1.5% commission rate fixed by estate agents cartel ruled illegal (UK).
20/09/2017
Five out of six estate agents from the Burnham-on-Sea area of Somerset, who colluded in an agreement to increase their profits by driving their minimum commission rates up to 1.5%, have been fined a total of £370,084 by the Competition and Markets Authority for participating in an illegal cartel.
‘Decision of the Competition and Markets Authority: Residential estate agency services: Case 50235’ explains that the 6th estate agent was not fined as it was the first to confess participation in the cartel and co-operated with the investigation, therefore benefiting from the CMA’s leniency policy.
The rationale of the cartel is summed up in the sentence “With a bit of talking and co-operation between us, we all win”.
Email evidence from the initial meeting explained how its aim was to “drive the fee level up to 1.5%” and make as much profit as possible. The members also took it turns to act as ‘policeman’ and ensure everyone was sticking to the agreement.
CMA was required to take action against estate agents for competition law breaches in 2015, raising concerns that the sector does not properly understand the seriousness of anti-competitive conduct and the consequence of breaking the law.
It has therefore recently published ‘Estate agents cartel case study’, which reveals what the Somerset cartel did and refers back to the 2015 case, to help remind other estate agents what can happen if they ignore competition law.