Judgment

Neutral citation:

[2017] CAT 15

Published:

5 Jul 2017

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Summary:

Judgment of the Tribunal in connection with certain competition issues (the “Competition Issues”) transferred to the Tribunal from the Chancery Division of the High Court by order of Sir Kenneth Parker dated 5 July 2016.

Agents’ Mutual Limited (“Agents Mutual”), a mutual association owned by its estate agent members, commenced proceedings in the Chancery Division alleging breach of contract by Gascoigne Halman Limited (“Gascoigne Halman”), an estate agent which operates 18 offices in the South Manchester/Cheshire region. Under its agreement with Agents’ Mutual, Gascoigne Halman had subscribed to a new online property portal called “OnTheMarket”, which was established with the intention of competing with other existing online property portals, the largest being Rightmove, Zoopla and Primelocation (the latter two both owned by Zoopla Property Group).

Gascoigne Halman denied the alleged breach of contract and, in addition, asserted that various provisions in the agreement breached section 2 of the Competition Act 1998 (“CA”) (the “Chapter I prohibition”) and were therefore void. In overview, the specific provisions were:

1) a rule by which an estate agent member may list its properties on no more than one other portal (the “One Other Portal Rule”);

2) a rule restricting membership of Agents’ Mutual to full-service office-based estate or letting agents, as opposed to agents operating only online (the “Bricks and Mortar Rule”); and

3) a rule requiring members to promote only OnTheMarket and not any other property portal (the “Exclusive Promotion Rule”).

Gascoigne Halman further contended that the One Other Portal Rule formed part of a wider arrangement between Agents’ Mutual and others collectively to boycott Zoopla and/or Rightmove, contrary to the Chapter I prohibition.

For the reasons given in the Judgment, the Tribunal held that the Competition Issues be determined against Gascoigne Halman. More specifically, the Tribunal held that:

1. As regards the One Other Portal Rule:

(a) The rule did not infringe the Chapter I prohibition by object.

(b) The rule did not infringe the Chapter I prohibition by effect.

(c) The rule was, in any event, objectively necessary to the “Arrangements” (the various rules which bind members of Agents’ Mutual, namely the listing agreement, articles of association and membership rules) as a whole, which were pro-competitive.

(d) The rule did not form part of a wider concerted practice to “boycott” Zoopla and was not invalid on that account.

(e) The rule was not an exempt agreement within the meaning of section 9 of the CA.

(f) If, contrary to the Tribunal’s conclusions, the rule did infringe the Chapter I prohibition, the Tribunal found that it was not severable from the Arrangements.

2. The Bricks and Mortar Rule did not infringe the Chapter I prohibition by object. If, contrary to the Tribunal’s conclusion, the rule did infringe the Chapter I prohibition, the Tribunal found that it was severable from the Arrangements.

3. The Exclusive Promotion Rule did not infringe the Chapter I prohibition by object. If, contrary to the Tribunal’s conclusion, the rule did infringe the Chapter I prohibition, the Tribunal did not consider it to be objectively necessary. The Exclusive Promotion Rule was severable from the Arrangements.

Because the Competition Issues were determined within the broader context of proceedings in the Chancery Division, the Tribunal made no further order beyond the determinations set out above.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.