One of the country’s best known agents, Romans, escaped penalty after blowing the whistle in the latest ‘cartel’ case despite playing an active role in arrangements.
It was Romans that instigated the investigation into the cartel after it says that senior executives became aware of what had gone on.
According to the latest Competition and Markets Authority update, during the life of the cartel Romans carried out monitoring of compliance and actively “policed” the minimum fees arrangement agreed between agents in Berkshire.
Two of the other agents concerned both alleged that they had acted under duress from Romans to participate – although their claims were dismissed as mitigation.
Both claimed that Romans had the power to “drive them out of business by under-cutting them if they did not enter into or comply with the minimum fee arrangement”.
The CMA’s latest document contains these and other claims, and reveals a deadline of less than a month away for three of the four agents in the ‘cartel’ to pay their substantial fines totalling some £600,000.
The CMA document does not go into detail about the leniency afforded to Romans – which alone has escaped penalty – other than by saying that it had applied for leniency and provided information.
The agents involved were Michael Hardy, Prospect, Richard Worth and Romans.
Their parts in the ‘cartel’ are described in some depth in the CMA’s latest update on the case, which spells out emails and conversations, and concludes that the agents agreed minimum fee levels in certain areas in Berkshire with the aim of restricting price competition.
The CMA quotes a director of Romans saying that in addition to having meetings, the agents would make other contact to discuss individual properties: “Most of this contact was by phone, both landline and mobile, and very little was ever written down.”
Documentary evidence gathered by the CMA showed the agents monitoring each other’s compliance with the arrangement.
One internal Romans email said that Prospect had emailed across a copy of the contracts, saying they were all at 1.8% “bar one at 1.75% which he apologised about”.
A Romans director also explained why the minimum fee arrangement was with Prospect, Michael Hardy and Richard Worth – because the three were “Romans’ main competitors in the Wokingham area”.
The CMA update explains why the arrangement ultimately broke down – it was because of the impending opening of an office in Wokingham by anoher large estate agent, which it was anticipated would be offering an introductory 0% fee offer.
The CMA’s document says that Michael Hardy, Prospect, Richard Worth and Romans were all directly involved in, and therefore liable for, the infringement.
However, it says, “Romans has been granted full immunity” under the CMA’s leniency policy.
The CMA has fined Michael Hardy, Prospect and Richard Worth amounts based on their turnovers (the sums are redacted from the report), and added 15% because of “the direct involvement” of their directors.
However, it decreased Prospect’s penalty by 10% to reflect compliance steps it had proactively put in place following another estate agency cartel case nearby (Three Counties case).
The document also discusses possible mitigating factors.
Both Michael Hardy and Richard Worth said they acted under duress from Romans to take part. Both said that if they did not, Romans had the power to drive them out of business.
In the case of Michael Hardy, the alleged threat was said to have been made in a single phone call in the summer of 2008.
In the case of Richard Worth, the alleged threat was made on several occasions.
However, the CMA dismissed these claims as mitigation factors. It did, however, grant leniency to Prospect, with a penalty reduction of 50%, because of the information it provided and its level of co-operation. It nevertheless still has the largest fine to pay.
Michael Hardy, Prospect and Richard Worth have been fined £142,843, £268,765 and £193,911 respectively.
Each must pay by close of banking business on February 18.
Romans has previously 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.”
Comments (12)
Romans sailing close to the wind? Surely not?
Worthy himself had long gone from Richard Worth before this raised its head . Cartels , I always wonder how all the concessions units at motorway service areas manage to getaway with charging the same price for a cup of coffee
Not wishing to condone the price fixing in anyway but one lesson learned is betrayal more likely to come from a friend than an enemy
Seems very wrong that Romans get off scot-free. Would be more palatable if they were fined too – albeit a proportionately lesser amount than the others.
Or perhaps CMA want to send a message…’pour encourager les autres’?
Exactly… it’s the most effective way of getting evidence to make a case.
Someone (in this case,Romans) was always going to take the bait.
The publicity makes it more likely that further examples will come to light – squeaky bum time for some – do you keep quiet and hope that other cartel members do the same, or do you save yourself a large fine and take out the opposition at the same time ?
Ironically it was Cicero whose words were translated to “honour amongst thieves” 🙂
You’ve got it – the CMA relies very heavily on whistleblowers (they simply haven’t the resources to proactively investigate from scratch). The next fine? For breaching their rules on reviews is my guess (prompted by a competitor or a disgruntled ex-employee, no doubt).
What an utter disgrace. With the amount of evidence against them why is Romans walking away unscathed? Someone admitting their crime does not suddenly make them innocent. Further decimation of an already tarnished public reputation, when will agents ever get a break?
When they all play by the rules.
One bad apple DOES damage the whole barrel in our industry, unfortunately.
Both claimed that Romans had the power to “drive them out of business by under-cutting them if they did not enter into or comply with the minimum fee arrangement”.
I think it is better to go out of business competing honestly and decently than face the humiliation of this. If you have to cheat to compete…you’ve lost
It’s pretty obvious why Romans did what they did – simply because they knew this was the skeleton in the cupboard and had the most to lose in terms of the ratio of how the fines were being divvied out.
Of particular note, is that not a single director who was part of the supposed MBO is still in the business other than Peter Kavanagh and are working elsewhere whilst waiting for all those big loan notes to be paid out on.
Funny old world as well, given that all of those agents listed who then colluded with Romans, were the very firms who when Romans were made an example of some years ago by Trading Standards for putting Sold boards outside some directors houses went around sticking photocopies of the press articles through all of Romans vendors houses and dined out on that for some time – http://news.bbc.co.uk/1/hi/england/berkshire/3536100.stm Romans may view the other agents getting stung for the fines as Karma.
It’s very unseemly that they have been given total immunity….
Perhaps they will refund the clients who were duped?
That’s a really interesting thought, I know that if I was a client of one of the agents involved I would be preparing a claim against them for compensation.
“… if I was a client of one of the agents involved I would be preparing a claim against them for compensation.”
Why? They were charged a Fee that they agreed to pay for doing a job – which was done.
The fact that the Agents stuck to their guns for minimum Fee levels is, in isolation, commendable.
Only the fact that they ‘colluded’ to do it en-masse is illegal in the eyes of the Law is the issue here – which is not a civil matter.
Whatever the CMA say, homesellers had a choice of whether to instruct these Agents or go elsewhere, so there was still an element of ‘competition’ open to them.
They chose the Agent despite the Fee level. No claim for compensation would be entertained for that reason alone.