New warning to estate agents over illegal price-fixing
The estate agency industry is still under the spotlight for possible illegal price fixing cartels according to the Competition and Markets Authority.
In recent years the CMA has taken action against three examples of anti-competitive practice in the property sector and the latest warning, issued yesterday, was contained in a document outlining how companies can break the law even through ‘apparently innocent’ conversations.
The CMA highlights the case of five Somerset estate agencies which in 2017 were fined over £370,000 and saw four of their directors being subsequently disqualified.
The rival agents all fixed their minimum commission rates at 1.5 per cent and according to the CMA their rationale was contained in an email between some of the conspiring firms which said ‘…with a bit of talking and co-operation between us, we all win.’
Email evidence also explained how ‘the aim of the meeting…will be to drive the fee level up to 1.5%’ and ‘…it’s really important we all give it the priority it deserves (making as much profit as possible)’.
Each business took it in turn to ‘police’ the illegal agreement. According to additional email evidence obtained in the CMA probe, agents were to report any issues ‘to the policeman immediately and get the matter resolved rather than let it fester and risk the agreement falling apart!”
The CMA says the lessons which the agency industry should learn from this case include:
– being careful when talking business with competitors and being especially wary of any conversations about pricing, or about a shared approach to pricing. “Rival businesses must decide and set prices independently of each other” says the authority;
– being aware that competition law applies to small businesses as well as large ones – the agencies in this case were small local or regional businesses.
The authority also issues a warning to the industry in the document when it says: “The CMA has now taken three enforcement cases in the property sector and remains committed to tackling anti-competitive conduct in this sector.”