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It's time for OTM to drop the exclusivity rule

Yesterday we heard about the letter from the CMA warning agents about anti-competitive behaviour. Today, in a scoop for Estate Agent Today, we find out that Trading Standards is indeed meeting with the CMA to discuss complaints made about OTM. 

In their letter under the heading 'Trade Associations', the CMA suggests that a Trade Association may be breaking the law:  

'where they take actions that limit the commercial freedom of their members’ 

It seems likely that this is a direct reference to OTM and that the OTM exclusivity rule may be just such a limit on their members’ commercial freedom.

In light of these revelations, it has to be time OTM faced up to the very real risk they and their members face in the form of large potential fines and possibly worse. They need to try and protect their own and their members interests by dropping the dangerous and anti-competitive exclusivity rule once and for all and hope that is the end of the matter. 

Every day the exclusivity rule persists increases the risk of severe fines and penalties being levied against OTM and its members.

On the plus side, dropping the exclusivity rule could actually benefit the OTM proposition and help drive new members. I, for one, would become a member if they do drop it and I'm sure there are many agents out there who, like me, approve of a strong agent-owned portal but have not joined OTM simply because of the exclusivity rule.

I also think that OTM membership should be open to all estate agents, even those without high street offices, so that means Russell Quirk at eMoov for example! 

For those who believe that internet based agents can't provide the same quality of service as the high street, the consumer will make the final decision. If OTM can muster enough support to break the duopoly of Rightmove and Zoopla then fine, let them do it on their own merits without having to resort to unfair, anti-competitive means. 

Most importantly, however, dropping the exclusivity rule now will minimise the risk of a full-blown CMA investigation and the possible dire consequences this could have for the OTM business and its member agents.

As many of you know, I have campaigned relentlessly against the OTM exclusivity rule from day one. If you want a refresher, take a look at this article I wrote back in October 2014, the third in my 'Industry Quake' series. This one dealt specifically with the issue of the anti-competitive nature of the exclusivity rule. Here are two prescient passages, backed up by research in the article:

'It's worth having a look at how the Agents’ Mutual exclusivity rule might be viewed by the CMA. The reason for the exclusivity rule is to control portal costs and, indirectly, to increase member profits. This could be seen to be at the expense of the consumer, who would suffer as a result of their property receiving less exposure than it would have done if the free market were allowed to operate'. 

'I'm hoping I don't have to write another article on this increasingly embarrassing (for the industry) subject, I'm hoping to hear an announcement very soon from Agents Mutual that they are reviewing their position on the exclusivity rule. If I don't hear that announcement then I will continue with my next instalment and believe me, I have plenty of more reasons why AM as currently constituted is a very bad idea'

Take a look at the whole article here.

However, it gives me no pleasure to see how events are now unfolding. What I want to see is a strong, successful industry based on fair and inclusive principles, in which the best agents thrive on merit without the need to unfairly restrict competition. 

So we shall see if the board of OTM have the courage and the common sense to announce the end of the exclusivity rule without further delay and in so doing to limit the risk they and their members are already exposed to. The alternative, to carry on with the current strategy, is unthinkable and the consequences potentially catastrophic.

We cannot hold back change, we cannot un-invent the internet, we are part of the free world and we operate in a free market. We are happy to bask in the benefits that freedom brings, so we have to accept the competition that comes with it as well.

*Simon Shinerock is Chairman of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.     

  • Rob  Davies

    Well said, Simon. Their anti-online stance is ridiculous, their one other portal rule is even more ridiculous. Let's hope the CMA come down hard on them.

  • Kelly Evans

    Simon, you've been so virulently anti-OTM, do you really expect us to believe you would join if they suddenly dropped this so called exclusivity rule? To call OTM a cartel is utterly ludicrous, it's not even close to being that and I think you know that, deep down.

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    Rob and Simon - can you point me in the direction of where or when it has been announced that the CMA is investigating OTM? No, I thought you wouldn't be able to. Perhaps this I told you so stance should have come out when there is some real information from the CMA rather than making a tenuous link to something it has said? Yes if OTM dropped the exclusivity rule then it might get a few hundred more agents on board. But the whole reason that OTM has been able to challenge Zoopla and take loads of its agents (a fact, just look at Zoopla's half-year trading statement) is because of the exclusivity rule. So why would it drop it now when it is just starting to make a head way?


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    Portal snores - again! Who cares if you join OTM - they have 5,000 offices already??

  • Rookie Landlord

    Yawn. Yawn. Yawn. Why don't we wait and see before hanging OTM out to dry? At present, they've done nothing wrong. The CMA and Trading Standards are merely doing their job by acting on the complaints of others. If they didn't, there would be uproar.

    If they find that OTM has been acting as a cartel, then you can all start doing cartwheels and patting yourselves on the back. Until then, a bit of sense wouldn't go amiss.

  • Simon Shinerock

    I think everyone needs to be clear, EAT has seen exclusive new evidence that National Trading Standards are meeting with the CMA to discuss their concerns about OTM. This is a major significant development, be in no doubt

  • maurice  kilbride

    I have never been an advocate of the exclusivity rule, one of the main reasons I didn't join OTM at its conception. I agree with much of what Simon says, although not the ridiculous scare mongering about how this may play out. At this stage there is potentially to be a meeting, until that has taken place and any decisions rolled out I doubt OTM are going to panic and react in a knee jerk manner. As for online agents, I don't have a problem with them advertising if they choose too, although I would be surprised if Quirke's e-moov did given what he has said about OTM! Portals are hugely important, but any good high street agent will know there are many other ways to source buyers, hence why 95% of the public still choose HS agents despite the difference in fees. This is all a bit of a storm in a tea cup if you ask me!

  • Rob  Davies

    @JohnBamonte - OTM challenging Zoopla? Hmm, that's debatable. There is plenty of evidence to suggest that isn't happening and that OTM has actually been going backwards since launch.

    Do you agree with the one other portal rule or the anti-online agent stance? To me, we need to make the industry more inclusive, encourage healthy competition not divisions. That's what OTM is doing - effectively saying we think nothing of online agents and RM and Zoopla, we've been doing this for years, we know best, we won't shaft you like these evil portals who have helped us get so many leads and instructions in the last few years, come and join us! Smacks of arrogance to me. OTM isn't trying to improve the industry, they're merely looking out for the best interests of the agents that formed that. That's the thing that most sticks in my craw.

  • Simon Shinerock

    Maurice, I understand your point of view but I disagree its scaremongering. The truth is we are in an anti corruption anti tax avoidance environment. As a society we are less likely to tolerate the abuse of the system by the establishment than ever before and more inclined to punish those who transgress. Estate agents are sitting ducks for the CMA to flex its recently acquired muscles

  • Kristjan Byfield

    Contrary to most comments here I agree with the excusivity rule for OTM- although I dont market with them. The whole point behind its inception was to break the monopoly of RM & ZPG and so, to do this, it HAD to have the exclusivity rule. If this is taken away then OTM should just close as, rather than acheiving its goal of SAVING agents money, it will in fact do the opposite and simply be another addition on top of RM & ZPG INCREASING agency marketing costs. A 3rd major portal does not create 1/3 new revenue- portals do not create buyers they just help allocate those that exist to the applicable resources. If OTM were to be investigated I would have thought this would have been regarding their stance re 'online agents' which I think is unfair and shows a backwards approach to an evolving industry. Personally I have no issue with this business model (online agents)and see absolutley no competition between them and a high quality, full service agency- so I dont understand this backwards approach trying to ignore a shift in how a sector performs going forwards.

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    I am a partner in a leading UK law firm. I have been watching this debate from afar for some months without comment. I have no vested interest in this matter, save from my wife working in the property industry, in the interest of full disclosure. My views are as follows. Agents should be under no illusion that Agents Mutual exclusivity may be illegal and may result in quite costly fines for its members. Agents Mutual itself seems to have been quite silent on this matter. It is simply not enough to say that they took advise 2 or 3 years ago before they were formed and when their market share was zero. What update have they had to this advice since launch and now claiming decent market share wins? If I were advising a client on this matter I would be asking for following. If my client was already a member, I would want to see now either i) clear current advise from Agents Mutual lawyers that there is a very limited risk or ii) the rule to be dropped as the potential damages (10% of revenues plus reputation, etc) would appear to far outweigh any benefits of this rule. If my client was not a member but thinking about joining, I would want them to get an indemnity from the founders in the agreement for any potential fines or damages. The CMA takes this stuff seriously. Agents Mutual can't have it both ways - claiming to be small enough to not be relevant to CMA whilst claiming to be large enough to be impacting market. Members of Agents Mutual would be well advised to take advise on this matter and seek to remove this rule if they want to limit their risks.

  • Simon Shinerock

    Kristjan, whilst you are entitled to your opinion, one which sounds pretty pragmatic, the issue here is about risk management. There is clearly a massive risk to agents who, inadvertently or not, become implicated in a potentially illegal cartel. The question is whether the juice is worth the squeeze. Did most agents who joined OTM weigh up the risk and are they prepared to pay the price if the worse happens? I personally object to the concept for the reasons I have often stated but again, that's not the point, the point is that the CMA will likely take concerns by National Trading Standards very seriously, if I were an OTM member, I would be worried.

  • Algarve  Investor

    Good points, maurice kilbride! I agree with everything you say. I disagree with much of what OTM stands for, but this does all seem like a storm in the teacup. Everyone's getting very excited even though nothing has actually happened yet. Let's wait to see if any wrongdoing has taken place before we start doling out the reprimands.

  • Kelly Evans

    Kristjan, this is what people don't seem to understand. They had to have the exclusivity rule, not to be anti-competitive but because it makes logical sense. OTM's whole modus operandi is to break up the current portal duopoly of RM and Z. If they then say, well, if you join us, you can still remain on both, then how is that going about achieving their aim? It's nonsense.

    If people don't agree with the one other portal rule, as many don't, then they simply don't sign up to OTM. If they are fed up of the portals milking agents dry, then they do sign up.

    As someone said elsewhere, OTM isn't forcing agents to sign up. There is such a thing as personal agency.

    This anti-competition nonsense is just a desperate attempt to scaremonger. More people afraid of OTM's potential success.

  • Jon  Tarrey

    @ John D - interesting to a get a legal perspective from this. If what you say is right, and I bow to your superior knowledge of legal procedures, then things don't look very good for OTM.

    It's always interesting to get an outsider's thoughts on the property industry. As you say, you have no axe to grind - unlike some on here - and no bias, so you can merely put across the facts of the matter in a totally impartial way.

    I do find it a bit odd that the pro-OTM brigade haven't responded to your comment. Maybe they're uncomfortable at how close to the truth your words are.

  • Simon Shinerock

    Sadly the 'OTM Brigade', I like that name, it has a ring to it, generally emote rather than think and posture rather than rationalise. Feelings are all well and good, we all have them but when it comes to making business decisions the risks and rewards need proper evaluation. Early on in the debate there was a lot of criticism of the portals and online agents and the sense was that OTM was some kind if 'Tit for Tat' and therfore justified. At the time I said 'two wrongs don't make a right' they don't and what we are starting to see is how this is going to play out. I think one of the most interesting points made in the CMA letter was the one about volunteering yourself if you feel you have broken the rules and how doing so will mean more leniency than if you don't. So, if as OTM and their supporters believe, that they have done nothing wrong, the smart thing for an OTM agent to do would be to contact the CMA and be open about their arrangements. That way if things do go bad at least they will have done something to protect themselves.

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    I have since read elsewhere that CMA has confirmed that it isn't 'investigating' OTM but that NSTEAT has confirmed that it is meeting with the CMA. Not really sure what to believe tbh. But the stories today seem to agree more with what I was saying yesterday (and Maurice Kilrbride's points) rather than all the end of the world rhetoric above.... The CMA has received complaints about OTM so it has to 'discuss' them. Until then, I am waiting to see actual evidence that the CMA is actively investigating OTM.

  • Simon Shinerock

    I have read the 'other article' let's just say it's carefully phrased. Before I became persona non grata with OTM Ian Springett told me about the strategy to target Zoopla, I think this kind of concerted activity has been clearly highlighted as a breach of the rules. What many agents may not appreciate is that the authorities move to their timescale, no one else's. I have made two points about OTM, the first is that it seems plain wrong and the second is that it's approach may expose its members to a significant regulatory risk. The 'other article' read objectively provides little real reassurance that this threat has gone away.

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