Advertising of estate agents' fees: competition law lessons
- Competition and Markets Authority
- Part of:
- Competition law compliance: guidance for businesses, Competition law, and Competition Act and cartels
- First published:
- 3 June 2015
The CMA fined an association of estate and lettings agents, 3 of its members and a newspaper publisher for breaking competition law.
This case study sets out the lessons learned from this case for estate and lettings agents and newspaper publishers about competition law enforcement.
In 2015, an association of estate and lettings agents, 3 of its members and a local newspaper were fined over £735,000 by the Competition and Markets Authority (CMA) for breaking competition law.
The agents were part of a trade association which prohibited its members from advertising their fees or discounts in the local paper. Two of the agents also extended this arrangement by agreeing with the paper that no other estate or lettings agents could advertise their fees, whether they were members of the association or not.
How did this break the law?
These agreements prevented agents from advertising their fees in the local paper. This limited their ability to compete with each other on their fees, making it harder for consumers to compare prices and get value for money. Preventing agents from advertising their fees may also have made it harder for new or smaller businesses to attract new customers.
What action was taken?
The companies involved were collectively fined over £735,000 by the CMA. They received reduced fines for settling the case, which allowed for a quicker resolution to proceedings. Two of the companies got a further reduction by committing to put in place specific compliance measures to help prevent them from breaking competition law in future.
What are the lessons from this case?
- Agreeing with your competitors to restrict the advertising of fees is likely to be unlawful. Advertising fees may be an important way for businesses to compete on price and attract new customers. A business must make independent decisions on the contents of its adverts, including whether to advertise its prices or not.
- Trade associations can break competition law. Whilst trade associations can offer many legitimate benefits, where they take actions that limit the commercial freedom of their members, for example by restricting the form or content of their advertising, this can risk breaking competition law. The association, as well as its members, can be fined for such conduct.
- The consequences of breaking competition law can be severe: fines can be as much as 10% of a business’ global turnover and directors can be banned from running a company for up to 15 years. In the most serious cases, individuals can even go to prison for up to 5 years.
Agreements that restrict how or where a business can advertise its fees may be illegal. Make sure you don’t fall foul of the law.
What can you do?
This case shows that it’s important for estate and lettings agents and newspapers to review their practices so that they don’t risk entering into illegal agreements. Some of the ways to do this is to:
- create a culture of compliance – everyone in your business must understand what they need to do to stay on the right side of competition law
- check when signing up to any trade associations that their membership rules don’t unfairly restrict how you advertise your services or run your business
- seek independent legal advice if you are unclear whether an agreement is anti-competitive or not
Use the CMA’s notification form to report any issues related to anti-competitive practices to the CMA.
For more information on how businesses can comply with competition law see our guidance collection.
This case study does not constitute legal advice and should not be relied upon as such.
Published: 3 June 2015