Agents leaving Rightmove or Zoopla for OTM is not competitive harm, ‘just harm’ – hearing told

Yesterday’s hearing at the Competition Appeal Tribunal examining OnTheMarket’s ‘one other portal’ rule was the last to be held in public until Monday.

The Tribunal is examining potential competition issues around the rule imposed by Agents’ Mutual portal after issues were raised by Connells-owned brand Gascoigne Halman.

Today and tomorrow, the Tribunal is due to be closed to the public for legal arguments. It is set to resume in public on Monday for final submissions.

The panel yesterday continued to hear evidence from two expert witnesses – Simon Bishop for Agents’ Mutual, and David Parker for Gascoigne Halman.

Mr Parker said: “My predictions from economic theory are that Rightmove is strengthened, Zoopla is weakened and OTM is not an adequate replacement for the loss of competition from Zoopla”.

He said the effect was “detrimental for all agents from a cost-per-lead perspective” as agents were “essentially forced to choose” between Rightmove and Zoopla as their second portal.

Mr Parker said that his analysis suggested it was “more likely than not” that Rightmove’s market position would improve as a result of OTM’s entry with the OOP rule.

Mr Parker went on to say that had OTM entered the market without the OOP rule, it was “quite possible it would have attracted more agents”.

Alan Maclean QC, for Agents’ Mutual, said that agents leaving Rightmove or Zoopla for OTM was “not competitive harm”.

It was, he said, “just harm”.

Mr Parker said that “several thousand agents [who] sign up with OTM have left Zoopla in very large part and that weakens Zoopla’s attractiveness to house hunters with the consequence of strengthening Rightmove’s position”.

Mr Maclean said: “But what you cannot show is that the loss of agents is caused by the OOP rule as opposed to simply my client’s competitive entry into the market.”

Mr Parker told Paul Harris QC, re-examining for Gascoigne Halman, that he felt OTM would “struggle”  because “it is quite well-known in the market that it doesn’t have an attractive proposition in terms of cost-per-lead”.

He said the OOP rule was a “deterrent to agents joining OTM [because], by signing up, they have given up one of their existing portals or they have given up the option of listing on a second portal.

“I think that OTM will struggle to attract material numbers of future agents.”

He said that he expected some further growth in OTM’ market share, but did not expect it to be very large.

Noting OTM’s market share was currently about 4%, Mr Parker said “they might get 6% or 7% by January 2020″.

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34 Comments

  1. Ric

    and [insert name] a Director of Gascoigne Halman, who signed up as a Gold Member and still holds a directors position at Gascoigne Halman was asked by the QC for OTM:

    “When you signed up for OTM knowing and understanding the OOPR which to all seems quite simple, and then went on to promote the site, you were and we assume still are a successful businessman with a clear knowledge of the industry and were not forced to, nor “conned” in to signing a piece of paper or giving out money in advance in support of the project. We assume you don’t usually fund a venture with thousands upon thousands of pounds without looking in to the venture and believing in it, or rather more agreeing with it and its core terms and conditions of investment”

    So, with this, why did you join? what has changed? Why did you not file proceedings before being acquired? Could it be and I put to you, this case should be “Connells -v- OnTheMarket” and with that I ask, why have Connells not issued proceedings before they acquired Gascoigne Halman?

    It seems to me either a terrible oversight by the due diligence team during the buy out, or perhaps they [Connells] and we now learn Zoopla felt OTM should or would have backed down before it got this far. Otherwise I ask again:

    What has changed Gascoigne Halman or Why did Connells not do this from day one? Neither, it seemed felt there was an issue until it suited. Finally we assume Connells will indeed be signing up to OTM if the OOPR rule was dropped, as surely to have such a passion about having the choice to be on all three can only be because you want to? Anything else may suggest you simply want to “thwart competition” or just “get out of a contract”.

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  2. marcH

    Perfectly stated Ric !

    Connells’ action is so clearly a Trojan horse although Specsavers might have a  different take on it……….

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  3. Trevor Mealham

    Ric,

    It’s AM/OTM taking GH to court. NOT the other way round.

    One of the big issues is founder member agencies (not GH) of AM, advertised on banned (3rd) portals and have not been taken to court. GH have been made an example of.

    It’s also up to a portal to make sure that its offering is lawful. The OOPR has many unfair angles not to just those who signed up. But  unfair effects on many who didnt subscribe to it who find themselves banned including other portals and platforms and online only agents.

    Whilst as you say the GH director might be a ‘a successful businessman with a clear knowledge of the industry’

    No one would expect him to have insight into agreement wording that could have impact under Competition law.

    It’s up to a portal to make sure its offering is lawful which is what is being questioned.

    There were communications from Springett showing they wanted a sizeable agency as a test case. There are others who also breached the OOPR who have been left alone.

    Many other agents have not been pursued for break away. So I guess GH are wondering why they are being hit.

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    1. Ric

      oh Trevor… read it again…. I say “SHOULD the case be Connells -v- OTM” for a reason….. and that makes absolutely perfect sense to me!

      I get it is actually OTM -v- GH but, why is it not OTM -v- Ric today? or -v- any other member.

      Do you HONESTLY not see this as Connells pulling the strings and saying don’t sit back and abide by the contract, insist you are not happy and wonder if this is actually anti competitive. If you believe this Trevor and you are very capable of giving a straight forward answer….then simple short answer…..

      Why did GH not decide to break the OOPR rule BEFORE the acquisition was mentioned or completed? What has changed?

       

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      1. Ric

        Trevor.

        “No one would expect him to have insight into agreement wording that could have impact under Competition law.”

        Yet so many on here, talk of how “they wondered about this from day one” some even saying it was the reason for not signing up!

        We all wondered (we were sticking tens of thousands in to something which was not even off the ground), yet whether we were assured or not of the legality behind the OOPR, the question will always remain…. What has changed for GH? Why now? and why would Z be offering £250k of legal funding? Is there any special relationship between Z and Connells, which may have a link behind this sudden change of mind?  

        My point, win or lose Trevor (I am in a win win either way) is this out of respect for anyone reading should be titled Connells -v- OTM in the case of We want our latest acquisition on Z not OTM.

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      2. Trevor Mealham

        Ric, simply Im not Connells or GH. So “the why” I could only guess would be Connells saw a good opportunity to acquire  a well known brand that suited their acquisition wants. Typically many offices brought in would be for public brand awareness. Locations. Existing biz such as managed lets, staff etc.

        Did they feel the OOPR was unlawful and wouldnt be a problem. Only their due dilligence would have that answer.

        Maybe their view was/is that if challenged they felt/feel in a court they would/will win.

        Looking at the growing costs they must be pretty confident to have not backed down.

        Key will be when the judges look at all evidence and make final ruling.

        We shouldnt play with what if’s, but look closer at what is and what has been.

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        1. Ric

          Trevor, life is full of if’s and buts!

          Mr Harris asked: “If you’d grown faster, you wouldn’t need the restriction in place for so long, would you?”

          “what is” clear there “has been” and will continue “to be” a question of “if’s” from everyone involved. Mr Harris just like me would find it difficult to do his job without the “If’s”……

           

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      3. PeeBee

        Ric

        You’re far too polite with the bloke.

        I’m more of a sledgehammer to crack this particular nut:

        Mr Mealham reads WHAT he wants… WHEN he wants… and then READS INTO IT WHAT HE WANTS.

        Reality, in this instance, does not fit with his agenda – so he prefers to work on #AlternativeFact methodology.

         

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        1. Trevor Mealham

          PeeBee.

          Maybe Ric has the right approach that you lack.

          He makes his point of view without offense to others.

          A forum is to comment on the story and should not be a platform to mud fling when you dont agree.

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          1. PeeBee

            Mr Mealham – here’s the difference:

            Mud is just that – and is easily washed off where it does not belong.

            Truth is painful when it hits home.

            You try washing all you want.

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            1. Trevor Mealham

              Can we stick to the story PeeBee. Thats what most of us are here for.

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              1. PeeBee

                So… hang on… let me get my head round what’s occurred here.

                YOU make a comment that I, being the polite sort I am and despite reservations that it was a fruitless exercise, respond to going off previous experience of your petulant attitude…

                …which you then moan about in true Mealhamesque fashion.

                Funny, really – all you’ve succeeded in (apart from confirming to the readers how hypocritical you are) is confirming my gut feeling that I shouldn’t have wasted my time bothering in the first place.

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                1. Trevor Mealham

                  Most of us are here about the industry news PeeBee and to share and debate different views.

                  So far youve only contributed abuse. But no ones biting.

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                  1. PeeBee

                    What’s to ‘bite’ at, Mr Mealham?

                    I’m stating an opinion – simple as.

                    I am of the opinion that your ‘interest’ in this case – and therefore any views you post – is compromised by your personal/business interests and that as such you reimagine any news reported as supporting your personal views, and thereafter disseminate the reimagined version as if it were the official version.

                    I am entitled to an opinion.  I am entitled to voice it.

                    Unless, that is, you wish to reimagine current freedom of thought and speech Laws and disseminate the news that I’m banned from doing so…

                    …and see if the readership wish to ‘bite’ at THAT, Sir…

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    2. Robert May

      “No one would expect him to have insight into agreement wording that could have impact under Competition law.”   I would fully expect the executives on a board to understand such basics Trevor and wherever there is uncertainty to employ appropriate legal advisors.

      The only way of running word on contract is to prove it illegal.  If GH advisors allowed them to  sign up to a contract that was illegal 12 months previous, GH  had duff advice, if GH signed up to a contract not understanding the implications and not taking advice I would question their judgement.

      It is fairly obvious GH signed up to the groupthink fervour of controlling perceived threats but are using the only real option to defend a claim against them for breach of contract once that no longer fitted with their change of circumstance and ownership.

       

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      1. Trevor Mealham

        Robert. Most acquisitions would carry a rider of responsibility from the former owners should pre ‘things in place’ end up costing the new owners out of pocket costs. Then again was GH sold as a ‘sold as seen’ ???? We dont know.

        Outside GH/Connells us the ignorant do not have such privy info.

        If there was such a clause, prior owners could be asked to fit certain bills that might arise! then Connells costs could be lower or zero even if they lose.

        Or if there wasnt such a rider, then they must be very confident about their stance to win based on the Competition Act 1998.

        We should only comment on facts. Not presume outcomes on intel we dont have.

        Its important on the judges ruling we learn what impact such restraints carry on service providers in relation to blocking agents from other suppliers in an open market.

        If OTM won, then what is to stop RM or Z from saying to agents you have to drop OTM or others when your contract ends with OTM.

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        1. PeeBee

          “We should only comment on facts. Not presume outcomes on intel we dont have.”

          I feel like the well-mannered bloke holding open the door for those less able here:

          Oh, puurrrleeeaaassseee – After you, Mr Mealham…

          AFTER YOU.

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        2. Robert May

          Who is it you are calling naive Trevor; Connells, GH or their respective legal teams? I am really struggling to see how the due diligence process failed everyone.

          Income, expenditure, debtors, creditors, contracts, staff, premises, competition, regulations. It is a fairly standard check list to go through.

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          1. Trevor Mealham

            Well something failed somewhere for sure Robert.

            Dod GH sign up to AM and its OOPR? Yes

            Was/is the OOPR legal? We have to await the judges decission.

            If the OOPR was lawful, then either Connells cocked up, or their lawyers. Or did their lawyers have a rider as to comeback if what had been sold was in breach due to the actions of the former GH partners? WE DON’T KNOW so guessing is pointless.

            If the OOPR is judged as unlawful then it would show Springett and Co got it wrong. Or more to the point their legal advisers.

            All we know is that it will be a landmark case where the third portal and maybe its supporting agents could be find heavily under cartel.

            Or if AM/OTM won then they have just set in stone that RM and Z could creat an OTM ban rule.

            If agents had to choose RM OR OTM and not both how many would remain on just OTM?

            I think OTM could be on a lose lose lose whatever the outcome.

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            1. Trevor Mealham

              be find heavily under cartel.

              … should have read ‘fined’ heavily ….

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            2. Robert May

              There will be clarity after the case Trevor but whatever the outcome there will be learning. If AM lose there will be an affinity group of  unknown  size and it will try again but having learned the lessons taught this time round.

              If you are right about everything it might be INEA but as I have said to other people beware of being seen to be too anything in this, it will  be remembered.

              Being right isn’t necessarily a win.

               

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              1. Trevor Mealham

                Very true Mr May.

                But my view has always been that RM and Z do a great media job in reaching Joe Public. OTM without testraints could have dented the portals subscriptions likely moreso without the OOPR and not upset others that could have remained neutral or even helped.

                But what would be better would be a platform that encourages agents to unite rather than compete.

                Portals are great at what they do. What interests me is what they are not doing that isnt today happenjng nationally.

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  4. Trevor Mealham

    Robert do a search on RM and Z and OTM for agents in the Isle of Man

    Then do a search for sold properties on RM for the IoM.

    Way past mid last year some OTM agents where showing they had been adverting there until a few months back.

    Very odd IoM agents feature on Z and OTM now and non on the island on the UKs no.1.  How’d that happen?

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    1. Woodentop

      I see they never tried INEA.

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  5. RAL

    Just curious but is there a reason why connells just didn’t accept the contract as it was and see it out to the end, just keep quiet and then do what they want at its natural conclusion.

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    1. Ric

      They must feel it is a no brainer of a win in my opinion, as losing will be a bit of a blight on their balance sheet.

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    2. BrandNew

      The hand of Zoopla……?

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    3. Trevor Mealham

      In the many PIE articles you can see the court showed others like Strutt and Savills (founder members) where doing OTM and RM and other portals. For instance FT.com for which FT.com and RM are in the banned portal lists (beyond one being selected as their second choice).

      Equally other agents have dropped AM contracts without being dragged in court over the OOPR.

      I guess GH/Connells just wanted to do no less than others and stuck to their guns.

      Why didnt AM/OTM take all agents in breach of their OOPR to court? Why shouldnt they advertise in other portals the same as founder members not being sued for the same actions?

      The case also centres around the 1988 Competition Act which if you google and read will see it doesnt support anti competitive restraints. Following court ruling the OOPR could make the whole AM contract void to agents who signed up.

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      1. BrandNew

        Playing Devils advocate…

        Couldn’t it be argued that the OOPR was actually pro-competition. In that, without it OTM/AM would not have been able to sign up the numbers that they did thus providing the financial basis on which to compete.

        Without the OOPR we would still be left with the Duopoly and no hope of anyone breaking into the market.

        Just a thought.

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        1. Trevor Mealham

          Trouble is the OOPR doesnt just incumber RM and Z. But also other portals and agent platforms.

          If an agent does AM/OTM then 99% will also do either RM or Z. As such if OTM place others like FT.com, INEA, Renovateme, PropertyPal etc etc on their ban list. It means those platforms get blocked from thousands of offices engaging them.

           

          Such portals then get restricted from growth and other new start portals may also get banned just as they start.

          Without the OOPR it encourages agents to move about which encourages free trade and healthy competition.

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          1. Ric

            Then they can introduce a OOPR surely and put a BP together and pitch which would have them be on their site and one other?

            Thing is, as most portals know, they will only ever be 3, 4, 5 onwards to the big 2…. so for me the ONLY way to break in to this locked tight duopoly which is really a monopoly was to come up with something which could take a “small market share” in to a bigger one. Thus I hope this is one of the things the Judge sees as fair enough and required to make it in the portal world.

            We have hundred of examples how no OOPR means agents, cannot see how the “newcomer” will be enough competition to the big two.

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        2. Ric

          Personally, I agree with you BrandNew!

          Without the OOPR this would have been as we so often comment on here a, “here we go again moment”

          So, if AM back in the day had pitched, try this site, pay us up front and commit to 5 years with no OOPR, it would not have got off the ground in my opinion.

          Trevor suggested “If” there were a OOPR on all, who would we all choose? Well Trevor the issue as I see it is….. this would lead to a cartel!, as we would without question all communicate locally and regionally even to see what the next person is doing. Human nature.

          I hope the ruling is, no more One Stop Shop Portals and the only place you can display your properties is on your own website. Awesome outcome.

           

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          1. Trevor Mealham

            Ric: if the judges Okay’d a OOPR then things change.

            But equally imagine if there werent main stream portals.

            But an agents own website became a portal for theirs and other local agents.

            Have a look at this:

            https://youtu.be/UkeIGvubisU

            You can find out more by googling real estate brokers and IDX websites

            Portals show agents listings and get paid. Why couldnt agents show one anothers listings and pay each other in the way today you might pay RM. Z or OTM.

            Portals bring agents together to compete. IDX brings agents together to collaborate.

             

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  6. Woodentop

    If they are going to argue cost per lead …. many agents can’t afford to be on three or more (many are actually only on one) AND haven’t the time to spend hours uploading and downloading to multiple sites. I doubt most agents even looked at it from that point of view, as we all know unless you have the property someone wants at that particular time you are speculative spending advertising on an annual budget. Web portals for agents isn’t all about selling, if you are an estate agents you will know what I’m talking about. What OTM offered was an opportunity to take back control from a monopoly being run by RM, grossly overcharging and for many Z were always lagging behind and ineffective and had no problems dropping them without the need for the OOP. It is GH/C & Z who are trying to make out the OOP is how they can get out of the contract and take down OTM after GH & 7,000 others freely entered into as “a good idea”.

     

    I expect an announcement on Monday following Friday’s legal arguments …. There is something “legal” in the wind to do that.

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