Rightmove was dealt a new blow this week, with reports that thousands of estate agents could seek up to £1 billion in damages amid claims the property portal had been ‘abusing its dominant market position’ by charging ‘excessive and unfair’ subscription fees.
In a case due to be brought to the Competition Appeal Tribunal, Jeremy Newman, a former panel member of the Competition and Markets Authority, said he is preparing collective legal action on behalf of thousands of estate agents across the UK.
Newman said the claim will ‘seek to return the overpaid fees to estate agents across the country’, and accused Rightmove of exploiting its dominance of the UK’s online property portal market ‘to charge excessively and unfairly high subscription fees, both at face value and when compared with its competitors’.
Analysis by The Property DriveBuy revealed Rightmove’s costs account for an average of 7.2% of estate agents’ monthly sales commission. In Newcastle, where property prices are among the lowest in the country, commission is as high as 12.4%. In London, commission is just 2.9%. Agents in Liverpool, Cardiff, Manchester and Birmingham pay around 9%.
Rightmove acknowledged it had been notified of a possible claim in a brief statement, saying:
“We’re confident in the value we provide to our partners. Further updates will be provided as appropriate.”
The action was criticised by Anthony Codling, managing director, equity research at RBC Capital Markets. ‘The fact that estate agents don’t like paying fees to Rightmove is hardly breaking news’, he pointed out.
“Are the fees uncompetitively too high? Fees are in the eye of the beholder. Is a business class flight from London Heathrow to JFK too expensive? For many of us yes, but cheaper seats are available that get you to the same destination on the same plane at the same time. Some willingly choose to turn left and the rest of us turn right.
“Rightmove offers a range of packages to its customers, and they choose which to pay for. They balance the return on investment – if I spend a few pounds more will I make a greater return (win more instructions or make efficiency gains which justify the costs)? Just like asking prices for houses, if the price is too high, make a lower offer or buy another house. Very few of us choose to sue the supplier.”
Earlier this week, Rightmove shares slumped in response to an announcement the company would be investing heavily into AI. The move was defended by RBC Capital Markets, which said investors had overreacted to the news and Rightmove would ‘change the game’ with its AI capabilities.
Shares fell again on Thursday amid news of the collective action, ending the day down 2.09%.
One Response
If the Estate Agents intend to bring a claim against Rightmoves alleged “‘excessive and unfair’ subscription fees”, maybe home sellers should bring class actions against Estate Agents for alleged excessive commissions.