Rightmove PLC (LSE:RMV) confirmed that it has received notice of a potential legal claim against it, following recent press reports.
"We're confident in the value we provide to our partners," the FTSE 100 company said, adding that it will provide further updates "as appropriate".
A collective claim for up to £1 billion in damages has been launched, accusing the property portal of charging its thousands of UK estate agent customers "unfair and excessive" fees.
The Competition Appeal Tribunal case is being led by Jeremy Newman, a former panel member for the UK’s competition watchdog, who told media the action will "seek to return the overpaid fees to estate agents across the country".
He said Rightmove “exploits its dominance of the online property portal market in the UK to charge excessively and unfairly high subscription fees, both at face value and when compared with its competitors”.
Newman claimed the portal’s profit margin of about 70% showed its ability to impose steep annual increases, arguing that agents had to absorb “consistent, excessive price increases on a regular basis”.
The proposed action is backed by litigation funder Innsworth Capital.
Analysis from property search app The Property DriveBuy shows Rightmove’s costs accounted for an average 7.2% of an estate agent’s monthly sales commission, rising to as much as 13.5% in Glasgow and 12.4% in Newcastle.
Estate agents in cities like Liverpool, Edinburgh, Cardiff, Manchester and Birmingham were paying around 9% of their commissions, while estate agents in London could see the figure drop to around 2.9% of earnings.
Steve Foreman, founder of The Property DriveBuy, told the Estate Agent Today website: “It’s clear from our research that many agents are paying a disproportionate share of their hard-earned commission to Rightmove, particularly in regions where property values and fees are lower. At a time when operating costs are already under pressure, this model feels increasingly unsustainable for independent agents."