr Springett answered: “It just seems to be common sense to me if you start a new business then you would cease to continue promoting your other business, and if you did previously have another one you would cease promoting it.”
The tribunal heard that in early planning of Agents’ Mutual, considerations were given to total portal exclusivity for three years but that was before the merger between Zoopla and Digital Property Group. After this, considerations changed to focus on the ‘one other portal rule’ for five years.
Mr Harris asked: “When you generated your duration figure using a limited budget and desk research yourself, how did you come up with the duration figure?”
Mr Springett replied: “We were pre-merger here, so there are four significant figures here.
“I think we looked on Friday at a document which showed November 2011 that the discussion was still on exclusivity for a few years.
“The five-year discussion came later after the merger had taken place.
“It wasn’t around this time that the decision was made.”
Mr Harris asked: “Can you show me the documents in which you show at this stage that only three years was required?”
Mr Springett: “At that stage I was considering history, together with some early advice, it was the first half of 2011.”
Mr Harris asked: “Can you show me the spreadsheet or data analysis which made you think that length would, and I quote, ‘allow it a sustainable entry’.”
Mr Springett answered: “The origin of that was referring back to previous experience. It was more an issue of what would work commercially. It was also a question of what the agent thought for them would be viable as a business.”
Mr Harris: “There is no underlying data. It’s effectively based on your view and experience with Primelocation.”
Mr Springett: “Primelocation launched at a time when Zoopla wasn’t really on anyone’s radar. Then an assessment was done on what was needed, then a financial model was put together.
“It’s a market completely dominated by two portals. The market when we launched Primelocation was rather easier than the one we did in 2015.
“Our challenge was we entered at a time when there were two large portals.
“They are strong brands, [have] strong marketing budgets, with entrenched consumer usage, so our challenge was how to come into the market and move those.
“I’ve always believed that properties, the listing themselves, are what draws the consumer.”
The tribunal then heard what led to the exclusivity duration to be extended from three years to five.
Mr Springett said: “It was based on the business plan. It would take us this time where we were sufficiently strong to stand on our own two feet. We also formed that view under legal advice, who reviewed our business plan, and that view was reached. I won’t pretend I didn’t want it as long as we could have it.”
Mr Harris suggested Mr Springett wanted complete exclusivity, and then described limiting agents to one other portal was a “compromised position”.
He said: “The thinking always once you knew what one of those portals would be, you thought it would be Rightmove, didn’t you?”
Mr Springett: “The idea that we cooked up a plot is fanciful.”
Discussion then turned to the company’s business plan, with Agents’ Mutual initially aiming for 1,000 offices at launch day.
Mr Harris said: “You wanted to be the number two player as quickly as possible, within 2-3 years.”
Mr Springett said: “I don’t think at the point we set out we had that ambition, but our view changed at the end of 2013, instead of getting to 1,000 branches we got to 1,800 so we recalibrated.
“It was a point of no return for us. If we could get to 4,000, we felt once we reached that level then we could confirm the project was going to launch, which we had not done until that point. We didn’t even have a brand name until July 2014.
“We had 4,000 total support in October 2014 and announced it, and some time after that we began approaching agents asking if you’ll now sign a contract.”
Mr Harris then turned to an email Mr Springett wrote, describing the venture as ‘unstoppable’.
The email allegedly said: “This means we are over 60% of the way to 4,000 supporting agents, at which point the venture becomes unstoppable.”
Mr Springett told the tribunal the email would have gone to members, and suggested Mr Harris was misinterpreting “unstoppable”, as he just meant the venture would go ahead.
The tribunal heard the company eventually launched with 4,600 offices signed up.
Mr Harris asked: “If you’d grown faster, you wouldn’t need the restriction in place for so long, would you?”
Mr Springett answered: “That’s self-evident.”
Mr Harris suggested that getting rid of Zoopla altogether was Agents’ Mutual’s aim.
Mr Springett replied: “That wasn’t our objective.”
Our second report, of later stages in the hearing yesterday, follows this.
The tribunal hearing continues.
Meanwhile, two new documents have been made publicly available at the links below. They relate to the existence of tapes alleged to be of recordings of meetings in Northern Ireland. The existence of the tapes was apparently made known to Gascoigne Halman after the proceedings had started and made known to Agents’ Mutual. Gascogne Halman applied to the tribunal for the tapes to be admitted as evidence. The tribunal agreed to this, although critical as to the quality of the tapes and whether those on the tapes knew they were being recorded. The Judge said that the transcripts, made by persons unknown, “were made for what we will broadly term ‘corporate espionage’.”
Cue a wave of dislikes here – but it sounds to me like Mr Springett ‘won’ this particular exchange.
Though if anyone cares to point out to me their opinion to the contrary, I’m always happy to listen.
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Any thoughts which way the case will go?
I do not believe it is anti competitive but it all lays on the judges shoulders and i feel I.S. has been a little brash and that may go against him (obviously only from what i read, may be different in the court).
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I think there is a bit of a mountain/molehill situation here.
Springett is running a business and those agents involved signed contracts agreeing to abide by the conditions set out within them – that’s literally what a contract is.
I don’t think it’s anti-competitive because any agent that claims they are making a significant loss of business because of portals clearly aren’t very proactive. If OTM was more successful people wouldn’t complain about OOP, and even if OTM isn’t catching up to RM/Z then the agents are basically relinquishing their responsibility to generate business. “It’s all about the portals nowadays.” No, it isn’t. It’s about people. Evolve your marketing to hit the local market and then you don’t rely on the portals to the extent that RM thinks you should.
To be honest I’m treading murky waters here because I’m not following the case or frankly that interested in it, but on the surface I think there is an underlying sickness to the agency world that is surfacing in this court case. OTM was and is an attempt to cure that sickness but I honestly don’t know what happens next. And as I freely admit, I don’t really care.
Sorry if I’ve mis-answered your question, Smile. Maybe I’m approaching this from the wrong direction.
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mrharvey I agree, although the reality is this was always one of the key elements of the argument to set up OTM and the lawyers had already assessed this, so he was well schooled in the answers. The only flurry of awkwardness were yesterday and last weeks argument about whether OTM and his team forced/encouraged agents to agree which other portal to remain on. That is the argument that will determin the outcome. Interesting that this is so focused on Zoopla damage, rather than Connell/Gascoigne Halman…thank goodness Zoopla are underwriting the legal costs..on behalf of another company!
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If this case goes against OTM/AM, as independent agents, lets do what has happened in every other major case over the last year (referendum , U.S. election etc.)….lets buck the expected and back OTM to the hilt. Commentators expect it to be the end of the project….but maybe it can be just the end of the beginning?
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It seems crazy to think that any new business starting out does not have the objective of becoming number one.
To do that is not to eliminate your competition, but just be bigger and better and when you have domination in the market place as R & Z, then thinking outside of the box was needed.
Regardless of the outcome, I cannot believe that any eligible agent is not already backing OTM. Even the people at the top of the large corporate agencies must see the sense in this working.
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Mr Harris is trying to make out that no business should have a business plan! Nuts, he struggled with the idea for argument and clearly from the other story on EYE today, the judges are starting to see “not all it what it seems”. 70 – 30 in favour of OTM? All it needs now is for defendants council to put the cherry on the cake …. a bomb shell is about to be dropped on GH/Connells or should be if they can see it. Connells shot themselves in the foot before the case was heard and have raised the principle of competition in the hearing which may now go against them?
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Past 10am and no sign of the OTM hate-mongers? Most unusual. And refreshing.
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“Meanwhile, two new documents have been made publicly available at the link below:
http://www.catribunal.org.uk/237-9308/1262-5-7-16-T-Agents-Mutual-Ltd.html“
Seems to revolve around transcripts alleged to be of recordings of one or more meetings that took place in Northern Ireland between Agents and AM Representatives.
Unless I’ve read it wrongly, they have been narrowly admitted as evidence despite very good argument against this; however the “confidential source” of the documentation has been excluded from the public version of the proceedings.
That’s okay – I’m sure some might think they have, at best, their own very good idea as to who the “confidential source” is (because presumably we can all read the Ruling Statement which is the above link) – or, at worst, a pretty good idea of where he/she collects a paycheque from…
Of course the man with ALL the facts and fallacies in front of him is the Judge – and is in the best position to decide accordingly whether, as was claimed in the admissions statements, the tapes and transcripts (made and produced apparently by persons unknown but referred to as ‘X’, ‘Y’ and ‘**’) “were made for what we will broadly term “corporate espionage” purposes.”
Watch this space…
** Letter used in the Court Documents has been deleted due to potential subliminal connection risk with people or companies living or dead.
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I’ve just read and it doesn’t take Columbo to work out who’s been recording agents. If there was ever a reason to support OTM – you have it.
“corporate espionage” indeed.This might have back fired.
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Is this true ….
Third Party Web Sites, Goods and Services
connells.co.uk provides links to third party web sites that are not affiliated with Connells (although Connells branding, advertisements or links may appear on these sites). We make no representations as to the quality, suitability, functionality or legality of any sites to which we may provide links or any goods or services available from such sites.
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Disgusting behaviour from Connells and their QC.
Hammer down, case closed, OTM win!
Why thank you your honour.
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This is the excerpt that highlights what grounds ‘corporate espionage’ was being discussed/used after being introduced late in the day. Saves you ready the whole transcript, but it is priceless the disclosure came late in the day and is best described as dodgy quality. Anyone have any opinions on the quality of all material and training and practices used by the defendants on a day to day basis….?
‘However, we are conscious that that course would leave Agents’ Mutual with no ability properly to investigate the provenance or content of the audio files and transcripts, and no real ability to counter them (if so advised) with further evidence. This application has been made in the middle of the trial, when the factual evidence has to a substantial extent already been heard. To require Agents’ Mutual to do anything in response to this late evidence would, in our minds, be entirely unreasonable. On a number of occasions, when seeking to counter our concerns regarding the provenance and content of the audio files and transcripts, Mr. Woolfe sought to assuage those concerns by suggesting that they (the concerns) could be resolved by asking the Agents’ Mutual representative, present at some but not all of the recorded meetings, about them. We wish to make explicitly clear that if this evidence is admitted (and it is a big if), then it is on the basis that Gascoigne Halman have to live with the deficiencies in the evidence that we have described and cannot, at a later stage in the proceedings, seek to bolster this material by suggesting that if it were false, Agents’ Mutual could have produced evidence to say so. We will not entertain any submission that silence on the part of Agents’ Mutual in response to this material indicates any form of acceptance or evidence that the recordings are accurate or unimpeachable.
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Disgusting behaviour from Connells and their legal team.
Where is that Gibbo fella who used to post on here when you need him! pffttt.
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No comment from Mr Mealham? That’s mighty strange on an AM/OTM story, isn’t it?
Maybe he’s too busy eating his words…
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