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Estate agents fined £370,000 for forming secret illegal cartel

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  • 18/09/2017
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Estate agents fined £370,000 for forming secret illegal cartel
The Competition and Markets Authority (CMA) has questioned whether estate agents are taking serious consideration to anti-competition business practices.

Its statement follows enforcement action taken against six estate agents for forming a secret cartel to artificially raise commission rates.

The CMA fined the group a combined £370,084 – although one member was let off for being the first to confess its participation and for its co-operation.

The regulator said: “This is the second time the CMA has taken enforcement action against estate agents in recent years, and raises concerns that estate agents do not properly understand the seriousness of anti-competitive conduct and the consequences of breaking competition law.”

 

Gang of six

The gang of six estate agents met in early 2014 and agreed to fix minimum commission rates at 1.5% with the aim of making the agents involved more money.

However much of their plans were made over email, which proved a significant source of evidence for the CMA investigation.

“With a bit of talking and cooperation between us, we all win!” was the initial aim, with the “intention of making as much profit as possible”.

At the meeting they formed the illegal cartel – by agreeing not to compete with each other and then took steps to ensure the minimum fee was kept to by emailing 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!!!!”.

 

Four confessions

All the estate agents were based in the Burnham-on-Sea area in Somerset.

They were: Abbott and Frost Limited; Annagram Estate Agents Limited (trading as ‘C J Hole’); Gary Berryman Estate Agents Ltd (and its parent company Warne Investments Limited); Greenslade Taylor Hunt; Saxons PS Limited and West Coast Property Services (UK) Limited.

Annagram Estate Agents was not fined for being the first to confess its participation in the arrangement under the CMA’s leniency policy and co-operated with the CMA’s investigation.

Four agencies Abbott and Frost, Gary Berryman, Greenslade Taylor Hunt and West Coast also admitted their participation to the CMA early on in the investigation and thus their fines included a discount to reflect savings due to their admissions and co-operation.

Fines for West Coast and Greenslade Taylor Hunt also included reductions for leniency under the CMA’s leniency policy.

 

Tackling sector issues

CMA senior director of cartel enforcement Stephen Blake warned that estate agencies continued to be a target of the CMA.

“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,” he said.

“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.”

National Trading Standards estate agency team head James Munro added: “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.”

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