The Competition and Markets Authority has exposed what really went on in the latest estate agency cartel case.
The ruling was made back in May, but the CMA has now made public the details.
These show that a group of six agents in Burnham-on-Sea, Somerset, had a meeting where they agreed to fix their minimum commission rates to 1.5%.
The six, says the CMA report, potentially had 95% local market share between them.
“With a bit of talking and cooperation between us, we all win!” was their rationale.
Email evidence also explained how “the aim of the meeting…will be to drive the fee level up to 1.5%” and “…it’s really important we all give it the priority it deserves (making as much profit as possible!)”
The estate agents took steps to ensure the minimum fee agreement was kept to by emailing each other when a specific issue arose, such as accusations of “cheating” on their agreement.
One email read: “If anyone is having problems with our agreement, […] let’s talk about it […] rather than going back to slashing fees!”
Each business also took it in turn to ‘police’ the cartel to make sure everyone was sticking to the agreement – parties were to report any issues “to the policeman immediately and get the matter resolved rather than let it fester and risk the agreement falling apart!!!!”
One email to the ‘policeman’ read: “It appears that [another cartel member] are being naughty tinkers […] I am working on proof […] with it going quieter, we just need to make sure we keep these fees up, eh!!!”
The cartel broke up in 2015, after publicity about an earlier cartel case, in north-east Hampshire and an adjoining part of Surrey.
The Burnham-on-Sea agents were not entirely happy to see their own arrangement go.
One email read: “I just cannot see, why on earth, any one of us would think it is a good idea to give ourselves a 25%-30% pay cut for doing exactly the same job that we were doing last year???
“We all know from recent experience that with a bit of talking and co-operation between us, we all win!!!”
A few of the estate agents thought about re-starting the cartel. One even weighed up the financial benefits it had gained from the cartel against the amount it could be fined by the CMA if it was caught, but decided it wasn’t worth the risk.
The CMA imposed fines totalling £370,084 on five of the six estate agents involved in this cartel.
The agents fined were Abbott and Frost Estate Agents Ltd, Gary Berryman Estate Agents Ltd (and its ultimate parent company Warne Investments Ltd), Greenslade Taylor Hunt, Saxons PS Ltd; and West Coast Property Services (UK) Ltd.
The sixth agent, Annagram Estates Ltd (trading as CJ Hole), was not fined as it was the first undertaking to confess its participation in the arrangement under the CMA’s leniency policy and co-operated with the CMA’s investigation.
Greenslade Taylor Hunt, a well known independent chain in the west country, has always made it clear that it was a partner in the Burnham-on-Sea area who decided to participate in the cartel, without the knowledge of other partners.
Yesterday, Greenslade Taylor Hunt partner and chairman Charles Clark told EYE: “The partner remains with us, though was severely sanctioned and now has a much changed role outside the residential agency.”
The 143 page ruling now made public can be found here:
A short case study revolving around the Burnham-on-Sea case has also been published and ends with advice to agents.