Price Fixing Cartel:
Three Berkshire estate agents have been fined by The Competition and Markets Authority (CMA) more than £600,000 for agreeing between themselves to fix minimum commission rates they charged their customers.
Following an investigation by the CMA, the companies involved in the illegal cartel, Michael Hardy, Prospect and Richard Worth, along with a fourth company, Romans, broke competition law by taking part in the price-fixing cartel, which began in September 2008.
The CMA claims that for almost 7 years the 4 companies conspired to set minimum commission rates for the sales of residential properties in Wokingham, Winnersh, Crowthorne, Bracknell and Warfield, locations where these companies were the leading estate agents at that time.
The firms were found to be exchanging confidential information on pricing and holding meetings between themselves to ensure the cartel members enforced and maintained the agreed minimum rates. The result was, says the CMA, that local home-owners were denied the chance of securing the best possible deals when selling their properties because they were unable to meaningfully shop around locally for a competitive price on commission rates.
Romans escaped a fine as it brought the illegal activity to the CMA’s attention and fully cooperated with the investigation, under the CMA’s Leniency Programme.
The fines imposed, according to the CMA, “take into account the behaviour of the companies involved. Michael Hardy’s and Prospect’s fines have been discounted to reflect the fact they admitted to illegal behaviour and agreed to cooperate with the CMA, thereby shortening the length of its investigation.”
In the case of Romans, which is part of the national Leaders chain, with 140 branches across the UK, was exempted from the fines as it had come clean and reported the matter to the CMA.
Peter Kavanagh, the chief executive of Romans told The Guardian newspaper:
“In June 2017, senior directors of Romans became aware that some years ago a small number of Romans residential sales executives across a few branches had acted in a manner totally contrary to the standards and values of the company. We immediately alerted the CMA.”
Michael Hardy’s and Prospect’s fines were reduced discounted to reflect the fact they admitted to illegal behaviour and agreed to cooperate with the CMA. Michael Hardy’s managing director, Neal Mackenzie, said: “A very poor decision was made and it is difficult not to conclude that a line that should not have been crossed was.”
Mark Hayward, chief executive of the National Association of Estate Agents told The Guardian:
“We are very aware of the implications of forming an estate agents’ cartel and have been vigorous in our promotion of the CMA’s Stop Cartels campaign to educate agents about price-fixing, market sharing and bid rigging. We continue to urge all our members to adhere to current legislation to ensure best practice to avoid falling foul of the law.”
CMA: Michael Hardy is being fined £142,843. This includes a reduction of 10% for settlement. Following the CMA’s provisional decision in June 2019, Michael Hardy agreed to settle the investigation with the CMA. By settling with the CMA, Michael Hardy admitted being part of the cartel, and agreed to pay the penalty and to a streamlined procedure. Prospect is being fined £268,765. This includes a reduction of 50% under the CMA’s Leniency Programme and 10% for settlement. As in the case of Michael Hardy, by settling following the CMA’s provisional decision, Prospect admitted being part of the cartel, and agreed to pay the penalty and to a streamlined procedure. Richard Worth is being fined £193,911.
Michael Grenfell, CMA Executive Director of Enforcement, had said:
“It is disappointing we’ve found yet another case of estate agents breaking competition law. We trust that the fines issued today (Wednesday 18 Dec 2019) will reinforce our message that we expect the sector to clean up its act and make sure customers are not being ripped off in this way. The industry needs to take note: this kind of behaviour will not be tolerated. If you break the law, you risk similar consequences.”
The latest case is the third one in recent years that the CMA has taken against estate agents. Others include the fining of three members of the Three Counties Estate Agent Association £735,000 and fining 4 estate agents in Somerset over £370,000 for similar offences.