Beleaguered UK portal OnTheMarket has been ordered to pay £1m in the test case it hoped would vindicate its 'one other portal' rule.
According to Estate Agent Today (EAT) three quarters of it is due immediately and the rest by the end of August.
OTM parent company Agents’ Mutual sued estate agents Gascoigne Halman and Moginie James for damages in the High Court accusing them of breaking the terms of their agreements by listing properties on more than one other portal.
But the agents disagreed and the High Court has now referred the case to the Competition Appeal Tribunal, a specialist court for competition disputes.
The tribunal will hold a preliminary meeting, known as a case management conference, on July 26.
According to a report in the Financial Times explaining the original dispute, north-west England agency Gascoigne Halman had signed up for gold membership with Agents’ Mutual including financing the portal through up to £54,000 of six-year loan notes.
But when the company switched its listings to both Zoopla and Rightmove after it was acquired by Connells Group in October last year, Agents’ Mutual accused the agency of breaching its agreement with OTM.
Agents’ Mutual has consistently argued it Gascoigne, along with all its other signed members could not escape their five-year deal with the portal and should ensure other agencies within Connells complied as well.
But according to the FT report, Gascoigne countered that the one other portal restriction was “void and unenforceable” because it constituted anti-competitive behaviour under the Competition Act 1998.
In a critical paragraph of the FT story, also quoted by EAT, author Judith Evans writes: “As part of its defence, Gascoigne Halman has claimed that Ian Springett, chief executive of Agents’ Mutual, suggested in a meeting with the agencies Countrywide, LSL and Connells that all three should agree to boycott Zoopla and would be compensated financially for any fall in their Zoopla shareholdings. The agencies rejected that suggestion, according to Gascoigne Halman.”
The newspaper says Agents’ Mutual filed a formal ‘Reply to the Defence’ on Monday and that at no time did Mr Springett seek to persuade the agents in question collectively to boycott [Zoopla] as alleged — either at the meeting or on any other occasion.
The company also told the FT that it had taken careful legal advice about key aspects of its strategy and that its directors were satisfied it was operating within the law.
EAT says the monies Agents’ Mutual has been ordered to pay, comprising £750,000 by July 19 and the rest by August 30, is "security for Gascoigne Halman’s costs and to 'fortify' financially an undertaking it has so far given in the proceedings.
EAT adds Agents’ Mutual has brought a similar case against Moginie James, a south Wales estate agency that began listing on both rival portals earlier this year.
Moginie James has brought a counterclaim alleging misrepresentation relating to how Agents’ Mutual presented the terms of its “gold” membership.
Agents’ Mutual has rejected the claim that its policy on other portals is anti-competitive, arguing in its response to Moginie James’ defence that “its object and intended effect is to facilitate a much more competitive online property portal market than has existed hitherto”.
Sources: EAT and FT.