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Competition and Markets Authority warns agents over portal choices

After over a year of speculation, the Competition and Markets Authority has stepped into the row over OnTheMarket and its ‘one other portal only’ rule.

It has written an open letter to agents warning against collusion over portal choices. It says it has not written to OTM, but has written to a number of agencies individually seeking more information. This follows a number of complaints lodged with the CMA over the past 18 months.

Estate Agent Today has asked OTM for its comments - these are carried in full at the bottom of this story.

In the meantime, here is a statement accompanying an open letter sent out by the CMA today to all estate agents:

The CMA has issued an open letter warning estate agents that agreeing with rivals which property portals to list on may break competition law.

The move comes after the Competition and Markets Authority (CMA) became aware that some estate agents may be making joint decisions to join the OnTheMarket portal and to remove their business from competing portals, rather than reaching these decisions independently of each other. The CMA has also contacted some agents that it suspects may have been directly involved in such activity.

The CMA is also working closely with the National Association of Estate Agents (NAEA) and The Property Ombudsman (TPO) to raise awareness of this issue.

Ann Pope, CMA Senior Director Antitrust, said: The online portals on which properties are listed is an important aspect of competition between estate agents and the choice of portal must be decided independently and not agreed with competitors. Estate agents that are found to be breaking competition law in this way could face significant fines.

Mark Hayward, Managing Director, NAEA said: All NAEA members should be aware of their obligations in regards to competition law around online property portals. We continue to remind members of these rules, and are happy to work with the CMA on these obligations to ensure agents act independently when deciding which portals to list on.

Katrine Sporle, TPO, said: TPO exists to provide independent redress to buyers, sellers, renters or landlords who feel they have been disadvantaged by the actions of an agent who is registered with the scheme. TPO is pleased to be able to work with the CMA to raise awareness of these issues with agents, and thus provide the best possible platform for consumer protection.

The open letter the CMA has sent to estate agents highlights three important points about competition law and the potential consequences of breaking it, as well as a previous case in which the CMA took action.

Agreeing with your competitors to restrict which suppliers you will deal with is likely to be unlawful. The decision as to whether an estate agent will or will not use the services of a particular property portal must be determined by that estate agent alone (or by its parent company), and must not be determined jointly between competitors.

The CMA continues to monitor the conduct of estate agents. This follows the CMA’s decision in 2015 that an arrangement on the advertising of estate and lettings agents’ fees breached competition law, which prompted the CMA’s subsequent competition law compliance work with the property industry.

The consequences of breaking competition law can be severe. Estate agents found to have breached competition law can be fined up to 10% of their annual worldwide turnover, and directors of infringing companies can be disqualified from UK company directorships for up to 15 years. In addition, individuals involved in certain cartel activity, such as agreements between estate agents to fix prices or allocate markets, may be prosecuted under the criminal cartel offence and could go to prison for up to 5 years and/or have to pay an unlimited fine.

The CMA is keen to assist estate agents and other businesses in the property industry to ensure they understand what they need to do to comply with the law and can recognise where they may be at risk of breaking it.

This afternoon a spokesperson for Agents' Mutual issued a statement saying:

“We are aware that the CMA has today published an open letter to agents about their obligations under competition law when choosing online property portals to advertise their properties. We note that the CMA specifically states that 'The CMA has no reason to write to OnTheMarket in this connection at this time.' 

"In terms of any contact the CMA might have had with any individual agents, it would be inappropriate for us to comment. Agents' Mutual has always been scrupulous in building a pro-competitive business to seek appropriate legal advice and to share that advice with its current and prospective agents.

"The guidance to agents given in the CMA's open letter accords entirely with the advice consistently given over time by OnTheMarket/Agents' Mutual to its current and prospective agents. 

"It has always been clear that in making a choice of 'other competing portal', if any, at the time of joining Agents' Mutual and listing their properties at OnTheMarket agency firms must act independently. Firms must not enter any collective agreement with other agents either (a) to list only at OnTheMarket to the exclusion of all other property portals or (b) to list on the same "other" portal in addition to OnTheMarket. Such an agreement could constitute a breach of Competition Law."

  • icon

    Why does the NAEA endorse OTM - just doesn't make any sense to me.

  • Terence Dicks

    I fail to see how the NAEA still manages to play on both sides of the fence. It openly endorses OTM on the one side, and then on the other side agrees with the CMA. How the hell can you trust such a body??

    Russell Quirk

    Time for the NAEA to step away from this farce and remove themselves from the OTM board, surely?

     
  • Simon shinerock

    This is serious and predicted, agents can't turn back time but crucial decisions will have to be made, it's worth noting that whistleblowers allways receive the most lenient treatment

  • Russell Quirk

    Well well. Better late than never :-) Let's see, did the founding agents of Savills, Knight Frank, Spicer haart, Strutt & Parker, Douglas & Gordon etc all drop Zoopla?

  • Trevor Mealham

    Where's all the hecklers who had a go at those of us who said AM/OTM was operating cartel like. Have they lost the voices??

    In an open market, placing unfair restraints is taboo.

    AM and OTM are shown as two separate Company House registrations with different directors.

    The OTM guys only allow agents in if they comply and support the AM restraints. AM and OTM having different directors who have colluded these restraints have acted to encourage cartel restraints.

    So much so arranging behind closed door meetings. VERY WRONG.

    UK law needs upholding. The driving offenders need to be called for answers and banged to rights in support of prescribed lawful best practices and consumers being fairly treated.

  • icon

    THIS IS VERY IMPORTANT – CUT AND PASTED FROM THE CMA WEBSITE…THE RACE IS ON:

    Whilst PIE decides whether or not to allow this comment, we should all be aware of this:

    Information on how to confess a cartel, the CMA’s leniency programme and what to expect

    https://www.gov.uk/guidance/cartels-confess-and-apply-for-leniency

    A business which has participated in a cartel may receive total or partial immunity from fines if it comes forward with information about the cartel, provided certain conditions for leniency are met.

    The first cartel member to report and provide evidence of a cartel will be granted total immunity, provided the CMA is not already investigating the cartel, does not otherwise have sufficient information to establish the existence of the cartel and the other conditions for leniency are met.
    In this situation, the business will receive:

    – immunity from fines
– immunity from criminal prosecution for any of its cooperating current or former employees or directors
– protection from director disqualification proceedings for all of its cooperating directors

    Or be an informant and earn £100k…

    https://www.gov.uk/government/publications/cartels-informant-rewards-policy

    Trevor Mealham

    Giles H - I know the first agent to report as I told them about the leniency rule many many months ago last year. They reported their view to the CMA and have since left AM/OTM feeling that what AM/OTM was doing wasn't right.

    All said maybe the CMA letter today is an olive branch??

     
  • Rob Bryer

    This is brilliant news! It's good to see something actually happening here. Final nail in the coffin I think.

  • icon

    The arrogance of the founders has been unbelieveable. How dare they have tried to dictate our industry like this.

    They are bringing nothing but a ruinous reputation upon all estate agents. This really is the morning after now and I'm sure many are wondering how on earth they thought they could get away with such abuse of their market leading position and reputation.

    We want a fair honest market place.

  • James Scollard

    Joining On The Market makes commercial sence because the portal is owned by the agents, nor shareholders and the reason everyone dropped Zoopla was because it was the obviously choice due to Rightmove being number 1 and having a much bigger market share. It's good CMA has finally confirmed on the market is not breaking any rules and perfectly legal.

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