EYE Newsflash: Two agents ‘disqualified’ as directors in wake of ‘cartel’ case

The Competition and Markets Authority (CMA) has this morning announced  that two agents involved in the Burnham-on-Sea cartel case have given  undertakings that they will not act as directors of any UK company.

David Baker, former director of estate agency Abbott and Frost Estate Agents, has given a disqualification undertaking not to act as a director of any UK company for three and a half years.

Julian Frost, another director of Abbott and Frost, has given a disqualification undertaking not to act as a director of any UK company for three years.

Abbott and Frost were among five Somerset agents fined more than £370,000 last year for secretly agreeing between themselves the fees they would charge – 1.5%.

The CMA’s investigation showed that a number of directors were actively involved in the cartel or were aware of it, and failed to take steps to stop it. Today, the CMA said it is continuing to investigate whether to seek the disqualification of other directors of companies involved in the price-fixing cartel.

However, it added: “Provided they continue to comply with the terms of their leniency agreement, however, the CMA will not seek the disqualification of the co-operating directors of three of the estate agents, which qualified for leniency under the CMA’s leniency policy.”

Michael Grenfell, executive director for enforcement at the CMA, said: “Agreeing prices with competitors is one of the most serious ways a company can break competition law, as it harms individuals, businesses and the economy.

“When, as in this case, estate agents agree among themselves commission fee rates, the effect is to stop people from shopping around for the best deal to help them with one of the biggest financial decisions any of us make – selling a house.

“Company directors have an important responsibility to ensure that their companies don’t engage in illegal anti-competitive practices.

“Today’s news should send a clear message to directors that if their companies breach competition law they risk personal disqualification.”

Under the Company Directors Disqualification Act 1986, the CMA may seek the disqualification of an individual from holding a company directorship or performing certain roles in relation to a company for a specified period where that individual was a director of a company which has breached competition law and their conduct makes them unfit to be a director. The CMA may seek disqualification by a court order or legally binding undertaking.

See the Residential estate agency services in the Burnham-on-Sea area investigation case page.

 

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14 Comments

  1. GeorgeOrwell

    Fair play.

    We either all play by the rules or it becomes a bun fight.

    On a different note, when is CMA going to look at fuel pricing? Prices artificially held higher when wholesale price drops yet when wholesale increases the fuel price increases almost immediately?

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    1. Bless You

      Amazing that it even got to court. Customers have choice.

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      1. PeeBee

        Yes, Bless You, they do.  LOADS of choice.

        But the Government, by vesting the powers in CMA that they have, clearly want ‘The Consumer’ to have more choice again.

        Whether these Agents were doing what they did for wrong resons or ‘right’ – the fact is that they got caught doing it.

        If there’s a Law there – then why break it?

        Had ‘X’, ‘Y’ and ‘Z’ all decided independently of each other not to reduce their respective Fees below those being charged by ‘PeeBee & Co’ then there would have been no problem.

        I simply don’t see where the problem is with that – does anyone else?

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  2. GeorgeOrwell

    Oh? Before we forget. The story highlights that some estate agents can get on together. Unfortunately for the wrong reasons.

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  3. MrLister

    Great isn’t it. Fined and disqualified for getting together and agreeing not to charge less than it takes to run a business and sell houses.

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    1. PeeBee

      Just when we think we’ve sussed you, MrLister – you chuck a curve-ball the size of a small planetoid!

      Wasn’t me that ‘Disliked’ your comment btw – but the fact that these Agents broke the Law – knowing that was the case – means I can’t ‘Like’ your comment either. 

      Even if I do agree (in part).

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      1. MrLister

        Nothing to sus PeeBee. I’ve always been clear. I’m a high street agent living with an LPE. I love my job and the industry and don’t want to work for the onliners. However I do always try and see the bigger picture and make sure that I have the facts before I post. I’m quiet well informed!

        You are of course right, they broke the law. Still leaves a bad taste.

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        1. PeeBee

          “Nothing to sus PeeBee”

          I beg to differ.

          “However I do always try and see the bigger picture…”

          Nothing wrong with that.  But ‘seeing the bigger picture’ isn’t usually available viewing for the likes of you and me.

          “…and make sure that I have the facts before I post. I’m quiet well informed!”

          This is where I depart from your line of response, MrLister.  You say you ‘have the facts’.  You have also previously stated that you have knowledge of PB stats.

          If I were a PB Regional Director I’d be looking at which of my self-employed LPEs need to be hauled in to explain themselves.

          And as to what ‘stats’ PB are issuing to their self-employed LPEs – well…

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  4. manchester57

    I’m glad to hear this. Next to route out agents who have bought property through their own agents without telling the vendor – Kent being one area! It’s a criminal offence. It would be great if estate agents could unite and route out the bad ones. What makes me laugh is how they try to make themselves look legitimate. The net is closing.  (This offence could run into billions) #Greed

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    1. PeeBee

      Would be interested to know which part of this post got the ‘thumbs down’.

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  5. b46

    how is this a bad thing, several agents (good im assuming as they feel their business is worth what they feel they deserve and not just negging down on fee to under cut everyone) are punished for deciding what they want to charge. if a customer didnt want to pay that fee they would have surely had other agents who would pull their pants down for them. terrible decision

     

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    1. PeeBee

      b46

      Several Agents feeling their business is worth “£X” is one thing.

      Several Agents in a room/via email/however making pinkie promises not to charge less than “£X” is another thing entirely.

      CMA want ‘the consumer’ to have a cheap, nasty option.  Higher fees SHOULD result in a better standard of service… better success rate… more customer satisfaction – and even more transactions – but somehow this doesn’t tick the appropriate box in Government circles.

      You want to stick to a minimum Fee – that’s great.  Just don’t agree it with the firm down the road.

      If all they can do to win business is to undercut you, then that speaks volumes that you can use to put them out of their own misery quicker than they can themselves.

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  6. Thomas Flowers

    Who runs the largest and most profitable ‘agency’ model ever devised?
    Have you ever dreamed of charging between 2% and 3% agency fees, on average, increasing to 12% for the most valuable properties?
    With this model, you do not even need to list, manage or have 100s of branches or pay for any sales teams to provide any sort of service.
    All you need is an HQ and fee collection team milking billions of pounds pure profit!
    The twist with this nationwide agency is that you charge buyers, instead of sellers.
    Does this sound unlawful as their fees are fixed, with no ability to negotiate, dare I say – a cartel?
    Just imagine also receiving 20% of other agent’s sales fees on many transactions for nothing!
     
    Then consider the hypocrisy of CMA fining a very small group of agents in Somerset £370,000 for agreeing to a viable fee, to allow them to make a fair % of profit on turnover, at far less than the above average agency fee – that is only payable on completion of that agreed service?
    Particularly, when that 1.5% fee is the same fee that is openly advertised as an agent’s average fee on TV  by the largest call centre agent?
    What happened was wrong but not £370,000 worth of wrong.
    The effect Stamp Duty Land Tax is having on the market and buyers is far worse?

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    1. Room101

      Ah yes Thomas.  The tax you pay to put a roof over your head with the money you have already paid tax on.

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