The government’s competition watchdog has made the unusual move of publishing more details of its recent investigation into price-fixing in the seaside town of Burnham-on-Sea in Somerset.
In March this year the Competition and Markets Authority fined a group of agents in the town a total of nearly £380,000 after its investigation uncovered that they had held a meeting at which they agreed to fix their minimum commission rates at 1.5%.
But the CMA believes that, because this is the second time it has caught agents undertaking such anti-competitive behaviour in recent years, it’s concerned that agents still don’t realise how serious such conduct is – or its consequences.
The earlier case involved an association of estate agent in Hampshire who in May 2015 were revealed to have colluded with a local newspaper over the publishing of fees and discounts in adverts.
To highlight this, the CMA has published details of how the Burnham cartel was set up, discussed and what was said at the clandestine meeting.
The agents involved were Gary Berryman Estates Ltd, Abbot and Frost Limited, Greenslade Taylor Hunt and West Coast Property Services (UK).
The CMA says the anti-competitive activity kicked off in 2014 when the agents met “to discuss fees”, a meeting at which the 1.5% fee level was agreed, as was their aim to “drive the fee level up” and agents “as much profit as possible”.
Evidence was also gathered that highlighted how the agents policed themselves to ensure that the 1.5% minimum fee was stuck to, with each agent taking a turn to monitor the others.
The CMA says that when the Burnham agents realised their activity might get themselves into trouble, the cartel broken up, much to the dismay of one or two of the agents who were unhappy to see commission rates begin to drop again.
“We all know from recent experience that with a bit of talking and co-operation between us, we all win,” one agent was recorded saying.
Such price fixing cartels are viewed by the CMA particularly seriously because competition law is designed to ensure businesses compete on a level playing field.
“In this case, the illegal agreement between the estate agents meant that local people selling their properties were denied the chance of getting the best possible deal, where normally they would have benefitted from agents competing against one another to offer better fee levels,” it says.