Agents' Mutual Ltd v Gascoigne Halman Ltd (t/a Gascoigne Halman)

Factual and Procedural Background

This case concerns the launch and operation of a new online property portal, referred to as "OnTheMarket", established by the Respondent in 2013 and launched in January 2015. The Respondent's members were estate agents who agreed to certain membership and listing agreements containing rules including the "One Other Portal Rule", the "Bricks and Mortar Rule", and the "Exclusive Promotion Rule". The Appellant, an estate agent, entered into a Listing Agreement with the Respondent in 2014, agreeing to these rules, which included restrictions on listing properties on competing portals.

Following the Appellant's acquisition by a larger estate agency group with a strategic relationship with a competing portal, the Appellant listed properties on multiple portals, allegedly breaching the One Other Portal Rule. The Respondent initiated proceedings in February 2016, alleging breach of this rule. The competition issues were transferred to the Competition Appeal Tribunal ("CAT") in July 2016. The CAT ruled against the Appellant in July 2017, finding no infringement of competition law by the relevant rules. The present appeal challenges that decision, specifically contesting the CAT's finding that the rules did not constitute restrictions of competition "by object".

Since the litigation began, the Respondent has demutualised and the Bricks and Mortar Rule no longer applies. The appeal is from an order of the High Court adopting the CAT's competition findings.

Legal Issues Presented

1. Whether the One Other Portal Rule and the Bricks and Mortar Rule constitute restrictions of competition "by object" under the Chapter I prohibition of the Competition Act 1998.
2. Whether the One Other Portal Rule constitutes a restriction of competition "by effect".
3. Whether the One Other Portal Rule and the Bricks and Mortar Rule are objectively necessary to achieve a pro-competitive goal.
4. Issues relating to the interpretation and severability of the Membership Rules and Listing Agreement, including the scope of obligations and termination of membership.

Arguments of the Parties

Appellant's Arguments

• The CAT wrongly focused on the pro-competitive nature of the portal as a whole rather than the specific contractual restrictions imposed by the One Other Portal Rule and the Bricks and Mortar Rule.
• The One Other Portal Rule restricts competition by limiting the number and identity of portals on which estate agents can list properties, which is a significant parameter of competition.
• The Bricks and Mortar Rule excludes estate agents using lower cost and differentiated business models, constituting a naked anti-competitive object.
• The five-year duration of the One Other Portal Rule reinforces its anti-competitive object, and the CAT erred in dismissing this factor.
• The CAT improperly considered the absence of regulatory investigation, the fact that the rule was freely accepted, and that legal advice was taken as factors supporting the rule’s legality.
• The CAT conflated "by object" and "by effect" analyses and failed to properly assess the degree of harm to competition posed by the rules.

Respondent's Arguments

• The One Other Portal Rule is a semi-exclusive purchasing obligation that does not reveal a sufficient degree of harm to competition to be considered a "by object" restriction.
• The portal was a new entrant with no significant market power, and the rules were necessary and proportionate to facilitate its market entry and promote competition.
• The Bricks and Mortar Rule defines the nature and scope of the business rather than having the object of harming competition.
• Market power is a relevant factor in assessing "by object" restrictions, and the Respondent lacked such power.
• The CAT correctly applied the law, considering the economic and legal context, and was entitled to give limited weight to the parties' intentions and aspirations.
• Issues concerning the interpretation and scope of contractual obligations and termination of membership are matters for the ongoing Chancery proceedings, not the competition appeal.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Case C-67/13P Groupement des Cartes Bancaires (CB) v European Commission [2014] 5 CMLR 22	Definition and application of "by object" restriction in competition law	Used to confirm that for a restriction to be "by object" it must reveal a sufficient degree of harm to competition by its very nature, considering content, objectives, and economic/legal context.
Case C-209/07 Competition Authority v Beef Industry Development Society Ltd [2009] 4 CMLR 6	Interpretation of "by object" restriction and its restrictive application	Referenced to illustrate that the concept of "by object" restriction is to be interpreted restrictively and that market structure changes can be significant but do not automatically imply anti-competitive object.
Case C-382/12 P MasterCard Inc v European Commission [2014] 5 CMLR 23	Objective necessity of restrictions ancillary to a main operation	Applied to explain that restrictions may be justified if objectively necessary and proportionate to a legitimate operation, even if they restrict commercial autonomy.
Bookmakers' Afternoon Greyhound Services Ltd v Amalgamated Racing Ltd [2009] EWCA Civ 750	Contextualizing "by object" restrictions in market entry scenarios	Used to support the proposition that restrictions facilitating new market entrants may not have an anti-competitive object.
Case C-32/11 Allianz Hungaria Biztosito Zrt v Gazdasagi Versenyhivatal [2013] 4 CMLR 25	Relevance of market power in assessing "by object" restrictions	Applied to emphasize that market power is a key factor when determining the likelihood of elimination or serious weakening of competition.
[2016] CAT 11 Sainsbury's Supermarkets Ltd v Mastercard Inc	Framework for assessing "by object" and "by effect" restrictions	Referenced for the approach to evaluating whether an agreement restricts competition by object, including the need to consider legal and economic context.
Case C-214/99 Neste Markkinointi Oy v Yotuuli Ky [2001] 4 CMLR 27	Rarity of vertical agreements being "by object" restrictions	Noted to show that exclusive purchasing agreements are usually assessed on effect rather than object.

Court's Reasoning and Analysis

The Court carefully examined the nature of the One Other Portal Rule and the Bricks and Mortar Rule under the framework of the Chapter I prohibition of the Competition Act 1998 and Article 101 of the TFEU. It upheld the CAT’s detailed analysis that for a restriction to be "by object", it must reveal a sufficient degree of harm to competition by its very nature, assessed in light of the content, objectives, and the economic and legal context.

Regarding the One Other Portal Rule, the Court agreed with the CAT that it constituted a semi-exclusive purchasing obligation, allowing members to list on OnTheMarket and one other portal, and that estate agents do not compete primarily on the number of portals used, but on the quality of their service. The Court noted the absence of market power by the Respondent and OnTheMarket, the significant barriers faced by new entrants in two-sided markets, and that estate agents voluntarily accepted the restriction as a condition of membership.

The Court rejected the Appellant’s submission that the CAT improperly focused on the portal’s overall pro-competitive purpose rather than the specific contractual provisions. It found that the CAT had correctly considered the object of the rule itself, independent of intentions, and had not conflated "by object" and "by effect" analyses.

The Court also found that the duration and non-variability of the One Other Portal Rule did not render it anti-competitive, given the absence of dominance or market power by the portal at the relevant time.

On the Bricks and Mortar Rule, the Court agreed with the CAT that it defined the nature and scope of the Respondent’s business and did not reveal a sufficient degree of harm to competition to be considered a "by object" restriction. The Court noted the absence of market power and that any potential anti-competitive effects were speculative and contingent on future market developments.

The Court further addressed contractual interpretation issues raised by the Appellant relating to membership termination and the scope of obligations under the Listing Agreement, concluding these matters were outside the scope of the competition appeal and reserved for ongoing Chancery proceedings.

Holding and Implications

The Court DISMISSED the appeal, upholding the CAT’s conclusion that neither the One Other Portal Rule nor the Bricks and Mortar Rule constitutes a restriction of competition "by object" under the Chapter I prohibition of the Competition Act 1998.

The direct effect is that the Appellant’s challenge to the competition law validity of these rules fails, maintaining the enforceability of the relevant provisions against the Appellant. No new precedent was set beyond affirming the application of established principles concerning "by object" restrictions, market power, and the assessment of contractual restrictions in two-sided markets.