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Agents who break competition rules to face huge fines

Competition watchdog the CMA says it plans to fine estate agents become involved in cartels as well as disqualify them as directors.

Nigel Lewis

cma

The Competition and Markets Authority (CMA) has revealed that it intends to introduce substantial fines for the directors of estate agencies who are involved in illegal cartels.

At the moment senior staff at companies can only either be prosecuted or be disqualified from being directors for up to 15 years via either Compulsory Disqualifications Orders or through voluntary undertakings if they are caught colluding in local fees cartels.

In reality, it is extremely hard to secure guilty verdicts for criminal cartel offences, as the CMA has found, and as in the recent Burnham estate agency fees scandal, instead it has been pursuing director disqualifications.

Personal liability

But the CMA has now submitted proposed reforms of the way competition is policed in the UK to underline greater personal liability and wants to introduce civil fines for individuals involved in breaches of competition law.

The proposals are at an early stage but the Government is expected to publish a Green Paper for consultation by the end of July.

Agents can be disqualified as directors if they contribute to the breach of competition law, had reasonable grounds to suspect a breach and took no steps to prevent it, or did not know but should have known that the company was involved in conduct that was in breach of competition law.

The now infamous Burnham-on-Sea case saw two directors of residential estate agents disqualified, for three years and three and a half respectively as a result of their companies having participated in a cartel to fix their minimum commission rates at 1.5%.

In April the CMA accepted a further disqualification undertaking from a director of one of the estate agents involved in this case, for a period of five years.

 

May 24, 2019

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