A group of estate agents who admitted taking part in an illegal cartel are to pay fines totalling up to £372,233.
One of the agents is to pay almost £190,000 and another nearly £100,000.
The overall sum includes a discount because of the four agents’ admissions and their co-operation with the Competition and Markets Authority’s investigation into price-fixing.
A fifth agent has escaped fines on the basis that it continues to cooperate with the CMA, and an investigation into a sixth agent is ongoing.
The probe into the latest case, in Burnham-on-Sea, Somerset, began in December 2015 after the CMA received information following a previous investigation into agents in Hampshire.
In Somerset, the agents admitted to breaking competition law by colluding to set minimum commission rates at 1.5%.
This, said the CMA, was “with a view to denying local home-owners selling their property the chance of securing a better deal”.
The businesses were yesterday named as: Abbott and Frost, Gary Berryman Estate Agents (and its parent company Warne Investments), Greenslade Taylor Hunt, which has 17 offices in the west country, and West Coast Property Services (UK).
The agent to escape being fined is Annagram Estate Agents, trading as C J Hole, part of Xperience which in turn is now part of the Property Franchise Group where it is a sister company to Martin & Co.
Annagram was the first company to confess its participation in the cartel.
This is the second cartel case brought by the CMA against estate agents.
In the first case, members of the Three Counties Estate Agent Association were fined £735,000.
This resulted in the CMA launching a campaign designed to improve understanding of the law within the industry.
It was this campaign that resulted in the Somerset case being brought to the CMA’s attention.
Yesterday, it said: “We encourage others with evidence of competition law being broken to report their concerns to the CMA.”
In the Somerset case, Abbott and Frost has agreed to pay a maximum penalty of £30,099. This includes a reduction of 20% for settlement (to reflect the fact that the company has admitted breaking competition law and has agreed to follow a streamlined procedure for the remainder of the case).
Gary Berryman Estate Agents and its ultimate parent company Warne Investments have agreed to pay a maximum penalty of £97,807. This includes a reduction of 20% for settlement.
The liability of Warne Investments arises from the fact that it held (indirectly) 100% of the shares in Gary Berryman Estate Agents during the relevant period and, says the CMA, is therefore presumed to have exercised decisive influence over Gary Berryman Estate Agents during that period and to form part of the same ‘undertaking’.
Greenslade Taylor Hunt, a partnership, has agreed to pay a maximum penalty of £186,054. This includes a reduction of 20% for settlement and a reduction of 15% for leniency.
West Coast Property Services (UK) has agreed to pay a maximum penalty of £58,273. This includes a reduction of 20% for settlement and a reduction of 35% for leniency.
The CMA said it continues to investigate the conduct of a further estate agent, Saxons PS, which is not a party to the settlement announced yesterday.
The CMA stressed: “No assumption should be made that Saxons PS Limited has infringed the law.”
Comments (54)
I assume the fines are going to those poor vendors who had to pay fees as high as 1.5% by way of compensation? Those poor souls who were completely ripped off by estate agents who charged scandalous fees just because they have a premises and have to pay business rates, building insurance, etc…
DID ANYONE MISS MR MEALHAM’S SHAMELESS PLUG ABOVE??
He’s apparently launching a new tool.
Who knows – maybe EYE will cover it for him. Give him a column inch or two?
Wednesdays look good – a ‘ no news’ day if ever there was one.
And BOY! will that be a ‘no news’ article…
“hahahaha,,,,, those were the days”
Does anyone else miss ‘Japan Dave’?
Life was so much simpler when all we had was the HPC Brigade , Realising Reality and Henry Pryor’s statistical gymnastics to contend with.
Sorry, Bless You – but THOSE WERE the days!
Agents sitting round a table and ‘fixing’ fees is illegal.
Agents all coming to their senses and ‘fixing’ their own fees – individually – is another matter, of course.
If all fix their own fee at the same figure, that is legal.
Someone should have removed the table.
In my book, tables are now illegal.
I wonder if this came about after a meeting about ONTHEMARKET.
I really enjoyed meeting all the local agents and realising that Rightmove was a path to disaster for our industry.
We all stood as one and said NO!!! we wont be bullied by a company that supports loss making internet businesses, who will eventually ruin our industry and take local jobs with it.
i had already masde a stand and survived 10 years by supporting Zoopla…. but i was listening…
‘No!!’ they all said…..’ we wont stand for it…’
1 month later:
ONTHEMARKET launch date::: ‘ ah , yeah,,actually, i quite like Rightmove and i will stay on that as well’,,net gain =zero..
hahahaha,,,,, those were the days
And yet Governments run Cartels with trade deals, bans and price fixing. One of the worst culprits is the EU in Brussels.
Quite right PeeBee. Remove the elements that otherwise would make something illegal. Gov bodies always look at the consumers best interest. And when collusion becomes anti competitive.
Of course done right collaboration can be consumer beneficial and reward higher fees lawfully.
Mr Mealham – you forgot to give yourself the requisite ‘Like’!
You’re slipping…
I haven’t read the whole thread, but has Trevor mentioned multi-listings yet?
*Am i doing this right? 🙂
MLS/ multi-listings is fine, so long as the main agent charges what he/she feels main agency is worth to them and doesn’t make multilist only available at a set fee via most local agents to create price fixing
Main sub agency is mentioned in the official NTSEAT Guidance for Estate Agents, thus accepted as a lawful agency procedure. What can’t be done is to abuse price fixing to achieve it.
There are many case studies showing where main agency has achieved a higher sstc than other sole agents even valued at. As such MLS/multi-listing used right is of benefit to consumers
That is until Surveyor appears on the scene and down values, Lol.
That too can happen Woodentop. But hopefully 5-6 sub agents may have 1-2 buyers in reserve 🙂
“There are many case studies showing where main agency has achieved a higher sstc than other sole agents even valued at.”
Funny – you only bang on about one*
“…achieved a higher sstc…”
Doesn’t mean that it actually SOLD for that higher price.
“…than other sole agents even valued at.”
Doesn’t mean it actually sold for more than it was worth.
* which would be the now infamous “extra £25k” brought to the table by an Agent six miles away who got that from their shop window advert – nothing more. Guess your local chappie/chappess is feeling a bit miffed now that not only is his original recommended price to the vendor making him look more Charlie than chappie; and that his ‘local is best’ mantra has been shot out of his own window by an Agent who is no doubt now touting the @r$e out of his unsold stock!
Question.
If all High-Street Agents in a town decided collectively to offer to SELL – not just LIST – a property for £1, would that still constitute a cartel?
The use of “cartel” as you will know is selectively used by those who wish to take advantage as and when its for them. There are so many facts in our life that operate Cartels and no-one cares unless its an estate agent.
YES as any restraint or blight collectively engineered under price fixing would be cartel.
Equally if ALL agents in a newspaper said they would remove advertising is the paper didnt restrain Bobby budget from running a promo that didnt favour the others. The paper and collective would be at fault as in the Trinity and Three County Agents cartel case
So, hypothetically, in your opinion, if a franchise holder were to insist all of its several hundred “self-employed” contractors were to charge a set fee which they were not permitted to alter, would that be legitimate or, a cartel Trevor?
I’ll take a shot Chris: So, hypothetically (of course)
A franchise would typically operate via geographical zones placing operatives of say ‘Mauve Tiles Estates’ in different areas. ie Fred operates in Canterbury and Sarah in Maidstone and Geoff does Tunbridge Wells etc etc.
As such although collaboratively the three are pushing the same brand and pricing model etc etc. The three (or 300) would be singular operatives of that brand model in their area. As such would Geoff’s association with the other 2 or 299 affect consumer choice when locally another 15-50 agents provide consumers other choices.
Imagine Coca Cola going into Tunbridge Wells and signing up all shop keepers to Coca Cola and in their contract rid sho keepers of Fanta or Pepsi. Then Fanta and Pepsi would have right to plead the Competition Act.
Now imagine a brewery saying to its publicans your license only allows you to sell Whitbread beers and ciders.
As Whitbread own the company that comes with their branding, they own the shelves to offer just their stock at their RRRP
If brands have franchise agent operatives, I assume they can choose what’s pitched at what price in their business outlets.
However if Mauve Tiles and Easy House and TwoPillows and Emover all agreed that they would run the same knock down campaign to ALL sell homes at £299 rather than their normal fees, then the otherwise competitors would be colluding to harm local higher price agency models.
Equally, if models that were normally £499-£599-£799-£899 had a trade agreement that all would never be above £899 again it could be seen as harmful collusion.
I bet Kwick Fit tyres in Dartford are pretty much the same price as Kwick Fit tyres in Sussex, and north of London. But I bet Kwick Fit Tyres are not price fixed the same as every other tyre seller in Dartford.
The problem is that the public think estate agency is highly profitable, when those involved know it isn’t. The rise of cheap options only goes to reinforce this. These files are totally out of proportion to the offence.
Just like PB & Co would like the public to believe, so they can win business but as many say, the consumer isn’t necessarily getting that better deal..
As posted in ‘the other place’
A cartel is a cartel. If agents want to be taken seriously as the trustworthy face of agency, they cannot expect different treatment when they knowingly break the law. These agents have just handed a wonderful PR coup to those agents who claim they are breaking the mould of ‘dodgy/ high-cost’ agents and are looking after consumers interests by ‘cutting fees’.
That said, I sincerely hope that the likes of the CMA, NTSEAT, ICO, HMRC, FCA etc. will be taking action against those seemingly breaking the law on an industrial scale without sanction or censure.
Trouble is Chris at the head of NFOPP is Mark Hayward who was one of the AM directors. Thus how can NAEA etc get their house in order when their own encourage things such as the OOPR
Mr Mealham
Chris Wood never mentioned NAEA/NFOPP, or Mark Hayward – all of which you name above.
Your point therefore being…?
The jury is out on this for me. Clearly the agents have realised that a ‘fee war’ (which most if not all of us are experiencing at the moment) wasn’t actually doing any of their businesses any good at all, so agreed that they wouldn’t engage in one and instead let ‘the best man (or woman!) win’ based purely on likeability and service rather than the fee. I’m guessing that the agent who squeeled wasn’t winning much business and rather than concentrate on improving their offering decided that it was better to drop their fee to win the business, much like most agents prefer to do these days. As for preventing customers from getting a better deal on fees, there was nothing to stop the customer from going to one of the onliners if all they were concerned about is fee.
As I have said before the UK is amongst the cheapest estate agency fees in the world. Look at OZ 3%, Europe 6 to 17% and America at 7%?
Is not stamp duty the biggest price fixing charge?
What about the call centre estate agents who are using vast amounts of other peoples money to charge loss leading fees to enable them to gain traction when in real terms it is costing them more to gain these listings than many agents charge for a full service in the average market?
What about portals taking free control of agents client data via their own data feed or acquisition of software companies?
Is insisting that agents use their own data feed that gives them free access to your clients valuable listing data a monopoly?
Perhaps if the CMA spent time looking into these practices and what other agents charge throughout the world they may consider that 1.5% commission is at least half or considerably less than what most agents charge worldwide?
Particularly as the Government then charge a further 20% commission on top of fees in VAT?
Example: property sale at £250,000 equals Stamp duty of £2,500 (£12,500 for buy to let) Average agency fee in my area (1%) equals £2,500 plus VAT of £500 equals Government fee of £3000 (£13,000 buy to let)?
Are not the Government themselves the real beneficiaries of the home moving process for no service whatsoever and at the consumers considerable expense?
Thomas.
NTSEAT guidance shows fees should include VAT not a comm% plus VAT.
Its worth Googling NTSEAT Guidance estate agents fees VAT.
“NTSEAT guidance shows fees should include VAT not a comm% plus VAT.”
WHEN QUOTED TO PROSPECTIVE VENDORS.
Mr Flowers is not pitching for business, Mr Mealham – he is stating a point as to how much ESTATE AGENTS charge – not the tax on it (which he also includes for good measure.
Keep to your ‘specialist subject’, Mr Mealham – any other attempt at points scoring simply highlights your weakest link.
Pathetic. These fines are totally outrageous. I really feel for these guys.
If a group of agents get together and say “Hey, this is what our service is worth, let’s not let anyone get away with paying less”, I don’t see a problem. Good on them, we should all do it. Yes, I know the law but in this case the law is a big steaming poo. 1.5% is the minimum we should be getting. That’s not a high base level for a fee. Do what you want after that but at least charge a fee that relates to the service and one that allows you to sustain a business. 1.5% minimum isn’t ripping anyone off. If an agent wants to do 1.75% or 2%, great if he can get it but he may well be beaten by the agent who offers the more competitive fee of 1.6% or 1.5%…..a fee that none of us should be going below. At the moment we’re hard pushed to get 1% with every micky mouse agency locally quite happy to drop their pants and take a good spanking . Love this business!
My thoughts exactly!
I understand the public needs protecting, but estate agency is hardly a monopoly is it…the public had plenty of choice if they though 1.5 was to high..
i still feel £1000 for online DIY service is the biggest problem consumers have at the moment.
@BlessYou – The trouble is when all or most local agents set a price. Then it does become a monopoly.
Years ago the Monopolies Commission outlawed agents colluding to fix comm pricing
“@BlessYou – The trouble is when all or most local agents set a price. Then it does become a monopoly.”
FIVE “local” Agents ‘set a price’. There are DOZENS who all claim to be “local” to and charge anything from fourpence to a shilling.
Don’t the Call-Centre/Hybrid/Bedroom Billy Agents then become the majority? The “most” you refer to?
So – there was no case to answer to here, surely?
You should have been there on the stand for them, Mr Mealham – as an ‘Expert Witness’ – this being your specialist subject and all that…
…or were you too busy stirring entirely another crock?
Stick to the story PeeBee.
But had they have had me, they might have been £370k better off in pocket.
“Stick to the story PeeBee.”
The above IS sticking to the story, Mr Mealham. Or, at least, sticking to your comment which was made as a result of the story – so I am only as off-piste as you.
“But had they have had me, they might have been £370k better off in pocket.”
Actually – no they wouldn’t. According to you they were a majority – so the fine would be totally justified. You’d have sunk any hint of a defence without a trace.
It is MY thought processes above that might have got them ‘off the hook’, had they been put forward.
Never mind – better luck next time…
PeeBee I couldnt have got round what they did wrong for sure.
But any agent coming to me pre their fixing fees, id have advised they didnt fix all charging 1.5% or any same %.
But I could have shown them lawfully how to gain higher fees lawfully.
Thus they’d never have got dragged to court.
From a business plan perspective having a fee that works for business to stay solvent is a good ideas but the whole sorry saga isn’t intended to help business. It is consumer focused, cheap is everything but could just backfire as far too many agents (and other businesses) are cutting their throats with stupid fees they can’t survive on. Having a stable and fair fee structure helps everyone but you are not allowed to discuss doing that.
Wonder what the situation is with the LPE,s at Purplebricks who have bandied together to agree to charge the same fee which is carved in stone ?
I expressed a similar thought a while back… Anyone from the CMA reading this?
Fall on deaf ears, they have known about this and their other antics for a long time and done nothing.
Will Annagram the “grass” be seeking protection under The Police Witness Programme ! Punishment fair enough but Trading standards are very selective in their targets .Electrical reatilers on Retail Parks (those who ar enow left!), Petrol Filling stations in townds and on a smaller level coffee prices amongst franchises at Motorway Service Stations to name but a few
Solicitors anyone?
Quote: A fifth agent has escaped fines on the basis that it continues to cooperate with the CMA
Typically, when a first agent comes forward to raise suspicion and work with the CMA, they can find themselves void from fine. Typical actions can carry a 10% fine based on annual revenue x the mount of years the offence has happened.
This practice of commission fixing was outlawed years ago when the Monopolies Commission policed this area.
Agents can agree to sub and work together. What they can’t do is price fix or collude to place restraints that hit Joe Consumer or competitors.
Trev please, you cannot comment on a cartel story and not yourself mention the word cartel.
But otherwise good points and agree.
“Typically, when a first agent comes forward to raise suspicion and work with the CMA, they can find themselves void from fine. Typical actions can carry a 10% fine based on annual revenue x the mount of years the offence has happened.”
Yeah… your point being?
“What they can’t do is price fix or collude to place restraints that hit Joe Consumer or competitors.” 03 March 2017
Yet in other Mealham quotes:
“What’s the problem with agents getting their fees up.” 17 May 2016
“I really don’t understand why agents struggle to get better fees and can’t secure listings.” 7 March 2016
“In the last few weeks I have shown a few agents how to get their fees up at valuations…” 7 March 2016
There’s piles more where those came from – but I guess these show that to certain individuals/groups/clubs it’s not WHAT you do – it’s HOW you do it, and no-one rats the others out.
“On that if data was revamped to flow to a mutual hub where sharing meant share via better fees etc. It could leave many budget agents out in the cold.” 11 December 2015
That last one – isn’t that the vaguest hint of cartel-like activity, Mr Mealham?
@PeeBee.
Typically, when a first agent comes forward to raise suspicion and work with the CMA, they can find themselves void from fine
The point is that in cases where a business feels cartel is happening and they may be part of it. To be the first in to highlight the instance and ‘why’ – CAN be:
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
https://webcache.googleusercontent.com/search?q=cache:efbmg-f0_noJ:https://www.gov.uk/guidance/cartels-confess-and-apply-for-leniency+&cd=2&hl=en&ct=clnk&gl=uk
Mr Mealham, I ask again
WHAT IS YOUR POINT?
My point was on the part of the story where one agent is not being pursued and a poss reason why.
SO – let me get this right…
An article with a body of 551 words – and you decide to home in on only FIFTY SIX of them split between two paragraphs to point out to the readership?
Four Agents have had over a third of a million quid PLUS Lord knows how much more in costs ripped out of their bellies – and you instead want to draw our attention to the screamer who ratted them out and walked away scot free?
And you had NO ulterior motive whatsoever – no hidden agenda – for this decision to ignore those that were penalised, and to instead keep on making a point that there is always thirty pieces of silver waiting for the right person to collect them?
Some would say that speaks volumes, Mr Mealham.
Volumes.
Im sure many readers would ask why does one agent get off.
The sad thing is agents get hard hit. And theres more agents or rather ‘budget listers’ not making it easier.
People like me can help agents fight some of the challenges.
I and the INEA partners are preparing to launch a new Property Broker model. To do so we need to ensure its lawful for agents to use. Thus I communicate a lot with the powers that be and pass on findings to agents who engage with us.
@PeeBee – as for higher fees, whats the issue. I never recommend agents fee fix. What I recommend is that they offer main agency at a premium price that they decide.
So if Agent A charges 0.75% to 1% sole and agent B charges 1% sole and Agent C charges 0.95% sole. Then all for subbing out as a premium service which is totally legal would allocate a main agency fee as to what they feel happy to pay a introducer sub agent be it main agency at 1.25% – 1.5% or 2.25%
Agents in their own capacity have to decide what works for them and what they are willing to offer.
As such agent A may act as a main agent and charge 1.75% offering 0.75% to any sub agent
Agent B may quote 1.5% and be happy to take 0.5% and give 1% away.
Its down to the main agent, not what the main agent and his 4-5-6 buddies agree on being a same figure.
As for budget agents – we’ll they simply self exclude by being cheap and not having enough funds in the seller fee to be able to offer sub agents anything.
If budgets offered main agency, they’d up their fees, which end goal would be better for local agents fighting ground zero.
MLS/subbing is no different to saying to a seller – here is our basic package, or for £x’s more you can have premium pics, floor plans, premium listing on RM etc etc.
Subbing is just a premium offering to achieve more. There is nothing to stop any agent offering it so long as it is on their main agency terms and not a collusive set fee in a geographical area where every agent offers the same at a colluded same price.
Look at the fines, wow!!! It’s a bit more of a deterrent than the equivalent ‘informal resolutions’ from the ASA when homeowners have been denied the opportunity to make an informed decision because of misleading advertising!
Correct, but you miss the point, this is punishing the nasty high street estate agent, rather than the harmless fairy like online kings and queens
I don’t care if you’re high street, online, hybrid or cheddar cheese. Illegal is illegal and needs to be punished.
Just a thought, Is not 1.5% a bargain when PB are openly advertising their fee saving based on 1.8%?
Would that have made an interesting discussion?
It seems to me that to warrant such action and fines the agreed fee must be unfair and based on what the call centre agents are getting away with quoting, can a below their average fee be deemed as unfair to the consumer?
Is it not more unfair to charge people upfront without telling them 1/4 sales conversion figures so they can better understand their chance of selling?