The Competition and Markets Authority has today announced that four top agents have provisionally been found guilty of breaking competition law.
They are Michael Hardy, Prospect, Richard Worth and Romans, all Berkshire based.
It has emerged that it was Romans itself that told the CMA.
This morning Romans CEO Peter Kavanagh said: “In June 2017, senior directors of Romans became aware that, some years ago, a small number of Romans residential sales executives across a few branches had acted in a manner totally contrary to the standards and values of the company.
“We immediately alerted the Competition and Markets Authority about this matter and have assisted with the CMA’s subsequent investigation under its leniency programme.
“We also undertook our own investigation and, based on our findings, have taken the appropriate disciplinary action against those individuals involved. We also reviewed and strengthened our training, management and compliance procedures to ensure that all our staff act with integrity at all times and adhere to the company’s high ethical standards.
“We are truly sorry that the judgement and behaviour of these individuals did not meet the standards of behaviour expected by our people, our customers and our colleagues in the industry.
“As the investigation by the CMA is ongoing, we are unable to comment further at this time.”
Prospect also released a statement, saying that the investigation was into agents allegedly agreeing not to “aggressively under-cut each other during the 2008 recession” and that “it appears Prospect inadvertently broke anti-competition law in an effort to survive [the] economic turndown”.
Founder Colin Wells said this morning: “As a business that holds the customer very dear, we are very disappointed by the CMA’s initial findings.
“This was never a situation of us wanting to decrease competition or market choice for consumers. In fact we wanted the exact opposite: 2008 was a difficult year for everyone and we were worried the larger agents could remove local agencies from UK high streets altogether by using their financial strength to undercut the market.”
Wells continued: “I am truly sorry my actions have been viewed in this way. At Prospect, we always try to do what is right for the customer, employees and wider community.
“This matter was over ten years ago and we now have incredibly stringent processes and procedures in place to ensure we operate with the highest levels of transparency and compliance.
“In accordance with CMA guidance back in 2015, we immediately introduced an [appropriate] policy, and have continued to build on this ever since. Furthermore, to ensure others do not make the same error, I have also been working closely with the CMA, and will continue to do so.”
The full CMA statement says:
“[They] broke competition law by taking part in a price-fixing cartel where members set minimum levels of commission fees for the sale of residential properties. The alleged cartel took place in the Berkshire area from at least September 2008 and lasted for almost seven years.
The result of such price-fixing is that homeowners may be denied the chance of securing the best possible deal when selling their properties, as they are unable to shop around all of their local agents for better rates.
In a Statement of Objections issued today, the CMA has provisionally found that the four estate agents:
- agreed that they would all apply minimum commission rates for residential property sales
- exchanged confidential pricing information
- held meetings and colluded to make sure that they were all enforcing and maintaining the agreed minimum commission rates.
Howard Cartlidge, Senior Director, Cartels, said:
Everyone knows selling your home is expensive. So it’s important that people should be able to shop around all of their local estate agents to make sure they are getting the best possible deal.
Estate agents who conspire to set minimum commission rates are cheating homeowners and breaking the law. Where we find evidence that this is happening, we will not hesitate to take action to protect people selling their home.
Today’s findings in the Statement of Objections are provisional and will not necessarily lead to a decision that the companies have breached competition law. The companies now have the opportunity to consider the detail of the CMA’s provisional findings and respond to it. The CMA will carefully consider any responses before any final decision is made.
Tackling cartels is a fundamental part of the CMA’s work, and this is the third case brought against estate agents in recent years. Previous actions include fining 4 estate agents in Somerset over £370,000 for colluding to set minimum commission rates, and charging 3 members of the Three Counties Estate Agent Association £735,000 for breaking competition law in relation to estate agent and letting fees.
The CMA also has an ongoing Stop Cartels campaign, which aims to educate business about which practices break the law and urges people to come forward if they suspect a company has taken part in cartel behaviour, such as fixing prices or rigging contracts. The campaign explains what anti-competitive behaviours are, why they are illegal, the impact they have on customers and the economy, and why they should be reported.”