Another day and another shot being fired in the battle between Zoopla and OnTheMarket. This time Zoopla has engaged a leading UK lawyer to provide advice on whether the actions of OnTheMarket and its members could be in breach of the UK competition law.
The advice received by Zoopla is that both OnTheMarket and its members could face large financial penalties as the Agents' Mutual Limited's arrangements do infringe UK competition law.
It is hard to believe that Agents' Mutual didn't get legal advice up front on their anti competitive stance and their "one other portal" policy. Assuming they did have legal advice that it is ok (otherwise why would they do it), it will be interesting to see if this does play out legally and what implications it does have for the membership drive and the long term viability for the business.
Here is the press release put out by Zoopla...
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.”