05 June 2015

CMA warns estate and lettings agents not to break competition law

On 3 June 2015, the Competition and Markets Authority (CMA) issued letters to a number of UK estate and lettings agents warning that they may be at risk of breaching competition law. The move follows a decision by the CMA in May this year fining an association of estate and lettings agents, 3 of its members and a newspaper publisher over £735,000 for agreeing to restrict the advertising of fees or discounts in a local newspaper.

In light of this case, the CMA has sent warning letters to a number of other estate and lettings agents, which it suspects may also have been involved in restricting the advertising of fees. The companies involved have not been named. The CMA also states that it has received complaints that other associations of estate agents may be engaging in similar practices, and is considering whether to take further action.

In order to help businesses avoid competition law risks, the CMA has published open letters to companies in the property and newspaper industries along with a case study. The study flags that agreeing with competitors to restrict the advertising of fees is likely to be unlawful, given that advertising fees may be an important way for businesses to compete on price and attract new customers. It also stresses that a business must make independent decisions on the contents of its adverts, including whether to advertise its prices or not.

The CMA adds that it is working with a number of industry bodies in the sector to help publicise the case and encourage best practice.  Under the UK competition regime, businesses that are found to have broken competition law can be fined up to 10% of their annual worldwide turnover, and company directors can be disqualified for up to 15 years where their conduct makes them unfit to be concerned in the management of a company.  In addition, individuals involved in very serious cartel activity, such as price-fixing, may be found guilty of the criminal cartel offence and could go to prison for up to 5 years and/or have to pay an unlimited fine.

Ann Pope, CMA Acting Executive Director of Enforcement, stated that businesses trading in the UK are encouraged to have an effective compliance programme in place.  A key aspect of any such programme from the CMA’s perspective is to have a clear and unambiguous commitment to comply with competition law throughout the organisation, from senior management down.  Such a programme can be treated as a mitigating factor in determining any penalty fine should a breach occur.

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