Zoopla says it has legal advice stating that the OnTheMarket portal and its member agents could face fines and claims for damages should some of its activities be declared to be infringing competition law by the Competition and Markets Authority.
Advice provided to Zoopla by law firm Freshfields Bruckhaus Deringer LLP says that if the CMA at any time found an infringement of competition law, it could impose fines on each agency of up to 10 per cent of their total annual turnover.
In the case of an independent single branch firm, Zoopla claims the fines could run into the tens of thousands of pounds while for a larger firm - Zoopla's statement specifically says such as Savills plc - the fine could run into the tens of millions of pounds.
The advice adds that any of OnTheMarket'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.
The damages could include compensation for lost profits, the diminution in the value of capital assets or lost commercial opportunities.
The advice also says that each agency firm would be individually liable for the full amount of any damages awarded, rather than just for a share. Zoopla warns this could run into millions of pounds for some agents.
Zoopla's statement does not specify what activities by OTM may be considered anti-competitive, but back in October online agency eMoov lodged a complaint with the CMA accusing the new portal of running an illegal cartel.
The complaint - formally lodged against OTM's operating company, Agents' Mutual - included the claim that AM was an illegal cartel being run by 10 estate agency directors to form a protective entity, and that it was operating to the detriment of the consumer by excluding online estate agents and singling out' which portals its members could list on.
The CMA's response at the time stated that it would review and retain the information you [eMoov] have sent us to support any future work that the CMA may choose to carry out.
In November Agents' Mutual said that at the outset it had taken appropriate legal advice as to the legality of its model and contractual terms. In the light of the advice received, the directors are satisfied that the company is operating within the law."
Overnight AM re-issued that statement along with a broadside against the latest comments from Zoopla: "We note the speculative statement concerning Agents' Mutual strategy released by Zoopla Property Group. It is yet another desperate attempt to intimidate agents into remaining with them when it is clear that many more are likely to leave them to join OnTheMarket during the coming year.
Now Zoopla says that while the CMA may choose to take a wait and see' approach, the implication of its advice from Freshfields Bruckhaus Deringer LLP 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, in the words of Zoopla, potentially devastating.
The advice draws on case law from 2012 which reveals that the Competition Appeal Tribunal - a judicial body which hears and decides upon cases involving competition or economic regulatory issues - awarded exemplary damages where it found that defendants had acted with a specific intent to eliminate a competitor from the market.
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 says Zoopla communications chief Lawrence Hall.
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Comments
Rightmove , Zoopla ,primelocation, Globrix ,Fish4 homes ,property finder etc (the list goes on) have been shafting the agents who suffer from" webfear syndrome" fear of not being on a particular website for years. Zoopla made no attempt to stop us leaving having been charging us double what another agent was paying (same town). We all should have the balls to drop them all Rightmove included and just have OTM as "our" own website. It will give Rightmove the opportunity ,which I am sure they have been considering ,to allow homeowners the chance to list their properties direct with them which will give the "everything made so simple" on-line only agents something to think about. As for the intermediaries ( "Net an agent" for example) don't get me going !
'The proof of the pudding will be in the eating'
To Mr Shinerock..."Jenko you say the OTM agent market share is increasing, can you back that up"...I heard from someone who attended the NAEA conference yesterday that the membership numbers has gone up by 100 in a week to 4800.
So despite Zoopla's best efforts "the CMA may choose to take a wait and see approach." This appears to be an ineffective sting by Zoopla. We must simply wait now for the latest figures to be released to see OTM's position in the industry. The proof will be in the pudding.
No, whatever the OTMers say is gospel. They don't need facts or figures. They just know.
Jenko you say the OTM agent market share is increasing, can you back that up
Did you hear that rumour from your mate, Phil Spencer
I heard a rumour this morning that job applicants are already turning down interviews for companies that advertise on Zoopla. Can you blame them!
"What I find amazing is the vitriol being aimed at Zoopla"...Can I suggest you read the press release and then tell me how you think Zoopla are trying to look out for their customers best interests.
This is a complete disaster of a press release.
"You do of course know that it will be possible to follow the fortunes of OTM members over the next few months and see what happens to their market share, a little birdie tells me it's already beginning to decline"...No it's going up not declining.
What I find amazing is the vitriol being aimed at Zoopla by some agents a company that has come from nowhere to take on Rightove and is now rightly fighting it's corner. You do of course know that it will be possible to follow the fortunes of OTM members over the next few months and see what happens to their market share, a little birdie tells me it's already beginning to decline, you can't hide from reality
@Rob Davies
'Or you could let people think for themselves'
But many do not!
Echo.
Agreed PH - seems completely bogus. Why would a vendor post on a trade news site
'Losing out on millions of potential buyers' - sorry that's just plain wrong. Just becuase RM and Z have millions of visitors doesn't mean your property will be viewed by millions, far from it.
Unless you're living in Buckingham Palace, Paul
'Losing out on millions of potential buyers' - sorry that's just plain wrong. Just becuase RM and Z have millions of visitors doesn't mean your property will be viewed by millions, far from it.
Unless you're living in Buckingham Palace, Paul
"We felt it important to share this information with our members and other industry participants in the interests of transparency" - cheers Zoopla!
Perhaps it would be transparent of you to report to your shareholders that things aren't going too well...
@Rob Davies - base upon my experience any agent who isn't on rightmove is dead in the water. So portals are VITAL ( :p ) I am with RM & Zoopla at the moment - the lead quality and data Zoopla provide is crap. I am only with Zoopla as our main competitor isn't so I can SELL this "perceived advantage" to potential vendors as Zoopla currently advertise on TV and people have heard of them. OTM is here to reduce Agents costs as RM have ramped them up to make more money from their consumers US. If an agents costs reduce - guess what - they could offer cheaper fees to THE CONSUMERS!! ;)
Or you could let people think for themselves.
JUST BECAUSE YOU TYPE IT IN CAPITALS DOESN'T MAKE IT RIGHT.
Yeah, OTM have turned a duopoly into a monopoly. Nice one guys.
A lot of people seem very annoyed at the success of Zoopla. Granted, this does stink a bit of desperation, but who's to say their accusations are unfounded. As far as I can see, Zoopla have been hit by the arrival of OTM, but it's still unclear how much. In some cities and towns, not at all. In others, they've been losing agents left, right and centre. We need to wait a year or so before drawing any conclusions about the impact of OTM.
It seems quite a lot of people are keen to announce the death of Zoopla already, but that seems far too premature to me.
Maybe, but you can't deny the importance of portals. That would be naive in the extreme. Where do you think the majority of buyers and sellers turn to first I don't think many people browse estate agent windows anymore, do you Of course estate agents are still there to sell, but they wouldn't get half as many leads or exposure without the portals.
@Paul - Choose a different agent then PLEASE REMEMBER ESTATE AGENTS SELL HOUSES NOT PORTALS. Portals are just an advert. To be honest you don't seem like a genuine seller to me - more like a person with an axe to grind. ;)
Nothing better to do and obviously concerned and worried that ON THE MARKET are going to take over your share of the Market. Sending letters to clients too stating that the appointed Agent aren't using Zoopla, how low can you get and astounding grief fuelled arrogance. Rightmove is the leading portal and the stats show that and without the ESTATE AGENT you wouldn't have a business. I hope you get what is coming to you.
Guest(PH) you are absolutely are missing something. I want to sell my home at the moment and I want to be able to use an agent I trust - who I bought my house from originally (savills) but they are not working in my best interests in any way. My home won't appear on any other portals than this onthemarket for 48 hours or however long savills choose. Then it will only appear on Rightmove and not Zoopla - I am losing out on millions of potential buyers. That is reducing consumer choice and not working in the best interests of the consumer. To ordinary people like me it looks like a cartel...
@Guest (PH)
The best post yet on this subject.
Everyone, please note.
Reducing consumer choice Who are the portals consumers/customers ESTATE AGENTS not the public. The public don't pay RM Zoopla or OTM agents do. The only public who should care are vendors and they choose the agent they feel will serve them best (or with cheapest fee lol) Why is everyone missing this No PAYING public are being hindered here. PLEASE EXPLAIN TO ME IF I AM WRONG OR MISSING SONETHING HERE!! (Agent for 20 years)
Simon, Zoopla "Saving up" for legal action Really Have you seen their acocunts I think they could launch a pretty big assault now if they had any remote chance of success - they are also under a duty to act responsibly with the company assets, throwing a shed load of cash at lets face it, 5,000 Estate Agents via an action against OTM is not all that responsible - if it were, they would have done so already....
No doubt the advice also included guidance that such a possible action for anticompetitive behaviour would involve an abuse of a dominant market position. Zoopla cannot on one hand say that OTM is really hurting clients because of its relative market obscurity whilst at the same time saying that OTM has a dominant market position.
It would be safe to assume that when [i]and if[/i] OTM gains sufficient traction to even suggest it has a "dominant market position" it will already have changed its business model to remove any potential claims of anti-competitive behaviour.
It is also worth noting that the merger of Zoopla and the Digital Property Group was investigated by the CMA and was deemed not to be reducing consumer choice. How is bringing a new company to market reducing consumer choice
As I pointed out in the run up to the OTM launch, it's not just the CMA that can launch an action, it's any other affected party as well, in this case Zoopla. So you have to think this though, what will Zoopla do if OTM gains further traction, I know what I would do, I know what I would already have done. They will be obliged to fight for their survival and really, when you cut out the bluster and anti Zoopla rhetoric, what have they done to estate agents and how have they been treated by them They became the one and only credible competitor to RightMove and in effect broke the monopoly, estate agents have rewarded this achievement by ganging up on them and trying to put them out of business. Now if you are an OTM agent you may say that all is fair in love and war and I would say live by the sword die by it. Zoopla will certainly not go quietly into the night, they will do anything they can to survive, as a public company they are obliged to protect their shareholders interests. Some have commented that Zoopla have stopped advertising on TV, I speculate they may well be saving up for a legal assault of their own, I know it's what I would do.
Love it, lies, damned lies and statistics....."Competition Appeal Tribunal-----awarded exemplary damages where it found that defendants had acted with a specific intent to eliminate a competitor from the market"
AM are not seeking to eliminate a competitor from the market and anyone with an ounce of sense can see that; all they are doing is requiring agents use one other, any other, portal as well as OTM. Where is the specific intent to remove ANY competitor from the market in that Agents can drop whomever they like, there is no pressure on which, just as there is free choice to chose which other portal the agents remains with, be it RM or Zoopla.
The fact that Zoopla has without doubt suffered the most in the OTM launch is telling. Especially as they are the ones throwing most toys out of the pram. We dropped Zoopla - they did absolutely NOTHING to try and retain us (Multi Office independant) and I have seen more effort on customer retention from my energy suppliers. Now they are feeling the pinch and resorting to scare tactics.
I Spent 20 years in the legal profession, I have scrutinised the issues and can't see any. Read this paragraph again (emphasis added) - "Advice provided to Zoopla by law firm Freshfields Bruckhaus Deringer LLP says that [b]IF[/b][u][/u] the CMA at any time found an infringement of competition law, it [b]COULD[/b][u][/u] impose fines"
That applies to any industry, any sector and any company....it is a very big "if" and if Zoopla did had something substantial to throw at OTM /AM as their legal advisor, I would not suggest they shout about it until they issued proceedings......