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No Competition

In Agents Mutual Ltd v Gascoigne Halman Ltd, the Competition Appeal Tribunal unanimously rejected Gascoigne’s allegations of breach of competition law raised against Agents Mutual.

The competition issues in the case essentially arose out of the contractual relationship between the defendant, an estate agent, in the well-known but new to market online property portal known as “OntheMarket” (“OTM”) established by the claimant. Agents Mutual Ltd is a mutual limited company owned by its members, all of whom are estate and lettings agents.

In particular the competition issues related to the operation of what was referred to as the “One Other Portal Rule” and the membership restriction to only full-service office-based estate/lettings agents. Thus, restricting membership by those agents operating an online business model only.

The “One Other Portal Rule” required users of OTM to list their properties for sale/rent on a maximum of one other competing portal only. This essentially meant that many members of OTM had to cease listing properties on one or other of the main competing online portals such as Rightmove or Zoopla and thereby promote OTM. This was part of the process by which OTM intended to increase its market share and number of listed properties.

Gascoigne’s argument
Gascoigne’s argued that the object of the “One Other Portal Rule” was to restrict competition in both (i) local markets around the UK for estate agency services and (ii) the UK-wide market for property portal services. Further, by restricting membership to only full-service office-based agents, Agents Mutual were denying non-traditional agents the ability to access customers through OTM, “in perpetuity and without any reference to OTM’s entry and/or success in the market”. Finally, the restriction on promoting other on-line portals placed a negative obligation on members to deny the other on-line portals access to the promotional efforts of estate agents. Consequently, with these objects in mind, Gascoigne argued that the Appeal Tribunal should find that the Rule and restrictions infringe the Competition Act. Gascoigne also alleged that Agents Mutual had participated in a collective boycott arrangement.

Decision
Following a lengthy trial, with the cross examination of lay and expert economic witnesses, the Tribunal has unanimously, and comprehensively, rejected all of the allegations of breach of competition law.
The Judgement runs to some 168 pages but in summary the main points made by the Tribunal include:

  • a new entrant to the on-line portal services is pro-competitive as opposed to anti-competitive;
  • the “One Other Portal Rule” is a restriction freely accepted by agents as part of the price of accessing the OTM. The Tribunal found that the Rule meant agents were obliged to purchase advertising from a given portal but, not to the exclusion of all other portals just to the exclusion of all other portals but, one;
  • the overriding purpose of Agents’ Mutual in launching its new Portal was to compete with the established property portals and provide cost reduction benefits to its Members. This was not, in the Tribunal’s view, a clearly anti-competitive purpose;
  • the membership restriction to full-service office-based agents is intended to enable like-minded agents to provide a service ancillary to their business which they all need in order to do their business; and
  • the collective boycott allegation was not borne out by the facts.

Comment
It is clear that the Tribunal took a wide view in looking at the overall benefit to consumers in having a third large property portal to compete with the two established players and was prepared to accept a degree of restriction in how agents marketed property to satisfy that end. It is also important to note that a portal making its services available on a restrictive basis is not an anti-competitive or a collective boycott. If agents had colluded more tightly with OTM to boycott one specific portal then the decision might have been different and so this should not be read as one which allows anti-competitive behaviour in the property industry but one which is very specific on its facts.

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