Gascoigne Halman Ltd v Agents' Mutual Ltd

A contractual restriction is not a restriction of competition by object merely because it limits commercial freedom. It falls within the Chapter I prohibition only where, viewed through its content, objectives and specific legal and economic context, it reveals a sufficient and readily identifiable degree of harm to competition such that an effects analysis is unnecessary.

A semi-exclusive purchasing obligation accepted by members of a new two-sided platform, which lacks market power and permits use of one established competitor, did not meet that standard. Nor did a membership rule limiting participation to office-based full-service agents. Both rules could require reassessment if the platform acquired market power, but neither was objectionable by object on the facts found.

Agents’ Mutual operated the OnTheMarket property portal. Its members were subject to a One Other Portal Rule, allowing use of OnTheMarket and no more than one competing portal, and a Bricks and Mortar Rule limiting membership to office-based full-service estate or letting agents.

After Gascoigne Halman began listing properties on both Rightmove and Zoopla, Agents’ Mutual sued for breach of the One Other Portal Rule. Gascoigne Halman contended that both rules infringed the Chapter I prohibition in section 2 of the Competition Act 1998. The Competition Appeal Tribunal rejected that contention in [2017] CAT 15. A Chancery Division order then gave effect to that judgment in the proceedings.

The appeal concerned whether either rule was a restriction of competition by object, and whether certain observations on the contractual documents should constrain the remaining Chancery litigation.

1. Appeal dismissed. Newey LJ, with whom Sir Timothy Lloyd and Longmore LJ agreed, held that the Competition Appeal Tribunal had correctly concluded that neither rule was a restriction of competition by object under section 2(1) of the Competition Act 1998.
2. The governing inquiry, drawn from Cartes Bancaires [2014] 5 CMLR 22, is whether the agreement itself reveals a sufficient degree of harm to competition to make consideration of effects unnecessary. The court must consider the provision’s content and objectives and its specific legal and economic context, including the actual functioning and structure of the relevant market. The category of object restrictions is to be construed restrictively.
3. The One Other Portal Rule was properly characterised as a semi-exclusive purchasing obligation. It did not impose absolute exclusivity, was accepted by agents choosing to participate, and operated in a two-sided market in which OnTheMarket was a new entrant without market power. The Tribunal had considered the rule itself, rather than treating the portal’s general pro-competitive purpose as dispositive. It was entitled to find that the rule did not by its nature reveal the requisite harm. Its five-year duration and Agents’ Mutual’s aspirations did not alter that conclusion on the facts found. A different conclusion could arise if market conditions changed and OnTheMarket acquired market power.
4. The Bricks and Mortar Rule defined the nature and scope of the venture. In the absence of market power, it likewise did not reveal sufficient harm to competition to constitute an object restriction. It too could become competitively problematic if OnTheMarket obtained market power.
5. It was therefore unnecessary to determine the grounds concerning objective necessity and severability. The Tribunal’s unargued observation about termination of membership was provisional and did not bind the parties in the continuing Chancery proceedings. The scope of Gascoigne Halman’s obligation to procure group compliance was also left for those proceedings.

• Court of Appeal (Civil Division): dismissed Gascoigne Halman’s appeal in [2019] EWCA Civ 24.
• High Court of Justice, Chancery Division: on 5 October 2017, Marcus Smith J ordered that the competition issues be determined in accordance with the Competition Appeal Tribunal’s judgment as if it had been given in the Chancery proceedings. This was technically the order under appeal.
• Competition Appeal Tribunal: following transfer of the competition issues, rejected the alleged Chapter I infringements in [2017] CAT 15.