“We confirm our understanding that [Agents’ Mutual] will, through its directors, seek to implement the requirement during the Listing Period [viz. a period of five years] that we list our UK residential sales and lettings properties on the Portal [i.e. OnTheMarket] and our website together with a maximum of one other competing portal (‘Third Party Portal’) in accordance with the terms of this letter (the ‘Exclusivity Requirement’). We hereby undertake that we will comply and procure that each member of our Group (as defined in Appendix 4) complies with the Exclusivity Requirement at all times.”
“7. We agree that from the Listing Date we will promote the Portal to our registered applicants, vendors and landlords and agree not to promote any other portal (including but not limited to the Third Party Portal save in accordance with and as permitted by this paragraph 7). In addition, we agree to promote consumer usage of the Portal in support of the overriding aim of creating a marketing leadership position for the Portal. Notwithstanding these requirements it is, however, acknowledged between us and [Agents’ Mutual] that we are permitted to advise prospective vendor/landlord clients that we use the Third Party Portal and to reference the Third Party Portal in our marketing material. 8. In addition, we hereby acknowledge that from the Listing Date we will be required to co-operate generally in co-branding our business and each member of our Group (as defined in Appendix 4) with [Agents’ Mutual]. In particular, we understand that we will be required to include [Agents’ Mutual’s] branding and that of its website, on all our consumer communications and marketing materials, sales particulars and digital communications (relating to UK residential sales and lettings properties) and in our office windows (using window stickers and/or display cards). We also agree to include a hyperlink to the Portal on our website. We hereby undertake to comply, and to procure that each member of our Group complies, with the co-branding requirements at all times.”
“Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which— (a) may affect trade within the United Kingdom, and (b) have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom, are prohibited unless they are exempt in accordance with the provisions of this Part.”
“(1) An agreement is exempt from the Chapter I prohibition if it— (a) contributes to— (i) improving production or distribution, or (ii) promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit; and (b) does not— (i) impose on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives; or (ii) afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question. (2) In any proceedings in which it is alleged that the Chapter I prohibition is being or has been infringed by an agreement, any undertaking or association of undertakings claiming the benefit of subsection (1) shall bear the burden of proving that the conditions of that subsection are satisfied.”
“1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings, - any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.”
“it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency between— (a) the principles applied, and decision reached, by the court in determining that question; and (b) the principles laid down by the Treaty and the European Court, and any relevant decision of that Court, as applicable at that time in determining any corresponding question arising in EU law.”
“89. It is apparent from the case law of the Court of Justice that if a given operation or activity is not covered by the prohibition rule laid down in art.81(1) EC, owing to its neutrality or positive effect in terms of competition, a restriction of the commercial autonomy of one or more of the participants in that operation or activity is not covered by that prohibition rule either if that restriction is objectively necessary to the implementation of that operation or that activity and proportionate to the objectives of one or the other …. 90. Where it is not possible to dissociate such a restriction from the main operation or activity without jeopardising its existence and aims, it is necessary to examine the compatibility of that restriction with art.81 EC in conjunction with the compatibility of the main operation or activity to which it is ancillary, even though, taken in isolation, such a restriction may appear on the face of it to be covered by the prohibition rule in art.81(1) EC. 91. Where it is a matter of determining whether an anticompetitive restriction can escape the prohibition laid down in art.81(1) EC because it is ancillary to a main operation that is not anti-competitive in nature, it is necessary to inquire whether that operation would be impossible to carry out in the absence of the restriction in question. Contrary to what the appellants claim, the fact that that operation is simply more difficult to implement or even less profitable without the restriction concerned cannot be deemed to give that restriction the ‘objective necessity’ required in order for it to be classified as ancillary. Such an interpretation would effectively extend that concept to restrictions which are not strictly indispensable to the implementation of the main operation. Such an outcome would undermine the effectiveness of the prohibition laid down in art.81(1) EC.”
“There is an interactive relationship between the two customer groups. The more customers there are on one side, the more attractive the platform is to the other side. Thus, the more properties a portal lists, the more attractive it will be to the property-buying public, and the more members of the propertybuying public it attracts the more attractive it will be to estate agents. This feature, generally referred to as ‘network effects’, means that a potential new market entrant must consider how best to create demand on one side of the market in order to create demand on the other, so that it may benefit from these network effects.”
“149. We draw from this statement of the law the following propositions: (1) For an agreement to be held to restrict competition ‘by object’ it must by its very nature reveal a sufficient degree of harm to competition, having regard to its specific legal and economic context. It is not enough for it to be merely capable of resulting in the prevention, restriction or distortion of competition. (2) In determining whether an agreement reveals a sufficient degree of harm, we must look at the content of its provisions, its objectives and its economic and legal context. In determining that context, we must consider the nature of the services that are the subject of the agreement and the structure and functioning of the market or markets in question. The parties’ intentions may be relevant, but we are not obliged to take these as determinative. (3) This evaluation of harm is not the same as considering the economic effects of the agreement, which is a quite distinct exercise, only necessary if restriction ‘by object’ is not established. Nevertheless the agreement must be capable of having some impact on the market or markets in question. Assessing this possible impact is a strictly limited exercise not involving a full examination of market effects, or any balancing of pro- or anti-competitive effects. (4) The concept of restriction ‘by object’ should be interpreted restrictively in the sense that it should only be applied to those categories of agreement whose harmful nature is easily identifiable in the light of experience and well-established economic analysis. 150. Accordingly, our approach will be to examine the agreement or provision in question to see whether by its very nature, having regard to the economic and legal context, it clearly and unambiguously reveals a sufficient degree of harm to competition to make any examination of its effects unnecessary.”
“Bearing in mind the generally pro-competitive effect of a new market entrant, it is evident that, as regards each provision alleged by Gascoigne Halman to be anti-competitive, the process of inquiry must be as follows: (1) Is the provision (in the case of the One Other Portal rule, the Bricks and Mortar rule and the Exclusive Promotion Rule) anticompetitive ‘by object’? (2) Is the provision (in the case of the One Other Portal Rule) anticompetitive ‘by effect’? (3) If the provision appears to be anti-competitive is it, in all the circumstances, necessary to achieve an overall neutral or procompetitive goal? This, third, question is the question of objective necessity.”
“Estate agents do not compete as to the number of portals on which their properties are advertised. They do compete in terms of the provision of the most effective selling service of properties or (which is not the same thing) the provision of what prospective customers perceive as the most effective selling service. We accept that subscription to one or more portals forms a part of that service. We also accept that, given the increasing importance of portals, advertising properties on one of the main portals would be regarded by potential vendor customers of estate agents as important, and so would form part of the service provided by an estate agent even if that estate agent was him- or herself not especially convinced of the efficacy of portals as an advertising medium. We further accept that most estate agents consider property portals to be extremely useful in advertising their properties. Finally, we accept that most vendors would regard an estate agent not signed up to at least one of the major portals (that is, one of Rightmove or Zoopla) as an estate agent not to instruct. Beyond this, we are not prepared to regard portals as a ‘significant parameter of competition’ as stated by Gascoigne Halman.”
“When considering the nature of the One Other Portal Rule, it is important to bear three points in mind: (1) First, neither Agents’ Mutual nor OnTheMarket was alleged to hold any significant degree of market power in either of the two relevant markets we are considering. To the contrary, OnTheMarket was a new entrant to the property portals market, with all the market weakness that that generally implies. (2) Indeed, secondly, in the case of markets with two-sided platforms, new entrants suffer from a much greater barrier to entry than in the case of products that only need to deal with a single group of customers as opposed to two inter-related groups of customers. It is difficult for a new entrant to establish itself in these circumstances. Because of the two aspects of demand linked by the platform, it is difficult to attract the listings of estate agents without having attractive ‘footfall’ (that is, visits to the portal) from the property buying public; and it is difficult to attract such ‘footfall’ without the listings …. (3) Thirdly, estate agents have an entirely free choice whether or not to join Agents’ Mutual and participate in OnTheMarket. It is only if the estate agent chooses to join that that estate agent becomes subject to the One Other Portal Rule. Should an estate agent choose not to join then the status quo is unaffected. That estate agent will, obviously, not be subscribing to OnTheMarket, but there is nothing to prevent an estate agent from purchasing advertising from Rightmove, Zoopla and/or any other portals. (4) It follows that the One Other Portal Rule is a restriction freely accepted by an estate agent as part of the price of accessing OnTheMarket. The nature of the restriction – which binds the moment the estate agent becomes a Member both in terms of its horizontal and vertical effects – is to impose on all participating estate agents a measure of exclusivity in relation to portals in general. The rule is not one of absolute exclusivity – estate agents are not required to purchase their ‘portal’ advertising only from OnTheMarket – but is a variant on the exclusivity theme. Participating estate agents must advertise their properties through OnTheMarket and can choose to do so through one other (but only one other) portal. 182. In short, we consider that the one other portal rule is to be characterised, in terms of its nature, as a semi-exclusive purchasing obligation: that is an obligation to purchase advertising from a given portal, not to the exclusion of all other portals, but to the exclusion of all other portals but one, and that its economic and legal context strongly suggest that its nature and purpose are not to harm competition.”
“Turning now to the One Other Portal Rule itself, we do not consider that this can be said to reveal a clear and obvious harm to competition: (i) In the first place, this is a case where estate agents, through their membership of Agents’ Mutual, might be said to be seeking a cheaper and more efficient solution to their portal advertising needs. We do not consider that the limited exclusivity provided by the One Other Portal Rule can be said clearly and unambiguously to have the object of restricting competition. To the contrary, having regard to the economic context in which the provision was intended to operate – that is, in a market having the characteristics we describe in paragraph 181(2) above – the nature of the provision suggests a procompetitive object. (ii) Secondly, the fact that the One Other Portal Rule is not exclusive but permits Members (if they wish) to use or continue to use one other portal appears to create competition between the two established portals. Whilst we must be careful not to confuse identifying the object of the restriction with assessing its economic effects, we are required to consider the economic context in which it operates and allowed to consider whether it is likely to have any impact on the market. The evidence described in Section E above shows that the One Other Portal Rule was likely to increase competition between Rightmove and Zoopla in that both Rightmove and Zoopla would pay greater attention to the demands of estate agents subscribing or thinking of subscribing to Agents’ Mutual because they appreciated that membership of Agents’ Mutual entailed one or other of them being dropped. (iii) Thirdly, we have in mind the need to apply the concept of restriction ‘by object’ restrictively and not to extend it to hitherto untainted categories of conduct, such as this. The One Other Portal Rule is a provision whose object can be seen as pro-competitive, providing as it does a means of new market entry, and it does not obviously fit any previously established category of object restrictions. (iv) Finally, whilst we do not regard the parties’ intentions as determinative, we note from the evidence in Section E above that the overriding purpose of Agents’ Mutual in launching its new Portal was to compete with the established property portals and provide cost reduction benefits to its Members. This is not, in our view, a clearly anti-competitive purpose.”
“As the [EU Commission’s ‘Guidelines on Vertical Restraints’] state (at paragraph 6): ‘For most vertical restraints, competition concerns can only arise if there is insufficient competition at one or more levels of trade, that is, if there is some degree of market power at the level of the supplier or buyer, or at both levels. Vertical restraints are generally less harmful than horizontal restraints and may provide substantial scope for efficiencies.’ In the present case Agents’ Mutual does not have market power either in the property portals market, where it is a new entrant, or in the estate agents market, where its Members, though significant in terms of numbers of estate agency branches, account for only a small share of relevant purchase revenues.” ‘For most vertical restraints, competition concerns can only arise if there is insufficient competition at one or more levels of trade, that is, if there is some degree of market power at the level of the supplier or buyer, or at both levels. Vertical restraints are generally less harmful than horizontal restraints and may provide substantial scope for efficiencies.’ In the present case Agents’ Mutual does not have market power either in the property portals market, where it is a new entrant, or in the estate agents market, where its Members, though significant in terms of numbers of estate agency branches, account for only a small share of relevant purchase revenues.”
“(1) Whilst there may be cases where the duration of a provision is a factor that affects whether or not that provision is or is not anti-competitive, this is not such a case. We accept that were the OnTheMarket Portal to achieve success on the scale of Rightmove – ie, dominance – then that might render the One Other Portal Rule anti-competitive, whether ‘by object’ or ‘by effect’. We express no view, because the fact is that OnTheMarket is very far from achieving a status of dominance or anything like it. (2) We appreciate, of course, that it is Mr Springett’s [i.e. Agents Mutual’s chief executive’s] and Agents’ Mutual’s aim to get to ‘tipping point 2’, where OnTheMarket rivaled Rightmove as the ‘number 1’ portal. But we are not obliged to take the parties’ intentions as determinative of our assessment: these are mere aspirations, and with all due respect to Mr Springett, that is how we must regard such statements. We consider that the provisions that Gascoigne Halman contends to be anti-competitive must be assessed in light of the facts as they stand now. Should the situation change, and (for example) Agents’ Mutual both achieves dominance in the market for its Portal and persists in maintaining the One Other Portal Rule, then the potential for that rule to offend the Chapter I (or indeed the Chapter II prohibition) would have to be considered. But that is not a matter for this Judgment. We consider that it would be entirely wrong to assess the anti-competitive object of the One Other Portal Rule by reference to the parties’ aspirations against an uncertain future. (3) What is more, as the communications in Section E demonstrate, Agents’ Mutual was careful to take legal advice, and we would be surprised if Agents’ Mutual were to persist with a provision that was anti-competitive (because, say, of the dominance of the Portal). (4) Gascoigne Halman contended that there was no evidence that Agents’ Mutual in general, or Mr Springett in particular, had given any serious consideration to or undertaken any analysis of the minimum period needed for OnTheMarket successfully to enter the property portals market. This contrasted with the extensive market analysis carried out by the new entrant in the case of BAGS v AMRAC (‘BAGS’) (a case which Agents’ Mutual had cited in support of its market entry argument) to find out the least restrictive justifiable entry level. Instead, so Gascoigne Halman contended, Mr Springett, working on a small budget without support, had essentially relied on his own judgment in the matter. (5) On the facts, it is no doubt correct that Mr Springett simply exercised his commercial judgment, without undertaking extensive analysis. We proceed on this basis. In our judgment, the suggestion that, before introducing the One Other Portal Rule, Agents’ Mutual was obliged to carry out a detailed assessment in order to determine what the duration of the rule should be, is misconceived. Whilst the steps taken by the new entrant in the BAGS case were no doubt professional and impressive, that was a quite different industry with different characteristics. The case does not establish, in our view, that such steps must be taken by every new entrant to every market. Instead, what is needed is a serious and professional assessment that is appropriate to the context. In this case, we are satisfied, from Mr Springett’s evidence, that he believed, on the basis of his experience and professional judgment, that a duration of five years was appropriate, and that the need for the One Other Portal rule to continue in its original form would be reviewed as OnTheMarket’s business developed. That, we conclude, was all that was appropriate or necessary in the present case. (6) As to the ability to vary the One Other Portal Rule, Gascoigne Halman contended that Agents’ Mutual was actually unable to vary the rule without its (Gascoigne Halman’s) consent. Whilst it is ironic to consider a case where the very party alleging a provision is anticompetitive is also refusing to alter it, we do not consider Gascoigne Halman’s contention to be correct ….”
“(4) In our view, the Bricks and Mortar Rule has the purpose of defining the nature and scope of the business created by Agents’ Mutual, rather than clearly having the object of harming competition from or as between those undertakings not covered by its terms. It might possibly have such an effect, but this has not been alleged by Gascoigne Halman, whose allegation is confined to saying this is a restriction ‘by object’, and we make no finding in this regard. (5) We decline to regard such a provision – particularly when contained in the rules of an undertaking that clearly has little or no market power – as anti-competitive ‘by object’. Viewing the rule as a vertical restraint (ie, as between each Member and Agents’ Mutual) leads to the same conclusion.”
“we consider that the only viable way Agents’ Mutual could succeed in establishing itself as a portal was to attract estate agents and to encourage them to put their properties onto the new (rival) platform in a manner that was not altogether duplicative of listings on other portals. We do not consider that Agents’ Mutual could simply hope that estate agents would shift their properties away from their existing portals: without some form of obligation to that effect, estate agents would simply duplicate their listings.”
“49. In that regard, it is apparent from the Court’s case law that certain types of coordination between undertakings reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects …. 50. That case law arises from the fact that certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition …. 51. Consequently, it is established that certain collusive behaviour, such as that leading to horizontal price-fixing by cartels, may be considered so likely to have negative effects, in particular on the price, quantity or quality of the goods and services, that it may be considered redundant, for the purposes of applying art.81(1) EC, to prove that they have actual effects on the market …. Experience shows that such behaviour leads to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers. 52. Where the analysis of a type of coordination between undertakings does not reveal a sufficient degree of harm to competition, the effects of the coordination should, on the other hand, be considered and, for it to be caught by the prohibition, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent …. 53. According to the case law of the Court, in order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition that it may be considered a restriction of competition ‘by object’ within the meaning of art.81(1) EC, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part. When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question ….”
“the General Court erred in finding … that the concept of restriction of competition by ‘object’ must not be interpreted ‘restrictively’. The concept of restriction of competition ‘by object’ can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects, otherwise the Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition. The fact that the types of agreements covered by art.81(1) EC do not constitute an exhaustive list of prohibited collusion is, in that regard, irrelevant.”
“The second category concerns cases in which an agreement is ambivalent in terms of its effects on competition. If the object of an agreement is to promote competition, for example by strengthening competition on a market, opening up a market or allowing a new competitor access to a market, the necessary restriction of the requirement of independence can, when matters are viewed as a whole, give way to the aim of promoting competition.”
“Furthermore, those agreements would also amount to a restriction of competition by object in the event that the referring court found that it is likely that, having regard to the economic context, competition on that market would be eliminated or seriously weakened following the conclusion of those agreements. In order to determine the likelihood of such a result, that court should in particular take into consideration the structure of that market, the existence of alternative distribution channels and their respective importance and the market power of the companies concerned”
“205. Joint purchasing arrangements restrict competition by object if they do not truly concern joint purchasing, but serve as a tool to engage in a disguised cartel, that is to say, otherwise prohibited price fixing, output limitation or market allocation. 206. Agreements which involve the fixing of purchase prices can have the object of restricting competition within the meaning of Article 101(1). However, this does not apply where the parties to a joint purchasing arrangement agree on the purchasing prices the joint purchasing arrangement may pay to its suppliers for the products subject to the supply contract. In that case an assessment is required as to whether the agreement is likely to give rise to restrictive effects on competition within the meaning of Article 101(1). In both scenarios the agreement on purchase prices will not be assessed separately, but in the light of the overall effects of the purchasing agreement on the market.”
“For most vertical restraints, competition concerns can only arise if there is insufficient competition at one or more levels of trade, that is, if there is some degree of market power at the level of the supplier or the buyer or at both levels. Vertical restraints are generally less harmful than horizontal restraints and may provide substantial scope for efficiencies.”
“We have received information that online only estate agents are prohibited from listing on OnTheMarket.com.
“The Gascoigne Halman Listing Agreement thus tied Gascoigne Halman into listing with the Portal for a period of five years from the Listing Date. We understand that similar – and sometimes effectively even longer – periods applied to other Members.”
“And incidentally, although not relevant terribly to this part of the case, in the other part of the case that’s currently stayed and may or may not ever be reached, we have pleaded that Gascoigne Halman’s membership has terminated as a result of 2.4.1 and it has been denied.”
“as identified in closings, there are, of course, methods of terminating membership (by either party) – but none of the methods set out in Membership Rule 2.4 is relevant for the purposes of the present competition trial. This trial proceeded on the basis that [Gascoigne Halman] was still a Member of [Agents’ Mutual] and continues to be bound by the Membership/Listing Agreement (but without prejudice to the further contentions that [Gascoigne Halman] makes about these matters in its Amended Defence)”
“For the avoidance of doubt, it is recognised that the points of construction of the Arrangements, informing Grounds 3, 4 and 5, may be relevant to the non-Competition Issues. Nothing in either the Judgment or this order is intended to or has the effect of limiting any future appeal of the non-Competition Issues, if and when these come to be determined and permission to appeal such a determination is sought.”
“In paragraphs 57 to 63 above, we held that Gascoigne Halman was obliged to procure that each member of its Group comply with the One Other Portal Rule. In other words, the One Other Portal Rule had a wide legal effect. Our assessment of the competitive effects of the One Other Portal Rule takes this wide legal effect into account. It is our conclusion that, notwithstanding the wide effect of the rule, it was not a ‘by object’ infringement. The purpose of the procure obligation was simply to ensure that an entire ‘Group’, as it existed from time-to-time, was covered so as to avoid possible attempts to evade the effect of the One Other Portal Rule.”