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TODAY'S OTHER NEWS

Advertising fees row: Property Centre still awaits CMA contact

The property centre in the middle of the latest controversy surrounding the Competition and Markets Authority says it is still waiting to be told formally about two complaints. 

The CMA is known to have received the complaints - believed to be from two individuals - about the advertising procedure for homes on sale through the Edinburgh Solicitors Property Centre. The ESPC is the trade body whose members handle an estimated 90 per cent of sales in the Edinburgh and Leith areas of Scotland. 

A spokesperson for ESPC told Estate Agent Today last evening that up to that time “the CMA has made no approach to ESPC on this issue.”

The controversy first came to light when The Scotsman newspaper - believed to have been acting on tip-offs - reported over the weekend that the CMA had confirmed its receipt of two complaints.

The issue dates back to a procedure agreed by the ESPC in 2013. 

It says that member firms must take an advertisement through the ESPC for each property it is instructed to sell, irrespective of the specific wishes of vendors. The £370 fee for the advertisement is then typically passed back to the vendor. 

ESPC membership is open to solicitor-run estate agents, which are commonplace in Scotland, while UK-wide chains such as Knight Frank and Savills - which both have conventional agency offices in Scotland - are not allowed as members as they do not have staff conducting solicitor-based activities as well as property transactions.

The ESPC has told Estate Agent Today that: “We are confident the regulations to which our 140 members agree are well within the current CMA guidelines and pose no unlawful restriction to their individual operations. One of the many benefits of being a member of ESPC is the ability to bring together all the properties being sold by member firms through our three marketing streams which has benefits of scale for each solicitor estate agent and their client.”

This latest referral to the CMA follows the authority’s £735,000 fine on three English estate agents for anti-competitive behaviour concerning a trade body and advertising in a local newspaper.

The CMA made it clear at the time, as reported on EAT, that there were drastic consequences of the English agents’ case which agents everywhere should understand. Arguably the most dramatic is that businesses that are found to have broken competition law can be fined up to 10 per cent of their annual worldwide turnover and company directors can be disqualified for up to 15 years.

The Scotsman newspaper says the ESPC’s turnover, according to accounts filed with Companies House for the 12 months to May 2014, was some £4.7m.

There is of course an even worse sanction in the most extreme cases - jail.

“Individuals involved in certain very serious cartel activity, such as price-fixing, may be found guilty of the criminal cartel offence and could go to prison for up to five years and/or have to pay an unlimited fine” says the CMA.

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    Are all estate agents charging 2.5% multiple agency or 1.5% sole agency guilty of price fixing? Many of the high end properties in Central London are listed as joint sole agency by Knight Frank and Savilles'. Is that a cartel? It is certainly a restrictive practice.

  • Rob  Davies

    I think Knight Frank and Savills do as they please and don't really give two hoots. That's certainly how it comes across.

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