OnTheMarket agents warned by Zoopla they could be fined huge amounts

| Rosalind Renshaw

Eye received the following press release from Zoopla today. It is printed below, exactly as sent to us. More on this story tomorrow.

 

ONTHEMARKET MEMBER FIRMS COULD FACE SIGNIFICANT FINANCIAL PENALTIES, ACCORDING TO LEADING UK LAW FIRM

 

According to advice from top UK law firm, Freshfields Bruckhaus Deringer LLP, if the Competition and Markets Authority (CMA) ever concluded that Agents’ Mutual Limited’s (AM) arrangements infringe competition law, not only would AM as a corporate entity be subject to fines and possible damages, but each individual member agent would also likely be liable based on their participation in AM.

 The advice, provided to Zoopla Property Group plc (ZPG), states that, if the CMA at any time found an infringement of competition law, it could impose fines on each agency of up to 10% of their total annual turnover. In the case of an independent single branch firm the fines could run into the tens of thousands of pounds or for a larger firm such as Savills plc into the tens of millions of pounds.

The advice adds that any of AM’s competitors, including competing portals and excluded online agents and property developers that have suffered losses as a result of any anti-competitive actions, could use the CMA’s decision to seek damages in ‘follow-on’ litigation, including compensation for lost profits, the diminution in the value of capital assets or lost commercial opportunities. And, critically, each agency firm would be individually liable for the full amount of any damages awarded, rather than just for a share, which could run into the millions of pounds.

Whilst the CMA may choose to take a ‘wait and see’ approach to AM and not act immediately, the implication of the advice is that, if at any time during the life of AM the CMA does rule that its conduct has been anti-competitive, then the risks for those firms involved could be potentially devastating.

Drawing on case law from 2012, the advice reveals that The Competition Appeal Tribunal awarded exemplary damages where it found that the defendants had acted with a specific intent to eliminate a competitor from the market. The specific statements and actions of AM with regard to ZPG create a heightened risk for its members in this regard.

Lawrence Hall of ZPG commented, “Following receipt of this advice and the significant potential risks, we felt it important to share this information with our members and other industry participants in the interests of transparency. We do wonder if Agents’ Mutual has made its members fully aware of the potential exposure that they have opened each of them up to.”

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32 Comments

  1. Paul H
    February 24, 2015 at 14:41

    I’m never going back to Zoopla.

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    1. 1stTimeBuyer
      February 24, 2015 at 15:50

      Probably because you will be out of business being with onthemarket. 🙂

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    2. EHenderson
      February 24, 2015 at 16:04

      I suspect they couldn’t give a damn, Paul…

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  2. smile please
    February 24, 2015 at 14:52

    If’s, But’s and Maybes ……… What a pointless post by Z!

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    1. 1stTimeBuyer
      February 24, 2015 at 15:50

      Who knows… lots of if’s with the whole AM thing.

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  3. Harree
    February 24, 2015 at 14:53

    Paul H – you might not be able to afford to if the smelly stuff hits the fan. Neither AM or Z will decide whether the one portal rule or ‘going after Z’ is anti-competitive … the CMA will. But, you can bet your bottom dollar that Z will be pushing for an investigation. If you poke an elephant don’t be surprised if it tramples all over you.

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    1. wilko
      February 24, 2015 at 17:32

      So Haree what do you think will happen if Z are “successful” in getting 1000’s and 1000’s  of estate agency offices fined?……where will they go from there? Are you saying the industry in general will applaud them for that and then they will grow from strength to strength?

      If you were the ceo of Zoopla would you have played it like this?

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  4. Propman
    February 24, 2015 at 15:37

    Interestingly Lawrence Hall failed to mention the fact Freshfields advised Zoopla on their floatation giving them a vested interest in the matter… But I’m sure that was in the interests of transparency too.

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    1. EHenderson
      February 24, 2015 at 15:59

      Err – to my knowledge these firms don’t tend to like giving false advice…

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      1. smile please
        February 24, 2015 at 16:07

        What advice have they given, its like saying if the government bring in a tax on all estate agents tomorrow they would all be doomed.

        Yes it might happen but 99% chance it wont.

        By the way i am a non otm agent!

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        1. EHenderson
          February 24, 2015 at 16:50

          I have heard about groups of agents coming together to make decisions about which portal to choose. I think most agents don’t realise that this is illegal – could be criminally so. If there is evidence of this and the CMA choose to act, they could be in big trouble. I wonder how many group emails have been circulated between agents??

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          1. Propman
            February 24, 2015 at 17:15

            This would be true if the agents involved in these alleged groups had a strong market influence in themselves, which they almost definitely don’t, giving them free practice in this respect.

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          2. smile please
            February 24, 2015 at 17:55

            1. Somebody needs to investigate

            2. They need to be seen in breach of laws

            3. Need to prove it.

            Considering successive governments have decided not to regulate Estate Agency due to time, money and resources, it think there is very little chance of this being seen as anti-competitive.

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      2. Propman
        February 24, 2015 at 16:36

        I didn’t mean to say they gave false advice as what they have said is potentially true. But as many others have noted there are a whole load of  if’s and maybe’s in this statement and it evidently serves no purpose other than to try and ward agents off leaving Zoopla and to convince agents to come back.

        What I was saying though is that it is in their best interest to support Zoopla in this press release- even if in order to do so they need to make extensive use of if’s etc. The problems arise if OTM succeeds and Zoopla collapses and the FCA are forced into looking at whether the full potential impact of OTM was widthheld from potential investors when Zoopla floated (not too unlikely due to how dismissive Zoopla were/are of OTM), and understandably any firm involved in the floatation would have it in their interest that OTM doesn’t succeed in order to protect themselves. Obviously this is also a big ‘if’- but the fines from the FCA can be huge.

        Eitherway, as far as I know, OTM only need to use this strategy because the market has a low contestability and moreover, agents still get to advertise on the same number of major property portals as before (i.e. 2).

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      3. PeeBee
        February 24, 2015 at 16:37

        Err… WHAT “advice”?  Three or four ‘ifs’, half a dozen ‘coulds’ and the occasional ‘may’ or two thrown in for good measure to  hardly constitutes sound advice – does it?

        Z are burning bridges by the second.  I doubt if many of those who came off would even consider going back now if it all went completely Pete on them.

        You’re barking in the wrong forest – never mind up the wrong tree…

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  5. ukpropmaster
    February 24, 2015 at 15:58

    Really bizarre timing on this…why didn’t they just release this before AM ever launched?

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    1. PeeBee
      February 24, 2015 at 16:38

      Because they simply didn’t believe it would happen the way it did.

      Their new logo is an ostrich feather, I believe…

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      1. Paul H
        February 24, 2015 at 17:27

         I think the timing is down to the fact that they simply cannot stem the flow of agents who are issuing notice. There plans to date are not working, it’s now getting really REALLY desperate.

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  6. wilko
    February 24, 2015 at 16:07

    Another SPECTACULAR OWN GOAL by Zoopla!!! Many OTM agents may have considered going back with them instead of Rightmove…….but this just about caps off their tirade of anti am drivel that they have felt necessary to produce, which means they have WELL AND TRULY severed all ties with am agents. Really, someone (preferably from Zoopla) please please tell me what you expect to achieve from this type of press release?

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  7. wilko
    February 24, 2015 at 16:10

    Sorry, also meant to comment ;

    ” if the Competition and Markets Authority (CMA) ever concluded that Agents’ Mutual Limited’s (AM) arrangements infringe competition law”

    Sure is  a BIG IF and EVER!!!

     

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    1. smile please
      February 24, 2015 at 16:15

      That is the most important thing i the whole story!

      Its just Z trying to scare advertisers back to them, they would have been better off trying to get the CMA to look into it THEN release this.

      At least that way does not look like sour grapes!

      And as others have posted, Z should be aligning with OTM to take on RM!

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      1. wilko
        February 24, 2015 at 17:27

        Good post smile, I think this will further focus the fence sitters to move away from Zoopla and join otm. It clearly shows the contempt in which they hold estate agents, and not just those who have left them. I, like many others, would have considered going back to them and dumping RM if they had put together a great proposal and package, backed by a good advertising campaign(they have done no tv this year!)…..but no one wins business back/gains new business by bad mouthing the opposition. FACT.

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  8. Jonnie
    February 24, 2015 at 16:32

    Big gulp! – Zoopla are proper cross! – a month this week since OTM launched, they’ve tried ignoring it, telling everyone its irrelevant, arguing the visitor stats, crying, saying no agents have left the, saying agents have left, saying agents have come back, saying we are all mad…………….like a recently left / soon to be ex wife whos been a horror to live with in a one way marriage that now the old man has binned her has taken up a Chablis habit and drones on to anyone that listens about the 5 million reasons she has come up with why her husband is the worlds biggest b’stard and shouldn’t see the kids despite him being a decent chap just exercising his right to leave the bitch – Jonnie

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    1. smile please
      February 24, 2015 at 17:19

      Jonnie, Speaking from experience? 😉

      You did have me spitting my tea out at that post, brilliant!

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  9. Reader
    February 24, 2015 at 16:58

    Freshfields are a decent law practice, but  are not universally correct.

    It is odd that Freshfields appear to have agreed to their name and confidential advice being misused by Zoopla. Anyone else they can **** off while they are  about it!

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    1. wilko
      February 24, 2015 at 17:49

      Another good post, Freshfields will not have realised that they, by having their advice “used” in this way that they risk alienating themselves from the property industry. It could damage them./their reputation.

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  10. Robert May
    February 24, 2015 at 19:59

    The firm that has done so much to reduce competition in their particular service sector is whittling about 23% of the industry choosing to use a new duopoly rather than a duopoly that featured them? I have to say I am confused! Not just by the hypocrisy of the situation but the inappropriate manner in which a service supplier is choosing to alienate itself from its customer base.

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  11. GPL
    February 24, 2015 at 21:34

    Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha…. you’ll find Zhoopla hanging next to your toilet roll holder! Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha…. chisel this on Zhoopla’s Headstone…. 24/02/2015 The Day Zhoopla turned from Property Portal to Property Potty! It’s embarrassing to watch a once acceptable Property Portal begging on it’s hand & knees as it scrambles to save itself from extinction! That’s what comes from looking up the ars* of Rightmove for so long, you thought No2 slot kept you pretty… you just forget to look over your shoulder! Here’s the thing… if OTM said I could keep any portal I can guarantee you along with thousands of other estate agents that Zhoopla is a Dead Portal…. it’s behaviour post OTM confirms it is not fit for purpose! The reality is that we are hopefully moving towards a single Property Portal for our industry which should and must be OnTheMarket.com as we clearly need to rid ourselves of this portal nonsense. The fact that Zhoopla thinks it can rodger our industry for it’s own profits…. and we will just sit here and take it. Thankfully our industry has woken up just in time finding that we need to rid ourselves of these portal t*rds that have been stuck to our shoes for so long! I can see Chesterman and Co blowing in that great Zhoopla Hot Air Balloon in a desperate attempt to save their lucrative salaries, shares, luxury homes, holiday homes, executive cars and all the trappings of the hallowed profit factory that they have burdened our industry with! Trust me….if OTM changed their contractual terms tonight it would make ZERO difference to me… Zhoopla is a Dead Portal Walking…. not required… we made our choice pre OTM and it would remain the same regardless of portal choices….. a No2 Portal is a waste of time…. Zhoopla are now learning that their lack of drive to No1 spot demonstrated why they had to be jettisoned!

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  12. GPL
    February 24, 2015 at 21:46

    STOP PRESS! Zhoopla rumoured to be releasing a statement as follows “If Biggles the Explorer ever concluded that there were an alien race hiding behind the moon the earth would have to evacuate to Planet Zhoopla….” Ever concluded, Ever Concluded…….EVER Concluded?…. sticks & stones!….. it truly is Playground Press Releases! If it was ever concluded that Humpty Dumpty was pushed… then The Police would have to investigate….. blah, blah, blaaaaaah!

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  13. PeeBee
    February 24, 2015 at 23:40

    Robert May – rather than lose this in the middle of the thread (even though by mid tomorrow morning it will no doubt be in the middle itself, I thought it particularly relevant to draw attention to something you posted above – in relation to another comment you made only yesterday.

    Above you state “Not just by the hypocrisy of the situation but the inappropriate manner in which a service supplier is choosing to alienate itself from its customer base.”  Yesterday’s comment – “…Zoopla have to decide if they are a service supplier or a competitor. If it is the former then someone with some nads needs to point out how badly wrong things are  going if the latter, they  are headed to be a very big fish in s very small puddle.”

    What a difference a day makes.

    Begs the question have they made up their mind so quickly, maybe?

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    1. Robert May
      February 25, 2015 at 05:28

      If they have  decided to be a competitor  they should be mindful that being a big fish is a small pond is fine as long as there is enough food and oxygen to keep said fish alive.  The Remora who swim alongside such a fish  ought to be mindful of their postion too!

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  14. TheCountryAgent
    February 25, 2015 at 09:50

    So, I have just started up a portal called brickingit.com and if you don’t all sign up I’ll sue you!!!?? Leap forward 10 years and Zoopla will be a distant memory.  Actually, thinking about it, so will I….  hopefully…

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