Companies file claim and counter claim in aftermath of supermarket’s sale of embryonic online home-selling business
Tesco is embroiled in a bitter court battle with the estate agents Spicerhaart in which the two companies are trading accusations over their thwarted ambitions to create an online home-selling portal to rival Rightmove using Tesco’s marketing muscle.
Spicerhaart had acquired an embryonic online business Tesco Property Market (TPM) after the supermarket group’s ambitions to break into home-selling were blown off course by a ruling from the Office of Fair Trading (OFT) in 2008.
Under the terms of the sale four years ago, Tesco agreed not to seek repayment of millions of pounds invested in the venture for a period. Meanwhile, Spicerhaart are claiming, Tesco allegedly promised to continue to offer marketing support for the business, rebranded as iSold.
Tesco insists that it provided some marketing support, including a link on its homepage and data access on about 16 million users of its Clubcard loyalty scheme. The supermarket group claims Spicerhaart – which owns the Haart, Felicity J Lord and Spicer McColl chains and is controlled by Essex-based businessman Paul Smith – had failed to keep its promise of a nationwide service, only allegedly offering iSold in six city areas.
Latest accounts for Indigo Ltd – as Spicerhaart renamed the former TPM – refer to a £3.37m loan from Tesco, which fell due earlier this year. “Legal action is being taken to challenge this liability, which is also the subject of a guarantee from Spicerhaart Group,” it said.
Tesco has filed a claim with the high court for repayment of this overdue loan. Meanwhile, Spicerhaart has lodged a counter claim for a larger sum.
In the summer of 2007 TPM appeared to be a bold new entrant in the estate agency market, appealing to homeowners who felt traditional percentage fees on house sales did not represent value for money.
It offered customers the opportunity to market their home for a flat fee of just £199, instead of an agent’s traditional fee of about 2%. The fee entitled customers to a Tesco “for sale” sign and a listing on its Tesco Property Market website.
But the venture ran into problems and the OFT ruled that Tesco was providing more than an advertising service and would need to meet all the criteria of a traditional estate agency, including having people on the ground checking the property descriptions were accurate. The retailer ended privates sales on the site as a result.
The foray into the property market came amid a wider Tesco surge to diversify online, which also saw it launch a Tesco Cars website last year, offering customers an internet forum to sell their second-hand vehicles. That business, a joint venture with Auto Online Ltd, where car leasing tycoon Sir Trevor Chinn was a shareholder, also proved ill-fated, collapsing into administration in May this year.
In its report to creditors, administrators from Grant Thornton said: “The continuing uncertain economic trading conditions and a general lack of good-quality, second-hand cars to offer via the Tesco Cars website, resulted in poor performance of the business.”
Other additions to the rapidly expanding Tesco’s online offer have included the acquisition of TV and film-streaming business Blinkbox and the digital-book platform Mobcast, in which Bravo Two Zero author Andy McNab had been a shareholder. In June, the supermarket group also acquired a majority stake in We7, an internet radio service co-founded by Peter Gabriel.
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