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Four estate agents pay £370,000 after admitting price-fixing

Four Somerset estate agents have agreed to pay fines totalling over £370,000 to the Competition and Markets Authority, after admitting illegal price-fixing.

The businesses - Abbott and Frost Limited, Gary Berryman Estate Agents Ltd (and its parent company Warne Investments Limited), Greenslade Taylor Hunt and West Coast Property Services (UK) Limited – have admitted breaking competition law by taking part in a price-fixing cartel in the Burnham-on-Sea area.

The CMA says this saw them collude to set minimum commission rates for residential property sales at 1.5 per cent with a view to denying local home-owners selling their property the chance of securing a better deal.

“Moving home is expensive and this shouldn’t be made worse by estate agents conspiring to deny their customers the best possible deal, by agreeing not to compete on fees” says Stephen Blake, the CMA’s senior director of cartel enforcement.

“Price-fixing cheats customers, and we are committed to tackling it regardless of the size of the businesses involved. We have taken action against estate agents before, and will do so again if firms break the law” he continues.

The businesses involved agreed to settle with the Competition and Markets Authority after a year-long investigation. 

The authority says another company, Annagram Estate Agents Limited (trading as ‘C J Hole’), will not be fined - “as long as it continues to cooperate” – as it was the first company to confess its participation in the cartel. 

This is the second case brought by the CMA against estate agents in recent years.

The previous case saw members of the Three Counties Estate Agent Association fined £735,000 in 2015 and resulted in the CMA launching a campaign designed to improve understanding of the law within the agency industry. 

A statement from the authority says: “It was this campaign that resulted in the current case being brought to the CMA’s attention, and we encourage others with evidence of competition law being broken to report their concerns to the CMA.”

  • Kristjan Byfield

    With buyers having the choice of other agents outside of this 'cartel' as well as options for online agents I dont really see how this is unfair/unjust. 1.5 is not hefty- had they set the minimum well above the national avg then that may be something. What's more, if I was one of the ones fined I'd be rather miffed about the agent from the biggest company involved getting away scott free! Persoanlly this seems really harsh.

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    • J T
    • 02 March 2017 15:30 PM

    Competition is healthy, everyone agrees to that. But this article and situation has tried to portray these agents as bad as drug barons. It's not unfair to the consumer due to there being a ton of online agents now who charge a tiny amount as it is. These vendors still have those options. I can't say exactly why these agents have come to the conclusion they did but I can only see a conversation where, after discussing the problems facing estate agents today, they saw an option. 'Let's all agree to have the same fee, that way the business we get is down to how hard we work for it and not just an attractive price tag with no backing.'
    Or am I being too naive here?

    Jon  Tarrey

    Steady on. I don't think anyone is saying that these agents are equivalent to drug barons or mafiosos, but what they've been involved in has still deliberately cheated consumers by not allowing them to get the best possible deal. I thought agents were all about the customers? I thought agents were only interested in providing the best service to their clients, not the profits?

    An isolated case, yes, but an important one. Traditional agents shouldn't get a free pass because they're traditional. They should be held to the same standards - higher standards, even - as everyone else. If the likes of PB are going to get regular criticism for their practices, when trad agents do something wrong they should be called out on it and punished in a fair and appropriate way. I think that's what happened here.

    All these double-standards are staggering, and it does no favours for the old boys club to leap to the defence of any traditional agent who has done something iffy. When the supermarkets were accused of price-fixing, they were hammered. This is clearly not the worst crime ever committed, but its seriousness shouldn't be diminished because it paints a less than flattering light on the workings of some agents.

     
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    • J T
    • 03 March 2017 13:19 PM

    Yes you are most certainly being naïve here!

    Of course it's unfair to the consumer. They have done it to protect their income stream. If it didn't prevent the consumer from potentially getting a better deal they wouldn't have done it.

    "A conversation where they saw an option 'Let's all agree to have the same fee'" neatly demonstrates your naivety as it sums up exactly what is meant by collusion to fix prices. other wise known as a cartel. It's highly illegal 9hence the fines) and if you can't understand this you should not be in business.

     
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    Completely agree with the above comments (Gareth and Kristjan)

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    A cartel is a cartel. If agents want to be taken seriously as the trustworthy face of agency, they cannot expect different treatment when they knowingly break the law.

    These agents have just handed a wonderful PR coup to those agents who claim they are breaking the mould of 'dodgy/ high-cost' agents and are looking after consumers interests by 'cutting fees'.

    Daniel Roder

    Well said.

     
  • Jon  Tarrey

    Very naughty from the agents involved, reflected in the severity of the fine.

    To those jumping to the defence of the agents, saying they've not done anything wrong and the penalty is way too harsh, would you be quite as forgiving if this was Purplebricks, eMoov or Countrywide involved? Can't be different standards for different agents, depending on which side you agree with. As Chris Wood says, a cartel is a cartel and this story is like catnip to the online/hybrid agents who will now be firmly pointing out that agents aren't on the side of consumers at all. Not very bright.

  • James Robinson

    Anything below 1.5% would be a poverty fee which, given the huge costs of running an estate agency, is the minimum an agency should charge to simply survive. As tempting as it may be, it is lazy and wrong to form a cartel to defend ones fees. We all have to deal with "How much and what's your fee" customers but if you are loosing instructions on fees you really should be looking at how you conduct your business. If you cant convince a potential client that you will add value and are worth the fee you are asking then its probably time you changed profession.

  • Rob  Davies

    "The authority says another company, Annagram Estate Agents Limited (trading as ‘C J Hole’), will not be fined"

    There must be a punchline in there somewhere, or am I just being childish? Anyway, the incident itself is no laughing matter. I agree that 1.5% is not exactly hefty and their actions were far from the worst in the world, comparatively speaking. But they still broke the law, and knowingly at that, and might have got away with it had the above agency not admitted their part in the cartel. At the very best, it's underhand and shifty, which is not the perception we want to be putting across of agents.

    The fine is probably a bit too excessive, but they clearly want to dissuade others who might be thinking about doing something similar. I can certainly understand why it's so high.

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    • J T
    • 03 March 2017 13:23 PM

    "At the very best, it's underhand and shifty"

    No, it's highly illegal.

     
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    Bloody hell! Agents not aware that the formation of a cartel is illegal. Agents pompously suggesting that if you 'can't justify your fee you're in the wrong business' that can't even spell 'losing'!
    No wonder the industry is in a state of flux!

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