NEWS FLASH: CMA writes open letter to agents warning them about portal collusion

The Competition and Market Authority has this morning published an open letter to estate agents on choosing property portals.

OnTheMarket has responded by saying that the CMA’s advice “accords entirely with the advice consistently given over time” by OTM itself.

The letter warns that agents must not collude with other agents about their decisions. It also makes it clear that it has some evidence that such collusion may have already taken place, and in more than one area.

Notably, the letter has gone out to agents, with the CMA saying that it “has no reason to write to OnTheMarket in this connection at this time”.

It says of the letter: “The CMA is taking this step after becoming aware that estate agents in some local areas may have made a collective decision to join the OnTheMarket portal and at the same time to remove their business from other portals that compete with OnTheMarket.

“The CMA has already been in contact with some agents and trade associations in this regard.

“However, given some evidence that such collusion may be happening between estate agents in more than one local area, we are issuing this open letter to all estate agents, advising them that this kind of conduct may break competition law and that agents engaging in it could therefore face significant fines.”

The letter goes on to say: “If an estate agent discusses with its competitors its commercial intentions or agrees to make joint decisions with them (such as which supplier or portal to go with), this may break competition  law.”

The CMA says that the consequences of breaking competition law are severe, with agents who have breached it being fined up to 10% of annual turnover, and directors being banned from UK company directorships for up to 15 years.

City analyst William Packer, of Exane BNP Paribas, was quick to react, sending out a note to investors saying of the CMA’s action that “We see this as a positive for Zoopla and will fuel market hopes of a rapid rebound in members”.

He went on to say: “This is further negative newsflow for OTM after recent internal issues highlighted in the trade press.”

Packer said he expects Zoopla shares to respond favourably.

OTM has this morning told its members that, “as you would expect, the board and management team of Agents’ Mutual has always been scrupulous about building a pro-competitive business”. It says it has taken legal advice, and shared that advice with current and prospective members.

OTM’s email to members re-iterates the advice given by this morning’s open letter from the CMA, while Mark Hayward, managing director of the NAEA and who is a board member of Agents’ Mutual, said: “All NAEA members are aware of their obligations in regards to competition law around online property portals.

“We continue to remind members of these rules, and are happy to work with the CMA on these obligations to ensure agents act independently when deciding which portals to list on.”

The CMA letter is here

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65 Comments

  1. Digital Expert

    5…4…3…2…1…Trevor.

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    1. Robert May

      Most agents who have any form of qualification  were taught this. I suspect writing open letter  but not actually sending it to anyone is simply a means to a bit of peace and quiet.

       

       

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    2. Trevor Mealham

      If you believe that you or your business may have been involved in an anticompetitive agreement or arrangement, then you can find information on how to report this on the CMA’s website, or by contacting the CMA on 020 3738 6000.

      If you think you have been involved in a cartel, then you may even benefit from lenient treatment by coming forward to the CMA.

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      1. smile please

        Scaremongering at its best! ha ha!!!!

         

        Lenient, Trev, Buddy, Pal – Its an open letter they are not looking to prosecute anybody. What you think they will fine 6000 agents!!!! give it a break!

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        1. Digital Expert

          In all fairness, if a law has been perceived to be broken, the volume of violators is irrelevant.

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        2. Trevor Mealham

          @ smile please.

          I don’t think they will as many agents will have honestly joined in good faith.  However the 9 AM directors and 2 OTM directors should now be called in for questions as to why they created a two company collusion that restrained other digital platforms and other agents such as online only guys and girls.

          The actions of the two boards (AM and OTM) should now be called for answers.

          For sure thou’ the CMA have sent out a warning shot (which is quite serious as I know they have to select which cases are the most serious to proceed with).

          As such I’d seriously think as to leaving or staying if I was an agent in OTM/AM today.

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          1. smile please

            Its good news as far as i can see,

            No agents have been seen do do anything wrong as no action is being taken. Just a warning that like all big memberships they need to abide by the rules.

            Think it shows how well OTM is going.

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        3. davidbamforth

          “smile please
          APRIL 21, 2016 AT 2:13 PM
          Scaremongering at its best! ha ha!!!!

          Lenient, Trev, Buddy, Pal – Its an open letter they are not looking to prosecute anybody. What you think they will fine 6000 agents!!!! give it a break!”
          Smile, really? like agents don’t have a bad enough rep as it is with this kind of response?
          Yikes.

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      2. Eamonn

        This Trevor is off his meds isn’t he

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    3. Trevor Mealham

      Now where’s all my hecklers today from the last 12-18 months ??

      Laws the law.

      AM and OTM are shown at Companies House as two different entities with different directors. Thus for agents to be able to list on OTM by having to meet AM’s rules is pure cartel like restraints.

      i hope the CMA now follow through and heads of those who created this badly thought out farce now roll. I do not hold agents to blame, but agents should seriously now decide whether to remain, or leave what could become a serious mess.

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      1. RealAgent

        What are you talking about?! Before you big yourself up all the CMA are confirming is that if agents openly collude to dictate a local market that creates unfair competition, then then will investigate. Thats the same with advertising, fees et all….in other words NOTHING NEW TREVOR!!

        You’ve been spouting on for the last 12-18 months about OTM itself being a cartel and therefore investigated, well you were wrong then and you still are now!

         

         

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        1. Trevor Mealham

          Time to get real – RealAgent. Time to wake up and smell the coffee my friend

          The CMA don’t step in right away. They can take months or a year plus to act and take action which they have told me at past meetings.

          Finally, we have a CLEAR message that they are taking very serious agents meeting who collude to distraught markets that have direct effect on consumers

          Agents need to stop listening to ‘Heretics’ like Real Agent and look at what the Powers that be (CMA) have put in black and white as factual.

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  2. HarryN

    I’ve heard of rooms packed full of competing agents raising their hands to decide which portal they are dropping. It is clear (from briefly reading the guidance on the CMA website), that there are real incentives to blow the whistle to avoid the worst penalties. What next, agents dobbing each other in?!

    Surely there needs to be some sort of official position from the NAEA. They sit on the board of OTM and surely must have been aware that this sort of thing was going on.

    What a mess.

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    1. EHenderson

      I completely agree. It is about time the NAEA gave some sort of comment – and stand down from the board. There are agents suing each other, the CMA issuing warnings and a project that promised so much that is descending into the utter farce that so many predicted.

      How are they representing the best interests of their members by being at the centre of this?

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    2. Trevor Mealham

      I think the answer to that one harry is a big NO.

      But for sure the CMA letter says:

      The consequences of breaking competition law can be severe. Estate agents that are found to have breached competition law can be fined up to 10% of their annual worldwide turnover, and directors of such companies can be disqualified from UK company directorships for up to 15 years where their conduct in relation to such a breach makes them unfit to be concerned in the management of a company.

      In addition, individuals involved in certain very serious cartel activity, such as agreements between estate agents to fix prices or allocate markets, may be prosecuted under the criminal cartel offence and, if convicted, could go to prison for up to five years and/or have to pay an unlimited fine.

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    3. Trevor Mealham

      NAEA leadership SHOULD know far better. …………………..

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    4. Ric

      No agent decided to go on OTM because the agent across the road did or didn’t!

      Jeepers….. I am on Rightmove because everyone is on it….? Is that a cartel?

      Fact is agents made a decision for the good of their own businesses and that would be impossible to prove otherwise in the High Courts! Common Sense would prevail if this ever went further.

      The fact most villages have a Corporate Agent on Z and RM further defends the logic of why would any business risk their livelihood for a “newbie portal” which may have been a flop and from minute one, it was know the biggest spenders CW and LSL will not be on it.

      This letter merely reminds against such practices, either way the defence for most will be “your honour, I went with OTM because they fixed my costs for 5 years, it seemed like good business sense, especially in these times competing against more and more cheaper online outfits, knowing you costs for 5 years is good! Do you agree?”

      Trevor, stop reading this….. you will go blind! (I assume this is like porn to you?) 😉

       

       

       

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      1. Ric

        sorry “your” and “your” dam “r” button…..

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  3. Woodentop

     
    “1 The CMA has no reason to write to OnTheMarket in this connection at this time.
     
     
     
    Effective competition benefits consumers and businesses through downward pressures on price and through spurs to increased quality, innovation and efficiency. Where estate agents enter into agreements or
     
     
     
    2 arrangements that restrict competition between them, this can lead to artificially inflated prices, reduced service quality and innovation and limited consumer choice”.
     
     
     
    Now throw OTM into the equation and #1 brings down pressure on prices while with RM into the equation and you have #2 as they have  a monopoly and Z take over of PSG also brings this same situation onto the radar as they wish to become a monopoly.

    If one also follows the theme of the letter then every trade union in the country is operating illegally! While those for or against OTM can find some value to their advantage, the letter is more a political statement which could just backfire.
     

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    1. Ric

      I think I am in trouble for colluding with local house owners not to use other agents and just go with me…..

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  4. Mark Walker

    An open letter to the CMA – we were only on 1 portal before we joined On The Market, please stop wasting taxpayers money.

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    1. Digital Expert

      Then it likely won’t apply to you – but will for many, many OTM members.

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    2. Ric

      Same here Mark, but you can imagine the sticky pages of the Anti-AM brigades daily read as they get a touch over excited about the prospect of this.

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  5. Chri Wood

    Notwithstanding the above comments, it is perhaps long past the time for the CMA to review Rightmoves’ abuse of its dominant monopoly as well?

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    1. Digital Expert

      Being a market leader isn’t being a monopoly, especially with the other options agents are able to use without restriction.

       

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      1. Chri Wood

        You are of course correct. However, abuse of a dominant position is very much an offence:

        Categories of abuse

        5.5 Abusive conduct generally falls into one or both of the following categories: • conduct which exploits customers or suppliers (for example, excessively high prices), or • conduct which amounts to exclusionary behaviour, because it removes or weakens competition from existing competitors, or establishes or strengthens entry barriers, thereby removing or weakening potential competition.

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        1. Digital Expert

          I don’t think either of these apply. RM isn’t the cheapest, but almost every agent that uses it makes a profit from it.

          The second point doesn’t refer to RM, but it sure does apply to OTM. Of that there’s no doubt.

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          1. Chri Wood

            We disagree.

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  6. PropertyP82

    http://www.telegraph.co.uk/property/commercial/fines-or-prison-for-conspiring-estate-agents-deliberately-cuttin/

    It’***** mainstream media already!

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    1. Mark Walker

      Anna White has history here and is not an altogether, shall we say, independent voice on the matter.

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      1. Digital Expert

        Still, it’ll have widespread coverage to precisely the audience who’ll be eastate agents next customers…

        Ironically, it might be the first time most of them have ever heard of OTM.

         

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      2. Robert May

        Doesn’t IPSO have something to say about personal, financial or family connections similar to Section 21 EAA?

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        1. Mark Walker

          IPSO.  Pfffffffttttttt.

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          1. Robert May

            Sorry but on their website is says “We uphold the highest standards of journalism”

            You can’t go around being all dismissive like that. I was almost convinced no-one connected with the Telegraph could possibly have anything to gain from slatting  agency and now I have doubts over their integrity.

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  7. RussellQuirk

    🙂

     

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    1. Frown Please

      Thought you didn’t read PIE!!!

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    2. stevedp316

      This isn’t how CEO’s should act.

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      1. Frown Please

        Since when has Mr Quirk ever acted how he should?

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    3. RealAgent

      Gosh I didn’t realise Emoov were still in business.

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    4. PeeBee

      OOOOH, look, everybody…

      …The Quirkster not only employs someone to read for him – he then gets them to draw smiley faces for him.

      (Can’t afford anyone to answer awkward questions, though…)

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  8. stevedp316

    Time for on the market to drop the one other portal rule.

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    1. Trevor Mealham

      I think it goes further than that if you dig deeper Stevep316

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  9. GlennAckroyd

    This open letter is the miaow of a toothless tiger who doesn’t have the appetite to do anything.

    Start suing offenders.

    A few high profile jail terms will soon stop this nonsense.

     

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  10. PeeWee

    Taken from the CMA Letter;

    If an estate agent discusses with its competitors its commercial intentions or agrees to make joint decisions with them (such as which supplier or portal to go with), this may break competition law.

    So any estate agent who has ever made a comment or opinion here on PIE or any other forum in an attempt to collude opinion in one specific direction or other should go straight to jail?

    So long, farewell, auf wiedersehen, good night. (#dropsmic)

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  11. WelshWatcher

    PIE seriously ….. change the record it’s getting too much !!

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  12. Chri Wood

    The CMA confirm that this was a warning to agents not to get involved in such practices and not, as is heavily suggested by the Telegraph* in their piece, what appears to be a warning shot across the bows of OTM

     

    *As has been mentioned above, the Telegraph have form on this. A certain agent with an axe to grind and a big (but diminishing) PR budget to spend has very good connections with Anna White.

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    1. Digital Expert

      “A certain agent with an axe to grind and a diminishing budget” (sic)

       

      Sounds familiar 🙂

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  13. AgencyInsider

    The body of the CMS open letter says this:

    Competition law tackles agreements, arrangements or conduct that weaken competition or aim to do so.
    Effective competition benefits consumers and businesses through downward pressures on price and through spurs to increased quality, innovation and efficiency. Where estate agents enter into agreements or arrangements that restrict competition between them, this can lead to artificially inflated prices, reduced service quality and innovation and limited consumer choice.

    Read it really, really carefully and see if you share my conclusion that the CMA would not be able to demonstrate that the decisions of agents – whether in concert or not – to join OTM and drop AN Other portal has actually weakened competition led to artificially inflated prices, reduced service quality and innovation and limited consumer choice.

     

     

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    1. Woodentop

      You are getting the message. The CMA recognise that OTM hasn’t done anything wrong. OTM is a marketing portal and its presence is competition within the market place and likely to reduce costs.

       

      Its about time the anti OTM brigade woke up to that fact.

       

      The one portal rule is an issue only for AM, or is it as that is the option is for a member to decide if it wishes to join or not without collusion (just to keep Trev happy, who I see has jumped on the bandwagon to quickly with his scaremongering and still fails to reveal his business interest for being so anti!). And that is recognised practise in many industries.

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      1. AgencyInsider

        Exactly Woodentop. OTM is providing MORE competition. It will never kill off Z or RM (that is not its intention anyway) but it could take 2nd place in time.  As it grows it should also have the effect of reining in the excessive profiteering of RM and thus reduce the overheads of many agents. It may be fanciful to think that all such savings will be directly passed to the consumer – but if you were arguing with the CMA you could make a case that some of it might.

        And OTM in no way restricts competition with Z or RM or any other portal for that matter because if the consumer really wants to be on one of those portals they can choose to use an agent who is on them.

        The likes of Trev, Russell, EHenderson, Danny etc have put far too much store by the CMA letter and are partying rather too soon in my opinion. Still, no doubt the other pub will have a banner up proclaiming the imminent demise of OTM – the banner being paid for by… (oh go on, make an educated guess).

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  14. ivoridea76

    It appears by some of the comments that many agents think that the laws of the land don’t apply to them unless they specifically refer to “Estate Agents or Lettings Agents”, either that or they are above the law. In fact there are many laws that apply to all businesses, I believe the MD of the NAEA used to run a course highlighting them. And restriction of trade is an area covered by several Acts and agents collectively deciding to drop one portal in order to gain commercial advantage is a clear infringement. The problem all along is that AM/OTM has only the agents’ interests at heart, not the consumers, and has effectively encouraged agents to, perhaps inadvertently, break the law.

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  15. Mark Walker

    We were only on 1 portal before we joined On The Market.

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    1. Digital Expert

      Again, it won’t apply to you then – but it does for many, many others!

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  16. harry hood

    Prisoner’s Dilemma: If you know the competitor is going to rat then it becomes about ratting first!
     

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  17. harry hood

    FROM CMA
    Leniency for businesses
    A business which has participated in a cartel may receive total or partial immunity from fines if it comes forward with information about the cartel, provided certain conditions for leniency are met.
    The first cartel member to report and provide evidence of a cartel will be granted total immunity, provided the CMA is not already investigating the cartel, does not otherwise have sufficient information to establish the existence of the cartel and the other conditions for leniency are met.
    In this situation, the business will receive:

    immunity from fines
    immunity from criminal prosecution for any of its cooperating current or former employees or directors
    protection from director disqualification proceedings for all of its cooperating directors

    Detailed guidance on the different types of leniency and when leniency may be available is set out in the ‘Applications for leniency and no-action in cartel cases – detailed guidance on the principles and process’.

    Leniency for individuals – no-action letters
    An individual who comes forward with information about their involvement in a cartel may receive immunity from prosecution (a ‘no-action letter’) provided they satisfy certain conditions, including admitting taking part in the cartel and cooperating completely and continuously throughout the investigation.

    Cartel activity in Scotland
    Where cartel activity has taken place wholly or partly in Scotland, the CMA will decide whether to grant leniency to businesses. However, the CMA cannot give guaranteed immunity to individuals for criminal offences which are to be prosecuted in Scotland. The CMA will report an individual’s cooperation to Scotland’s Lord Advocate who will give ‘serious weight’ to any CMA recommendation that immunity should be granted. The Lord Advocate will also take notice of the CMA’s leniency guidance when deciding whether to grant criminal immunity to individuals.
    For more detail on the handling of leniency applications involving cartel activity in Scotland see the Memorandum of Understanding with the Crown Office in Scotland.

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    1. Woodentop

      Jupiter …. you haven’t a clue what you are talking about, seems more like back seat lawyer to me. YOU DO NOT KNOW WHAT A CARTEL IS!!!!!!

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  18. Robert May

    What happens if the defence is that CMA have colluded with a competitor to the Agents facing prosecution? With so much documented  and debated about the build up to this open letter even if it does come to something a smart barrister will  probably claim it is a put up job.

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    1. harry hood

      Well it will be about hard evidence not about which side won the debate. The question will be if the evidence constitutes proof.

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      1. Robert May

        No-one has won, CMA has simply reiterated anti competition regulations. It is an open letter not sent to anyone. It is a police car parked in a lay-by, there to remind people not to drive on the pavement just in case someone tries.

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        1. Trevor Mealham

          Or maybe its the last few seats on the last lifeboat before the Titanic’s final exit. Maybe the CMA are giving agents an opportunity to come forward before the smelly stuff hits the fan.

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  19. IHS

    Do any other property portals make it a condition of advertising with them that you do not advertise on  other portals? OTM’s one other portal rule is surely a restrictive practise and therefore by definition anti-competitive.

    If OTM were confident of becoming one of the top portals they wouldn’t need the rule – it just indicates the weakness of their position by trying to manipulate the market.

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    1. PeeBee

      OR

      It demonstrates their confidence that both ‘duopoly’ (credit: Robert May) portals are unnecessary – which well over 6000 branches seem to agree with…

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      1. Digital Expert

        Which by your own reckoning renders OTM utterly pointless.

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        1. PeeBee

          No it doesn’t.

          Suggest you take your head for what is clearly a well overdue 5h!te.

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  20. Michael

    Its ironic that CMA say

    ” Effective competition benefits consumers and businesses through downward pressures on price and through spurs to increased quality, innovation and efficiency. ”

    as the reason behind OTM is to provide effective competition against the Zoopla / Rightmove duopoly, to drive down our advertising costs and hence enable us to keep down our costs to the consumer.

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