CMA releases details of estate agents' cartel scheme

The Competition and Markets Authority has for the first time published details of the findings against a group of six estate agencies which fixed commission rates. 

The agencies – all based in the Burnham-on-Sea area in Somerset – agreed to fix their minimum commission at 1.5 per cent.

The CMA is today giving background information on the 2015 case for the first time as part of a reminder to all agents not to act uncompetitively.

The full CMA statement is below, along with the link to details of the case. 

By publishing its findings in this recent investigation, together with a short case study, the CMA reveals today exactly what the agents involved did, and is also reminding others to comply with competition law and avoid being fined.

A group of estate agents – all based in the Burnham-on-Sea area in Somerset – had a meeting and agreed to fix their minimum commission rates at 1.5% with the aim of making the agents involved more money, so denying local home owners the chance of getting a better deal when selling their property.

“With a bit of talking and cooperation between us, we all win!” was their rationale.

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 as profit as possible!)”.

At the meeting they agreed to form what is known as an illegal ‘cartel’ – when two or more businesses agree not to compete with each other.

The estate agents took steps to ensure the minimum fee agreement was kept to by emailing each other when a specific issue arose, such as accusations of “cheating” on their agreement.

Each business also took it in turn to “police” the cartel to make sure everyone was sticking to the agreement - parties 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!!!!”

Stephen Blake, Senior Director of Cartel Enforcement said: “Cartels are a form of cheating. They are typically carried out in secret to make you think you are getting a fair deal, even though the businesses involved are conspiring to keep prices high.”

“We are committed to tackling cartels regardless of the size of the businesses involved. We have taken action against estate agents before, and remain committed to tackling competition law issues in the sector.”

James Munro, head of the National Trading Standards Estate Agency Team, said: “We welcome the CMA’s reminder to the property sector of the importance of competition law. Being part of a cartel can have serious consequences for both businesses and individuals, so it is crucial that estate agents are aware of their competition law obligations.

“As the industry regulator we use cases like this as a trigger to assess the fitness of an individual or business to engage in estate agency work. This can lead to a formal warning or lifetime ban in engaging in this work.”

The CMA imposed fines totalling £370,084 on five of the six estate agents involved in this cartel.The sixth business involved was not fined as it was the first to confess its participation in the cartel under the CMA’s leniency policy and cooperated with the CMA’s investigation.

https://www.gov.uk/cma-cases/residential-estate-agency-services-suspected-anti-competitive-arrangement-s