Real Insights

'Agents in Cahoots'
Real Insights

Real Insights - Property Update

07 July 2015

Fleet in Hampshire has been named the happiest town in Britain for the last four years in a row. But some of its estate agents have concerns.

'Agents in Cahoots'

Fleet in Hampshire has been named the happiest town in Britain for the last four years in a row.  But some of its estate agents have concerns.

A while ago, three leading firms got together and decided none of them would publish their fees in the local newspaper. 

The agents were careful not to fix fees between themselves – which would be illegal.  They simply agreed none of them would include their own fees in newspaper adverts.  They also persuaded the local paper not to publish other agents' fees.

Is there a law against this?

The three estate agents thought it would be OK.  After all, there was nothing to stop a potential customer (or a potential new competitor posing as a customer) approaching each of the agents and asking them individually for details of their fees.

But these three estate agents, and the newspaper publisher, have now been fined a total of £735,000 by the Competition and Markets Authority (CMA). 

The CMA said that this arrangement had the object of reducing competitive pressures on estate and lettings agents' fees in the Fleet area.  It would be harder for new agents to enter the local market using lower fees to attract customers.

If one estate agent decides not to publish its fees in its own advertisements, but does not make any arrangement with any other agent that it will do the same, then that is lawful. 

The problem here was that the three agencies were all in cahoots.  And the fact that they persuaded the newspaper not to publish other agents' fees only made matters worse.

Other agents warned

The total fines in the Fleet case were relatively modest.  This reflected the fact that the parties co-operated with the CMA's investigation and admitted their liability.

However, the CMA has now sent warning letters to agents in other parts of the country, saying there are grounds to suspect them of anti-competitive arrangements to restrict advertising of fees.  This is an attempt to achieve a change in behaviour without the need for further legal action. 

The CMA has issued an open letter to the property industry, available on the CMA's website.  Property businesses cannot say they have not been warned.

Andrij Jurkiw is a partner in our Litigation Department.  He specialises in all aspects of UK & EU competition law and leads the Competition Team.