Choice is not the same as competition, property-portal lawsuit shows
7 July 2017. By Simon Zekaria.
A landmark court victory this week for a challenger property portal threw up a curious truism of competition law: restriction of choice isn't necessarily anticompetitive.
On Wednesday, a specialized competition court in London backed contract terms imposed on real-estate agents by Agents' Mutual, the owner of property portal OnTheMarket.com, to restrict rival online property listings.
The ruling came as a blow to OnTheMarket's main rivals, Rightmove and Zoopla, two portals that dominate the UK's online property-listings market.
OnTheMarket was set up in 2015 to compete with Rightmove and Zoopla. Agents' Mutual, a group of established real-estate agents, made peers agree as a condition of membership a "one other portal" rule — not to list property for sale or rent on more than one rival portal. That effectively made them choose either Rightmove or Zoopla, but not both.
The court found against Gascoigne Halman, a real-estate agent that Agents' Mutual had sued for breach of contract.
Last year, Agents' Mutual filed separate lawsuits at the UK's High Court against Gascoigne Halman and another agency, Moginie James. It accused them of breaking the terms of their agreements with OnTheMarket by listing properties on both of the other sites.
In January this year, the Moginie James lawsuit was withdrawn, leaving the Gascoigne Halman suit outstanding.
Focus on choice
Gascoigne Halman claimed the one other portal rule breached competition law.
But the court ruled that real-estate agents have free choice to sign up with OnTheMarket or not, in full knowledge that the rule would apply. Moreover, once they had made that choice, the agents had a free choice also to decide whether to list with Zoopla or Rightmove.
"There is nothing in the evidence to suggest that individual choice was subverted," Judge Marcus Smith said in his judgment.
Smith made clear that not only did the rule not break antitrust rules, it actually stimulated competition in a property-listings market where barriers of entry are high.
With real-estate agents engaged in commercial discussions to choose either Zoopla and Rightmove, the talks would invariably lead to terms that were "discussed and improved" both for agents and customers, Smith said.
Smith also said portal listings are advertisements, not objective information, and therefore real- estate agents are allowed to make decisions to maximize commercial gain.
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