Watchdog issues “strong signal” to rogue agents who price-fix
The Competition and Markets Authority says it wants to send “a strong signal” to the estate agency industry that price-fixing will not be tolerated.
The CMA has in recent times probed three cases of price-fixing amongst agents in different areas. These were:
2019: agencies Michael Hardy, Prospect, Richard Worth, and a fourth company, Romans, broke competition law by running a cartel which set minimum commission rates for sales in Berkshire. They fined more than £605,000 and have only four weeks to pay;
2017: In Somerset the agencies Abbott and Frost, Gary Berryman Estate Agents, Greenslade Taylor Hunt and West Coast Property Services (UK) Ltd all admitted breaking competition law and were fined over £370,000;
2014: Waterfords (Estate Agents) Limited, Castles Property Services Limited and Hamptons International, which were members of the Three Counties Estate Agents Association, entered into an agreement which prevented other members of the association from advertising fees or discounts in a local newspaper. The long-running case ended with a fine of £735,000;
Now the authority says that in setting its penalties for the most recent case – the cartel in Berkshire – it “considers that the need for general deterrence means that the CMA should send a strong signal that anti-competitive behaviour in this sector will not be tolerated.”
In addition, the public are being asked to inform the authorities if they know of agents operating fee-fixing cartels.
The CMA says anyone who has information about any other cartel is encouraged to call the so-called cartels hotline on 020 3738 6888 or email [email protected]
The investigation by the authority into the Berkshire price-fixing included damning evidence of telephone calls, emails and occasional meetings between the agents, including a monitoring system and penalties to try to deter any individual company from breaking the anti-competitive deal.
In its report on the case, issued yesterday, the CMA sets out why it found the agencies guilty:
“The commission fee charged by residential estate agents is an important factor considered by consumers (home sellers) when choosing between estate agents. Consumers who sought quotes from one or more of these estate agents will have been deceived as to the competitiveness of those quotes and may well have approached alternative estate agents had they been aware of the cartel conduct.
“The [agents’] conduct would have had a direct impact on home sellers given the significant cost of selling a home. Depending on the price of the property, the CMA estimates that the conduct could have increased commission fees paid by individual home sellers by hundreds of pounds.
“The conduct involved the setting of minimum commission fee levels to be charged for the provision of residential estate agency services in the Relevant Areas. The commercial objective of the agreement was to ensure that the Parties’ turnover levels and fees were maintained.
“The Parties agreed to the use of penalty payments for breaches of the Minimum Fee Arrangement, and at least two of the Parties developed internal monitoring mechanisms to check compliance. These penalty payments, however, were only enforced on potentially three occasions and the Parties did not always adhere to the Minimum Fee Arrangement.”