The competition watchdog has launched a new investigation into anti-competitive activity in the estate agency sector – its third since 2015.
Details on the new investigation, announced by the Competition and Markets Authority (CMA) on Friday, are sparse.
It is said to have been sparked by a tip-off that followed a CMA price-fixing probe last year involving estate agents in the Burnham-on-Sea area, which resulted in five businesses being fined more than £370,000.
The CMA confirmed it is investigating a suspected infringement of the Competition Act 1998 (CA98).
A spokesman declined to reveal who was involved in the investigation, but it is thought to involve a number of companies.
He said: “This has been launched on the basis of information that we received following a previous estate agency case we had in the Burnham-on-Sea area so there is momentum being built now.
“This is now the third Competition Act case that we have opened in the estate agency sector since 2015.”
The CMA said it had not yet reached a view as to whether or not there is sufficient evidence to issue a statement of objections to parties under investigation, which would detail what they are suspected of doing and give them a chance to respond.
A decision on whether or not to proceed with or close the investigation is expected by September 2018.
Cases of this nature generally take about a year to progress.
In some cases, businesses being investigated will settle, which generally means the process will take less time and fines will be reduced.
Businesses can be fined up to 10% of their worldwide annual turnover for a breach of competition law, although the CMA will consider how long the infringement took place, the size of the market, and the number of businesses potentially affected.
In 2015, the CMA fined a group of estate agents, three of its members and newspaper publisher Trinity Mirror more than £775,000 between them after a ‘cartel’ ruling.
Comments (17)
The MP’s and likes of Shelter want to price rig lettings fees, rent and tenancy term …. is that not a cartel?
I do understand what a cartel is and I do understand who the CMA are and what they do. But…….
There is probably not an estate agent around that wouldn’t agree that the service we offer is worth a minimum of let’s say 1.25%. Okay some may say more some may say less but lets say 1.25% for the sake of argument. I fail to see what is wrong with agents in a town all agreeing that they have to stop charging less that the service we as an industry can realistically charge in order to offer the service that the public want and deserve. Fine if agents want to try and charge more and good luck to them. Some may offer additional marketing tools, video tours, 7 day opening, professional photography etc but the basic service has to be worth 1.25%, so what’s the problem with agreeing not to charge less?
I’m sure I’ll be put right but that’s my take!
This isn’t a case of you “being put right”, Ang7779. You ARE “right” – but that’s paradoxically what makes it so wrong!
There IS a bottom line. Without one, there is only ruin.
But Agents fail to see that – or at least fail to work to the rule.
I’m going to give you a genuine example here. I have actually just been talking about it in the last 15 minutes before I came on EYE.
A lady came into the office yesterday, that I’d given an appraisal to two days earlier. She asked if I would discount my quoted fee – 1.5% inclusive – by a third. I only needed one word to answer her – but the resulting conversation lasted another five minutes, and ended positively… although of course she has every other Agent in my town ready to undercut me – and each other – to get the job..
I would love to get the job. But I won’t do it for less than my ‘minimum’ fee. And if I don’t get it – good luck to the numpty that takes on unprofitable business
Could I? Yes – a little. But I won’t. I am a cartel of one.
Oh – and for the record (and no doubt to give you a proper chuckle – the 1.5% Fee we are talking about comes to £2250, of which I would be gifting the Government £375 in VAT.
Race to the bottom – come on board!
Set your minimum Fees at a quid and CMA will come after your @sses.
PeeBee…Hi, I trust you’re well. Appreciated your comment. Nightmare isn’t it! Over the years I’ve read your comments with interest, agreeing with most until it comes to our online competition. There we differ quiet a bit, but whatever, that’s life and that’s business!
I’ve read PIE for a good few years but have always refrained from commenting. Mainly because I can’t be a^&*$ to get into anonymous arguments and slanging matches. I run a high street office and hopefully will continue to for many years to come. Online will never be an option for me, there’s a place for it but I like my car and basic salary too much! However there is a totally disproportionate amount of vitriol aimed at what is effectively our competition. Not just biased but a lot of untruths.
Here’s an example of where we go wrong on here.
There’s a guy on here MrLister whose partner was an LPE and he was a high street agent. His comments and observations were very insightful. But he just came in for abuse and was basically told he was talking rubbish, yet he was ideally placed to cast some light on how they operate. By all accounts he’s not going to post on here any more. A loss. I think on a forum where many don’t have any real experience or knowledge of how online agents really work on day to day basis we could do with more online agents getting involved but the posters on here don’t make it an appealing proposition. Got that off my chest.
Sorry, I’m rambling, bottom line, I have now decided to join the party here and have my say every now and again. I’m sure we’ll cross swords occasionally.
My first few comments on PIE were born out of pure frustration with a number of individuals on here who rightly or wrongly I named. I felt a little foolish afterwards but meant what I said. Yes, they (and many others) don’t like Purplebricks, but for goodness sake, give it a break. There are numerous high street agents in the areas our offices operate in who behave far worse and give a worse service
Cartels. I’d love to think of anther word for them. Perhaps collectives. Whichever, I’m right behind the idea. We need to as a “collective” at least have a base fee. I won’t hold my breath though.
Speak soon!
Ang7779
I am very well, thank you – and trust you the same.
I read your comments with interest. MrLister will be back I am sure. And whilst I am also sure that some of his ‘insights’ were genuine, in my opinion the holes in the argument were too wide and plentiful to serve use as a blanket in the way he intended.
You say that there is a dislike for PB. Rather than disagree, I would put to you that what there actually is, is a dislike – an intense one at that – for the way that PB and others have set out and are running their stalls. That’s certainly the case in my situation – and it’s my reading of the feelings of others.
I guess we can look forward to the next crossing of swords on the subject.
So to clarify, if all estate agents published their selling fees (As the biggest agent in the country (by fall throughs) wants) and those fees were all £1000, that would be a cartel.As although no official agreement would be struck, once the first agent banged up the £1000 advert, the others would be compelled to follow. This transparency makes all customers aware that every agent chargers the same and thus denies them any choice based on cost.
So if more than one agent in a town do the same fee … suspicions of a cartel? The story is like, we can’t wait to tell you, but can’t. Does sound like a broadside warning to all.
Shame the ASA are not so adventureous.
DUCKY: “I don’t care about interpretation of the law or technicalities” = seems about right, as long your armchair opinion comes first.
Woodentop
Seems that ducky doesn’t have high regard of the Laws of the land – at least those which our businesses require to be run in accordance with – here’s his thoughts on the subject from last April here on EYE:
“You can point to as many consumer protection laws as you want but in the end the consumer will get what they want which is a cheap way to sell their properties.”
Speaks volumes…
Sure does.
Now is that PeeBee 3 and Woodentop 2 for cartels or 565 and 265 respectively as we haven’t mentioned PB … damn just did. I’m off to the pub.
Dear CMA
Commission rates in the UK are amongst the best value in the developed world at circa 1% plus vat or 1.2% inc vat.
European rates are between 6% and 17% on new build sales.
Australia is around 3% and America around 6%.
If the largest call centre agent has at least tripled their fees and migrated to two of these markets it may suggest something!
So what about abuse of a dominant market position?
https://www.youtube.com/watch?v=cemTusT9ufs
How come we never hear about any investigations along those lines from the CMA?
Hmmm… one to watch, no doubt!
Maybe this announcement is a ploy for any potential whistleblowers to come forward.
Or is it simply reminding people that the CMA actually exist?
“This is now the third Competition Act case that we have opened in the estate agency sector since 2015.”
WOW! – Our industry is proper keeping the bu99ers on their toes, then, innit?
Doubt we’ll ever find out how many ‘unopened’ cases are sitting clogging up their Recycle Bin!
I’m bemused that Estate Agents would get on well enough with each other to agree on something 😉
Like Arthur I think what is the point of this announcement? If you have evidence get your finger out and get on with it ……no showboating, threatening required ….. just get on with it.
I’m a bit bemused by this announcement unless it is purely there to warn other estate agents of indulging in this “activity”
Details released none
Are you going to prosecute, dont know
Point of press release, estate agents are all evil!
One would naturally assume this is the same and they are investigating some sort of local arrangement, but i would guess that a national company setting a minimum fee/commission rate could also fall under this type of investigation?
>I’m a bit bemused by this announcement
Sounds like they don’t have enough evidence. Perhaps they’re putting pressure on so that one of the parties informs on the others as was the case in Burnham-on-Sea.
>i would guess that a national company setting a minimum fee/commission rate could also fall under this type of investigation?
Do you really think that’s the same as 95% of the effective market’s prices being fixed? I don’t care about interpretation of the law or technicalities, price fixing of the type that went on in Burnham-on-Sea cannot be compared with what you are suggesting.
I’m not having a dig at one of the call centre agents, just merely posing the query. I like many others have and will suggest, find it hard to imagine a situation where a group of local agents can strike a fee agreement. In my area the best communication you get outside of sales chasing is a 5 second chat at the local newagent. Agent directors/branch managers having the trust in each other to set up another cartel arrangement seems far feched particularly after what went on before.
Though if as a vendor you have 3 estate agents out and they all say 1.2% as their fee, in some peoples mind this would be enough to launch an investigation.
“Do you really think that’s the same as 95% of the effective market’s prices being fixed? …price fixing of the type that went on in Burnham-on-Sea cannot be compared with what you are suggesting.”
SO… what you’re saying is that “Burnham-on-Sea” wasn’t a cartel?
You agree that there was, in fact, a significant selection of available choice of Agent who did not subscribe to the idea of protecting their bottom line, their futures and most importantly the quality of service they were proud to provide for their customers by charging a realistic Fee for a job done?
That prospective sellers could instruct any one… or several… or all, even… of a large number of regional or national Property Listing Facility Providers in order to get their properties on the main portals and therefore be in with a chance of selling?
#Funny_that. You’re normally shouting about cartels from the rooftops now you don’t believe they exist and that the last poor bu99ers that got slapped with fines were done over.
You’re a complex animal, ducky – I’ll give you that.