The CMA is keeping an eye on property professionals
The Competition and Markets Authority (CMA) have reported on one of their recent campaigns ‘Cheating or Competing’. More information can be found on the CMA’s campaign page.
When there is healthy competition between property professionals and they operate independently, they will naturally compete on price, quality and innovation. When rivals try to undermine competition – for example by illegally colluding to fix prices, such as through fixing commission rates or agreeing to carve up and share markets – this can artificially increase prices. This sort of behaviour is known as a “business cartel”, is illegal and the CMA have taken action against businesses for doing this.
The consequences of getting caught in a cartel are serious
• businesses can be fined up to 10 per cent of annual global turnover
• directors can be disqualified from acting as a director of any company for up to 15 years
• businesses are exposed to third-party damages claims
• in the most serious criminal cases, individuals can face prison for up to five years.
If a company is the first to report being part of a cartel that the CMA is not already investigating and then fully co-operates, it can benefit from immunity from fines and its co-operating directors can avoid director disqualification. This is what one estate agent did in a recent case; as a result, it did not receive a fine and its directors obtained immunity from director disqualification.
In December 2019, three estate agents were fined more than £600,000 for taking part in an illegal business cartel by agreeing minimum commission fees for selling residential properties in Berkshire, England. The estate agents, and one other, held secret meetings to agree those minimum fees, which meant that local Berkshire residents were denied the opportunity to shop around and get the best deal.
This recent case is the third one the CMA have taken on in recent years in the sector. Others include fining three members of the Three Counties Estate Agent Association £735,000 for breaking competition law in relation to letting and estate agent fees, and fining four estate agents in Somerset more than £370,000 for colluding to set minimum commission rates.
For more information, including how best to report concerns to the CMA, visit the CMA’s campaign page.