13th January 2012
The proposed merger between Zoopla and Digital Property Group (Primelocation, Findaproperty) – in a bid to do battle with the supremacy of Rightmove – is being held up while it is studied by the Office of Fair Trading.
While clearance of the deal could be through by the end of February, if the OFT were to decide to refer the merger to the Competition Commission there could be a further six months’ delay.
On Wednesday, a number of estate agents were surprised to receive emails from the OFT asking them for their views on the proposed merger – despite the fact that it was announced three months ago on October 14.
The agents have been given the opportunity to express any concerns, but have been given only one week – until January 18 – to respond.
The comprehensive list of OFT questions asks whether agents consider Zoopla and/or Digital to be close competitors to Rightmove, whether they have ‘threatened’ to switch from one to another and why, and what they feel the impact of a merger could be.
It also asks for agents’ views on portals’ prices, and whether they feel there are viable alternatives to using the portals.
It asks, for example, if agents would consider switching providers if a portal raised its prices by between 5% and 10%. In fact, Rightmove is this year raising its prices by 21%.
One set of questions specifically asks agents for the actual amounts they are paying to each of the big portals.
Separately, the actual merger will involve Zoopla buying the entire share capital of Digital from A & N Media Investments, which is the consumer division of Digital Mail and General Trust, to form a new larger company. Zoopla will then sell back 55% of the shares in this new entity to A & N.
Yesterday evening, a spokesman for Zoopla said: “We can confirm that the OFT is currently looking at the merger to ensure that it does not raise any competition concerns, as is their normal process with mergers of this high profile.
“Given Rightmove’s dominance, we firmly view this transaction as being pro-competitive and good for agents who have been crying out for a genuine competitor to Rightmove for years.
“We are doing a lot of work with the OFT and are hopeful that clearance will be obtained to complete the deal.
“Once we complete the deal, we intend to change Rightmove’s dominance by being the most cost-efficient advertising option for agents and creating real competition in the market.”
Bushells comments that "A credible competitor to Rightmove is a good thing for agents and consumers as currently there is disparity in terms of market share. With such a merger creating another super portal, there will be more competitive pricing and a battle for more innovative products. This referreral is not ominous, rather mandatory for any business which will have more than 25% market share or a turnover of £70m plus. We are confident the merger will be endorsed"
Readers who wish to comment on the proposed merger can email firstname.lastname@example.org