6 Somerset estate agents fined £370,000 for commission price-fixing

CMA fines estate agents cartel £370,000 for rate fixing

A group of estate agents who secretly conspired to keep their fees high to make “as much profit as possible” have been fined £370,000 for operating an illegal cartel.

The Competition and Markets Authority (CMA) said this was the second time in two-and-a-half years that it had taken enforcement action against estate agents, and this latest case raised concerns that the sector “does not properly understand the seriousness of anti-competitive conduct and the consequences of breaking competition law”.

The six estate agents, all based in the Burnham-on-Sea area of Somerset, had a meeting and agreed to fix their minimum commission rates at 1.5%, thereby denying local homeowners the chance of getting a better deal when selling their homes. Between them the agents dominated the local area: their market share was said to be potentially as high as 95%.

The CMA said it was publishing full details of the case to remind other agents to comply with the law and avoid being fined.

Penalties totalling £370,084 were imposed on five firms: Abbott and Frost Estate Agents Limited, Gary Berryman Estate Agents Ltd (and its ultimate parent company Warne Investments Limited), Greenslade Taylor Hunt, Saxons PS Limited, and West Coast Property Services (UK) Limited.

The sixth, Annagram Estates Limited, trading as CJ Hole, has not been fined as it was the first to confess its involvement in the arrangement and cooperated with the investigation.

The price-fixing cartel was formed in early 2014 when the estate agents met with each other to “have a chat about fees”.

Email evidence showed that the agents’ rationale was “With a bit of talking and cooperation between us, we all win!”. The correspondence 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!)”.

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.

However, in December 2015 the CMA carried out searches of the estate agent offices and seized documents and digital material. 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.”

He added: “We have taken action against estate agents before and remain committed to tackling competition law issues in the sector.”

In May 2015 the CMA ruled that three members of an association of estate and letting agents, the association itself, and a newspaper publisher infringed competition law. That case involved the advertising of fees in the area around Fleet in Hampshire, and resulted in penalties totalling more than £735,000 being imposed.

https://www.theguardian.com/money/2017/sep/18/cma-fines-cartel-of-estate-agents-rate-fixing-burnham-on-sea

One thought on “6 Somerset estate agents fined £370,000 for commission price-fixing

  1. It’s a pity that the fines and criminal records are not also made against the individuals concerned – as that would be far more likely to deter others from doing the same in future.

    Like

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