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Online property search companies not anti-competitive

No Competition Act breach but further study needed

130/04    19 August 2004

An OFT investigation has concluded that there are no grounds for action under the Chapter II prohibition of the Competition Act 1998 regarding pricing policies in the online property search sector. However, the market as a whole needs further in-depth study which will be conducted by the OFT in due course.

TM Property Services Ltd, one of three online providers of property conveyance searches, complained to the OFT that one of its competitors, Transaction Online (TOL), and MacDonald Dettwiler (Hub) ltd (MDA), the hub operator of the National Land Information Service (through which online providers access property information from local authorities and other information holders) were abusing their dominant positions by adopting pricing policies in order to force TM Property out of the market. TOL and MDA are both subsidiaries of MacDonald Dettwiler Ltd

TM property alleged that TOL was abusing a dominant position by engaging in predatory pricing, and that MDA was abusing a dominant position as the sole information hub operator by raising its wholesale prices to an unacceptable level.

Following an investigation, the OFT has concluded that, as there are currently significant alternative property search methods available to conveyancers – ie the use of direct postal searches or personal search companies –  the online property search sector cannot, at present, be regarded as a separate relevant market. As a result, neither TOL nor MDA can be said to hold a dominant position.

However, there have been a number of complaints in relation to the property search market regarding access concerns with some local authorities which indicate possible problems in the way the market operates. As a result, the OFT will launch a market study when resources allow.

Justin Coombs, Service Industries Competition Enforcement Director, said:

'While our competition investigation has found that there are no grounds for action under the Competition Act in the online property search sector, there are clearly issues in this market as a whole that require further examination to ensure that the market is working effectively.'

NOTES

1. The Competition Act 1998 gives the OFT powers to investigate suspected infringements of the following prohibitions (which mirror the EC competition rules):

i) the Chapter I prohibition prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or any part of it) and which may affect trade within the UK (or any part of it)
ii) the Chapter II prohibition prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).

2. TM Property Services Limited is a joint venture between KPMG, Intergraph (UK) Ltd, Countrywide Assured plc and a number of private equity investors and venture capitalists. It was awarded one of three licences in October 2000 by the Local Government Information House to act as a retail channel operator for the National Land Information Service (NLIS) online conveyancing service.

3. TOL was awarded a licence to act as a retail channel operator for NLIS in October 2000. TOL is a wholly owned subsidy of MacDonald Dettwiler Ltd.

4. A third company Searchflow was awarded an NLIS licence to act as a retail channel operator in April 2001. Searchflow is the trading name of The Conveyancing Channel and is a joint venture between the Property Search Agency –  one of the UK's leading conveyancing search consultancies – and ESRI (Products) Ltd –  one of the UK's leading suppliers of local authority search systems.

5. MDA was awarded the licence to operate the NLIS hub in October 2000 providing online access to data relating to land and property in England and Wales. MDA is a wholly owned subsidiary of MacDonald Dettwiler Ltd.

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