The Competition and Markets Authority is reported to have received two complaints about a property centre, accusing it of breaking anti-competition rules by forcing its members to advertise through its own marketing channels.
The Edinburgh Solicitors Property Centre is the subject of the complaints, which are believed to have come from two individual members of the public.
The Scotsman newspaper reports that in 2013 the ESPC published a new agreement, which every member had to sign, requiring member firms to take out an advert with the ESPC for each property on its books – even if the individual vendor would prefer to use other methods, such as local media or independent portals.
The Scotsman says the £370 cost of the advert is then passed on to the seller.
The newspaper claims that any member firm failing to market a property this way, through the ESPC, risks expulson from the group, which is reported to handle around 90 per cent of sales in Edinburgh and the Lothians.
ESPC membership is open to solicitor-run estate agents, which are commonplace in Scotland, while UK-wide agency chains which do not have solicitor-based activities as well are not allowed to be members.
Estate Agent Today has received this statement from ESPC:
“The CMA has made no approach to ESPC on this issue. However, 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 involvement of 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 three consequences of the English agents’ case which agents everywhere should understand:
Firstly, “agreeing with your competitors to restrict the advertising of fees is likely to be unlawful. Advertising fees may be an important way for businesses to compete on price and attract new customers. A business must make independent decisions on the contents of its adverts, including whether to advertise its prices or not.”
Secondly, “trade associations can break competition law. Whilst trade associations can offer many legitimate benefits, where they take actions that limit the commercial freedom of their members, for example by restricting the form or content of their advertising, this can risk breaking competition law. The association, as well as its members, can be fined for such conduct.”
Thirdly and finally, “the consequences of breaking competition law can be severe: fines can be as much as 10 per cent of a business’ global turnover and directors can be banned from running a company for up to 15 years. In the most serious cases, individuals can even go to prison for up to five years.”
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.