CMA completes probe into advertising of estate agents’ fees
The CMA has issued its decision finding that an association of estate and lettings agents, 3 of its members and a newspaper publisher infringed competition law.
The Competition and Markets Authority (CMA) also imposed penalties on the parties totalling over £735,000.
Today’s decision brings the investigation to a close. In March 2015 the parties to the case admitted breaching competition law and have received reduced penalties to recognise efficiencies for the CMA resulting from the streamlined administrative procedure following settlement, as well as the parties’ admissions and ongoing co-operation as part of the settlement.
The CMA found that, at various times between July 2005 and January 2014:
Castles Property Services Limited (Castles), Hamptons Estates Limited (Hamptons International) and Waterfords (Estate Agents) Limited (Waterfords), each being a member of Three Counties Estate Agents Limited (Three Counties - the trade association), entered into one or more agreements that they would prevent members of Three Counties (including themselves) from advertising their fees or discounts in the local newspaper, the ‘Surrey & Hants Star Courier’
Waterfords and Hamptons International extended the scope of this arrangement, with the co-operation of Trinity Mirror Southern Limited (Trinity Mirror Southern), the publisher of the ‘Surrey & Hants Star Courier’, to prevent agents (whether members or non-members of Three Counties) from advertising their fees or discounts in the ‘Surrey & Hants Star Courier’
Three Counties’ membership rules prohibited the association’s members from advertising their fees or discounts in the ‘Surrey & Hants Star Courier’
The CMA found that these arrangements had the object and potential effect of reducing competitive pressure on estate and lettings agents’ fees in the local area in and around Fleet in Hampshire. In addition, they may have made it harder for potential competitors to enter the market by using the level of their fees to attract new customers. These practices potentially limited consumers’ choice and ability to compare prices and assess value for money.
Waterfords and Hamptons International, and its parent companies Countrywide plc and Countrywide Group plc, have now decided to introduce company-wide competition law compliance programmes, which include commitment by senior management to, and accountability for, future competition law compliance. In doing so they have taken certain steps to identify and assess potential competition law risks, sought to mitigate the risks becoming reality, and committed to regularly review the effectiveness of the programmes. The CMA has treated this as a mitigating factor, meriting a 5% discount to their penalties before the application of the settlement discount.
Advice for trade associations and businesses on complying with competition law can be found in our ‘Competition and consumer law compliance: guidance for businesses’ collection.
Please see the case page for further details. The full decision will be published in due course following the redaction of commercially sensitive information.
Notes for editors
- The Chapter I prohibition of the Competition Act 1998 covers anti-competitive agreements, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it.
- Any business found to have infringed the Competition Act 1998 can be fined up to 10% of its annual worldwide group turnover. In calculating financial penalties, the CMA has taken into account a number of factors including the seriousness of the infringement, the relevant turnover and certain mitigating and aggravating factors. Read the CMA’s penalties guidance.
- Appropriate compliance activities are one of the mitigating factors which may merit a reduction in penalty. The CMA considers that the key is to instill an appropriate compliance culture in an organisation, from the top down. The CMA recommends that businesses use a four-step process to tackle the specific risks they face: risk identification, risk assessment, risk mitigation and review. See our ‘Competition and consumer law compliance: guidance for businesses’ collection for further details.
- The CMA has imposed a penalty of £647,172 on Hamptons International, which includes a discount of 5% for compliance activities, and has applied a settlement discount of 10%, giving a penalty payable of £582,455. The CMA has held Countrywide plc and Countrywide Group plc, as the ultimate parent companies of Hamptons International, jointly and severally liable for £388,303 of Hamptons International’s penalty set out above (which includes the discount of 5% for compliance activities) and has applied a settlement discount of 10%, resulting in joint and several liability for a penalty of £349,473. These figures are slightly lower than those announced in the CMA’s press release dated 19 March 2015, due to the application of a compliance discount.
- The CMA has imposed a penalty of £101,397 on Trinity Mirror Southern, and has applied a settlement discount of 10%, giving a penalty payable of £91,257. The CMA has held Trinity Mirror plc, as the ultimate parent company of Trinity Mirror Southern, jointly and severally liable for this penalty.
- The CMA has imposed a penalty of £51,318 on Waterfords, which includes a discount of 5% for compliance activities, and has applied a settlement discount of 10%, giving a penalty payable of £46,186. These figures are slightly different to those announced in the press release dated 19 March 2015, reflecting the submission of revised turnover figures and the application of a compliance discount.
- The CMA has imposed a penalty of £19,275 on Castles, and has applied a settlement discount of 10%, giving a penalty payable of £17,348.
- The CMA has imposed a penalty of £100 on Three Counties, and has applied a settlement discount of 10%, giving a penalty payable of £90. This figure was applied in light of its lack of turnover in the market(s) affected by the infringement.
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and certain consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading.
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