One Other Portal rule – more competition in market or a distortion? Expert witnesses clash

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 the Honourable 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.

He said: said: “Estate agents will want to reach an audience of potential house vendors, property seekers, whichever term you want to use, and the more of those that there are, and in particular the more unique ones of those visiting that portal, the more valuable listing on that portal will be to that estate agent.”

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 competitively to force a one-on-one battle at these two stages between portals so they actually have so say, ‘We need to ensure that our offering is better than the rival’s at these two stages’ because a choice is being made and it is the OOP rule that is forcing that choice?”

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: “I agree that it doesn’t contractually foreclose it. But it distorts that competition. So it doesn’t prevent it but it distorts it.”

The hearing continues

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5 Comments

  1. RealAgent

    What I find staggering here is that Zoopla are all but admitting they aren’t as good as Rightmove, are not capable of attracting agents away from Rightmove and its for this reason they are claiming unfair competition.

    Odd isn’t it that a company that clearly knows it offers an inferior product is shouting not fair when an OOP rule flushes that out.

    Well Gascoigne Halman are, actually Connels are, no I think we all know it’s Zoopla by proxy that is…..

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    1. 1stTimeBuyer

      The case is between Gascoigne Halman and Agents Mutual, not Zoopla.  I’ve not seen any comment from Zoopla themselves saying as you suggest?  Please provide a link to where they do?  Thank you.

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      1. PeeBee

        “The case is between Gascoigne Halman and Agents Mutual, not Zoopla.”

        That’s right, 1TB. Course it is.

        Or isn’t, as the case may be.

        Keep saying it enough and maybe one day even you’ll believe it…

        …cos your shares’ll take a proper tw@tting if any other conclusion is reached by the City.

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  2. Agent26

    In my personal view in most other industries the whole duopoly that came about after Zoopla had bought out most of the remaining portals other than Rightmove (Propertyfinder in 2009,  Findaproperty / Primelocation in 2011 and so on) would never have been allowed to happen due to competition and markets law, as we all know it led to the remaining two large portals being able to charge much more year on year due to lack of choice.

    As the above article mentions, the more portals there are the more choice and therefore the more choice there is for the paying consumer i.e.us agents in this case – although perhaps that is where the anomaly lies in this whole debate in that it is the non paying consumer that decides which website they like to use and therefore is the most popular, even though technically we are the paying consumers in this instance?

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    1. 1stTimeBuyer

      I see what you are trying to say, but have to disagree on the competition side.  Let’s take search engines for example… There are many many search engines out there, but they are all just to small to compete with Google. So surely it is better to have one real competitor, than many insignificant ones which very few people visit?

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