CMA tweets out warnings to agents over trade group rules

The Competition and Markets Authority has used Twitter to inform agents of the risks of joining trade assocaitons with loosely-worded or uncompetitively-motivated aims. 

@CMAgovUK has tweeted: Joining an #estateagent trade association? Check membership rules don't break competition law.

It accompanied the tweet with a photograph of an unbranded For Sale board and with a link to a description of the case in which fines of over £735,000 were recently imposed on a local free-paper, an association of estate agents in Hampshire, plus three individual agencies within the assocation.

The CMA now says the agreements made within the association, between the agents and the free-paper, “prevented [other] agents from advertising their fees in the local paper. This limited their ability to compete with each other on their fees, making it harder for consumers to compare prices and get value for money.”

The CMA’s latest warning says there are three consequences of the Hampshire case which agents everywhere should understand.

Firstly, “agreeing with your competitors to restrict the advertising of fees is likely to be unlawful. Advertising fees may be an important way for businesses to compete on price and attract new customers. A business must make independent decisions on the contents of its adverts, including whether to advertise its prices or not.”

Secondly, “trade associations can break competition law. Whilst trade associations can offer many legitimate benefits, where they take actions that limit the commercial freedom of their members, for example by restricting the form or content of their advertising, this can risk breaking competition law. The association, as well as its members, can be fined for such conduct.”

Thirdly and finally, “the consequences of breaking competition law can be severe: fines can be as much as 10 per cent of a business’ global turnover and directors can be banned from running a company for up to 15 years. In the most serious cases, individuals can even go to prison for up to five years.”