CMA issues statement of objections to an association of estate agents, some of its members and a local newspaper
The CMA today issued a statement of objections to an association of estate and lettings agents, some of its members and a newspaper publisher.
The statement of objections alleges that these companies breached competition law by agreeing to prevent estate and lettings agents from advertising their fees or discounts in the local property newspaper.
The statement of objections is addressed to Waterfords (Estate Agents) Limited (Waterfords), Castles Property Services Limited and Hamptons Estates Limited (Hamptons International), each being a member of Three Counties Estate Agents Association. The statement of objections alleges that:
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these companies entered into an agreement which prevented members of the association (including themselves) from advertising their fees or discounts in the local newspaper, the ‘Surrey & Hants Star Courier’
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Waterfords and Hamptons International extended the scope of this arrangement, with the cooperation of Trinity Mirror Southern Limited, the publisher of the ‘Surrey & Hants Star Courier’, to prevent any agents (whether members or non-members of the association) from advertising their fees or discounts in this newspaper
The Competition and Markets Authority (CMA) has also addressed the statement of objections to Three Counties Estate Agents Association, alleging that the membership rules of the association themselves breached competition law, by prohibiting the association’s members from advertising their fees or discounts in the ‘Surrey & Hants Star Courier’.
The CMA’s provisional view is that the above arrangements reduced the competitive pressure on estate and lettings agents’ fees in the local area. In addition, the alleged restrictions made it harder for potential competitors to enter the market by using the level of their fees to attract new customers. The CMA provisionally considers that these practices limited consumers’ choice and obstructed their ability to compare prices and assess value for money.
Ann Pope, CMA Senior Director of Antitrust Enforcement, said:
The ability of a company to advertise its fees or discounts freely plays an important role in stimulating price competition between competitors. If estate or lettings agents are prevented from advertising their fees or discounts in the local newspaper, property owners are likely to find it harder to assess which agents offer the best value for money. It could also make it harder for new entrants to enter the market and compete effectively with established estate and lettings agents.
The CMA’s findings are provisional and no assumption should be made at this stage that there has been a breach of competition law. We will carefully consider the companies’ representations before deciding whether the law has in fact been infringed.
She continued:
Effective enforcement of competition law is central to the CMA’s role, not only to address specific anti-competitive behaviour but to encourage compliance with the law amongst businesses more widely. This is the CMA’s first statement of objections, which has been issued within 12 months of the start of the investigation, demonstrating our focus on progressing cases quickly and effectively.
Notes for editors
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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 (OFT). For more information see the CMA’s homepage.
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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 reference to agreement in the above news release should also be read as a reference to an agreement, a concerted practice or decision by an association of undertakings, unless the context requires otherwise.
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Any business found to have infringed the Competition Act 1998 could be fined up to 10% of its annual worldwide group turnover. In calculating financial penalties, the CMA takes into account a number of factors including seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors.
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In 2008, the OFT sent a warning letter to Three Counties Estate Agents Association to alert the association that its rules of membership might infringe competition law. The current investigation was initiated by the OFT under the Competition Act 1998 on 18 December 2013, following a complaint to the OFT about the association’s rules of membership.
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The statement of objections is addressed to the following companies, which the CMA provisionally considers were directly involved in the alleged infringement at various times in the period between July 2005 and January 2014: * Three Counties Estate Agents Limited, trading as Three Counties Estate Agents Association * Waterfords (Estate Agents) Limited * Castles Property Services Limited * Hamptons Estates Limited, trading as Hamptons International and * Trinity Mirror Southern Limited
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The statement of objections is also addressed to the following companies, which the CMA provisionally considers are jointly and severally liable as parent companies of the companies directly involved: * Countrywide plc and Countrywide Group plc, as the ultimate parent companies of Hamptons Estates Limited, and * Trinity Mirror plc, as the ultimate parent company of Trinity Mirror Southern Limited
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A statement of objections gives parties notice of a proposed infringement decision under the Competition Act 1998. It is a provisional decision only and does not necessarily lead to an infringement decision (see, for example, the OFT/CMA’s final decisions of no grounds for action in the bunker fuel case (CE/9278-10) and sports bras case (CE/9610-12). Parties have the opportunity to make written and oral representations on the matters set out in the statement of objections. Any such representations will be considered by the CMA before any final decision is made. The final decision is taken by a 3-member case decision group, which is independent from the case team and was not involved in the decision to issue the statement of objections.
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The statement of objections will not be published. In accordance with the guidance Involving third parties in Competition Act investigations (OFT451, adopted by the CMA), any person who wishes to comment on the CMA’s provisional findings, and who is in a position materially to assist the CMA in testing its factual, legal or economic arguments, may request a non-confidential version of the statement of objections by contacting the CMA no later than 23 December 2014.
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The CMA currently has 10 cases open under the Competition Act 1998. In June 2014, it published consumer protection guidance for the lettings industry. This guidance followed the publication of a report by the CMA’s predecessor, the OFT, into the lettings market in February 2013. The OFT also published a report into home buying and selling in February 2010.
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For more information see the property sales and lettings investigation case page. Enquiries should be directed to Siobhan Allen (Siobhan.Allen@cma.gsi.gov.uk, 020 3738 6460).