201610.17

Is the Online Property Sales Market as Competitive As It Should Be?

Heavy investment in Internet-based businesses has resulted in the establishment of powerful trading positions in many fields of endeavour. However, in one important test case, the impact of such developments on competition in the online property sales market will be analysed by a specialist tribunal.

A mutual limited company, whose membership was made up of estate agencies, had launched a web portal in order to challenge the alleged dominant position of two major players in the market. Membership was subject to a number of rules and, in particular, members were restricted to advertising their properties on the portal and one other website. Estate agencies that operated solely online were also excluded from membership and members were required to promote the portal, and none other.

The company had launched proceedings against one of its estate agency members, seeking orders requiring it to abide by those rules. However, in its defence to the claim, the agency argued that they had an anti-competitive effect in violation of the Competition Act 1998. The company submitted that they were proportionate restrictions that were necessary to enable a new entry into an essentially duopolistic market and thus served to promote competition.

The nature of the opposing arguments emerged after the High Court referred the dispute for resolution by the Competition Appeal Tribunal. The estate agency had given undertakings to hold the ring pending that hearing and, in order to enable its fair participation in the case, the company was directed to put up security of £1.33 million in respect of legal costs.

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