Estate agents wanting to avoid being drawn into secret cartels should be very careful in talking to each other about fees and business strategies which are not in the public domain.
Juliette Enser, project director at the Competition and Markets Authority, told EYE: “Staff should not be discussing competitively sensitive information – and a test of that is whether it is public knowledge.
“A real danger area is fees, including future fees and promotions.”
Enser, who led the price-fixing cartel investigation into six agents in Burnham-on-Sea, Somerset, would not be drawn on whether more estate agent cartels are being probed, saying: “We cannot comment on individual cases, but we have reason to believe that there is less awareness in the sector than we would like there to be.
“This was after all the second time in less than two years that an estate agency cartel has been investigated.”
In both the Somerset and the earlier north-east Hampshire cases, the cartels revolved around fees.
The cartels were by definition secret, and in both cases, large fines were dished out – albeit reduced when the agents co-operated with the investigations.
Enser said: “When the CMA publicises a case in a sector, it may receive intelligence about other cartels – as was the case here.”
An awareness campaign is aimed at “avoiding a repeat”, she said – but she also said that the campaign itself could uncover more estate agents’ cartels.
Wouldn’t it be easier for the CMA simply to insist that all estate agents should state and show their fees? It is, after all, what letting agents have to do by law, so why not sales agents?
However, Enser said it was not for the CMA to mandate how agents should publicise their fees but added that agents have to make their own independent decision as to what they charge.
The CMA offers up to £100,000 for anyone not involved in a cartel to report one. It also offers a leniency programme to whistle-blowers involved in cartels who report what is going on.
This was the case in Burnham-on-Sea where one of the six agents, C J Hole, reported the cartel and then co-operated in the investigation. The business escaped a fine altogether.
Are all reported suspicions of cartels investigated by the CMA?
Yesterday on EYE, a reader (Naysayer) posted up: “This happens in Mid Herts area. The local independents agree fee levels. They even set up their own property newspaper (in rival to the local rag) to try and drive anyone not in agreement out of business and yet the CMA did nothing when it was reported.”
Again Enser said she could not be drawn on individual cases, but said that where formal investigations were launched, these followed enquiries. The investigations themselves were very thorough, as has been shown in both the Hampshire and Somerset cartel cases, with information painstakingly gathered, including emails and evidence of meetings.