Fee-fixing: CMA sets out what agencies can and cannot do and say

The Competition and Markets Authority has set out precisely what agents and other companies can and cannot do in the event of any discussion about commercially sensitive information on current and intended fees and pricing.

In recent years there have been two celebrated cases where the CMA discovered and penalised agencies that had been participating in cartels. One was in Hampshire and the other in Somerset. 

Now the CMA has backed this up with explicit advice following a case in another industry - the manufacture of steel tanks. 

Late last year the authority found that a tanks supplier, Balmoral, along with three other businesses, had breached competition law by taking part in an exchange of competitively-sensitive information on prices and pricing intentions.

Balmoral has now been fined £130,000 for taking part in this unlawful information exchange, which took place at a single meeting in July 2012.

Balmoral was not a party to the main price-fixing cartel formed by some other firms - and which was the subject of a separate case by the CMA, involving a £2.6m penalty - but the fine for Balmoral comes simply because it exchanged the information at a single meeting.

In a statement to all companies in price-sensitive competitive sectors, the authority says: “Any business that is approached to join a cartel, or become involved in anti-competitive arrangements – for instance, to coordinate pricing or to share out markets between them - must immediately reject the approach, and must do so clearly and unequivocally. It is not enough to refrain from price-fixing or market-sharing. The business (and its representatives) must leave the meeting, and make clear and explicit its refusal to take part.”

The business must also refuse to participate in any discussions that involve the sharing of confidential and competitively-sensitive pricing information.

“The CMA brought this case to send a strong signal to companies about these critical compliance obligations, which are needed to protect customers from the higher prices which result when competing businesses collude on price or business strategy, including through the exchange of competitively-sensitive information” says Michael Grenfell, the CMA’s executive director for enforcement.

“The CMA is aware that Balmoral did not participate in the main price-fixing cartel, and this is reflected in the relatively low fine imposed on it. But exchanging competitively-sensitive confidential information, even at just one meeting, is itself a breach of competition law.” he continues. 

The authority says the size of Balmoral’s fine reflected the fact that it had not actually participated in the cartel and had extensively cooperated with the CMA’s investigations. 

Simon Barnes, a commercial partner and competition expert at Shoosmiths LLP - where he advises numerous large corporates and SMEs on competition regulation and breaches - wrote a feature for Estate Agent Today last weekend stating that evidence presented by the CMA in its decision on the Somerset cartel suggested pricing discussions between estate agencies may be relatively common.

Now any agent doing this risks extensive penalties, even if they do not go on to participate in any cartel itself.