Four estate agents fined £372,233 for anti-competitive price-fixing

First published by Admin on May 26, 2017 in the following categories: Investigations and tagged with cma | price fixing

Four residential estate agencies admitted to anti-competitive practices for price-fixing and have been fined thousands of pounds as a result.

In December 2015, an investigation was launched by the Competition and Markets Authority (CMA) after a previous CMA investigation into the advertising of fees in the estate and letting agency sector. The current investigation looked into whether the estate agents breached Chapter I of the Competition Act (CA). In simpler terms, Chapter I of the CA highlights agreements between companies that prevent, restrict or distort competition.

What they found was evidence of anti-competitive behaviour.

The investigation found that the estate agents anti-competitive activity started in February 2014 and lasted for over a year. The agreement set a minimum commission rate for residential property sales at 1.5%, which had the effect of potentially denying local home-owners who wanted to sell their property the chance of securing a better deal in the Burnham-on-Sea area in Somerset. Commission rates in the U.K. usually range from 0.75% to 3.0% and most estate agents are normally open to negotiating commission rates.

Illegal cartel

On 2^nd March 2015, four estate agents admitted to conspiring in an illegal cartel in relation to providing residential estate agency services in the Burnham-on-Sea area. After they admitted their wrongdoing, they also agreed to pay fines amounting to £372,233. The fine is imposed at a discounted rate as the companies admitted to their wrongdoing and cooperated with the CMA’s investigation.

According to the CMA, the fifth member of the cartel wasn’t fined as they were the first company to cooperate and confess to participation in its arrangement. This is on the condition that they continue to cooperate in the investigation.

The CMA are continuing their investigation into the 6^th member of the alliance but there are no conclusive findings and there shouldn’t be an assumption that they’ve infringed the law.

On 8^th March 2015, the CMA issued a statement of objections who alleged that 6 estate agents in the Burnham-on-Sea area breached competition laws when they partook in an agreement to fix prices.

Estate agents involved and fines imposed

The estate agents concerned are as follows:

The first 4 estate agents who admitted their participation in the illegal agreement have been fined. Annagram Estate Agents is the one who first confessed of the wrongdoing and were consequently not fined.

Greenslade Taylor Hunt was fined the greatest amount (£186,054). The Chairman of the company, Charles Clark, tried to justify the actions by stating that the company’s involvement was as a result of ‘misguided’ actions of one of its partners.

Abbott and Frost were fined £30,099; Gary Berryman Estate Agent were fined £97,807; and West Coast Property Services were fined £58,273.

Importance of protecting homeowners/consumers

Stephen Blake, Senior Director at the Cartel Enforcement, highlighted the importance of protecting home-owners, saying:

“…moving home is expensive and this shouldn’t be made worse by estate agents conspiring to deny their customers the best possible deal, by agreeing not to compete on fees.”

He continues to note that:

“…price-fixing cheats customers, and we’re committed to tackling it regardless of the size of the business involved. We have taken action against estate agents before, and will do so again if firms break the law.”

The CMA are keen on whistle-blowers and they encourage others who have evidence or grounds of suspicion that competition laws are being broken to come forward and report their concerns to the competition watchdog.

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