Companies fined over £775,000 in CMA investigation into advertising of agents’ fees
An association of estate and lettings agents in Hampshire, three of its members and a newspaper publisher have admitted breaching competition law and have agreed to pay penalties totalling over £775,000.
The settling parties consist of the association, Three Counties Estate Agents Limited (Three Counties); 3 of its members, namely Castles Property Services Limited (Castles), Hamptons Estates Limited (Hamptons International, and its parent companies Countrywide plc and Countrywide Group plc), and Waterfords (Estate Agents) Limited (Waterfords); and the publisher of the ‘Surrey & Hants Star Courier’, Trinity Mirror Southern Limited (Trinity Mirror Southern, and its parent company Trinity Mirror plc).
The penalties include a settlement discount of 10% to reflect the resource savings to the CMA generated by the parties’ admissions and agreement to co-operate.
Today’s settlement follows a statement of objections issued in December 2014. Following receipt of the statement of objections, the companies have now admitted that, at various times between July 2005 and January 2014:
- Castles, Hamptons International and Waterfords, each being a member of Three Counties, 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’.
- Waterfords and Hamptons International extended the scope of this arrangement, with the co-operation of Trinity Mirror Southern, 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.
- Three Counties’ membership rules prohibited the association’s members from advertising their fees or discounts in the ‘Surrey & Hants Star Courier’.
The CMA had launched the investigation over concerns that these arrangements had the object of reducing the competitive pressure on estate and lettings agents’ fees in the local area in and around Fleet in Hampshire. In addition, the restrictions may have made it harder for potential competitors to enter the market by using the level of their fees to attract new customers. The CMA alleged that these practices potentially limited consumers’ choice and obstructed their ability to compare prices and assess value for money.
Following the companies’ admissions, the CMA intends to issue an infringement decision around the end of April 2015. The CMA welcomes the parties’ admissions and co-operation throughout its investigation, which is likely to allow the CMA to complete its investigation within 16 months.
Ann Pope, CMA Senior Director of Anti-trust Enforcement, said:
These companies have admitted to making arrangements which aimed to reduce competition on fees and could have made it harder for new and innovative businesses to compete. The parties have also agreed to pay significant fines.
This case again demonstrates the CMA will take action in local markets as well as big national ones. It also shows that, where infringements take place within the context of trade associations, both the members of the association and the association itself can be found to have breached the law. This can result in severe financial penalties for the members, even where the association itself has limited funds.
The CMA has received complaints of potentially similar conduct concerning alliances of estate and lettings agents and local newspapers in other geographic locations across the UK. This may result in further investigations into similar restrictions, regardless of the size of company involved, particularly if they take no steps to remove such restrictions in light of the present investigation.
Advice for trade associations on complying with competition law is available on GOV.UK.
Please see the case page for further details.
Notes for editors
- A party under investigation may ask to enter into settlement if it is prepared to admit that it has breached competition law and is willing to agree to a streamlined administrative procedure for the remainder of the investigation. In return, the CMA may agree to impose a reduced penalty on the business where settlement would achieve clear efficiencies, resulting in earlier adoption of any infringement decision and other resource savings.
- Castles has agreed to pay the CMA a maximum total penalty of £19,275, to which, if it observes the terms of settlement, a settlement discount of 10% will be applied, giving a maximum penalty payable of £17,348.
- Hamptons International has agreed to pay a maximum total penalty of £690,317, to which, if it observes the terms of settlement, a settlement discount of 10% will be applied, giving a maximum penalty payable of £621,285. As the ultimate parent companies of Hamptons International, Countrywide plc and Countrywide Group plc have agreed that they are jointly and severally liable for a maximum of £414,190 of Hamptons International’s maximum total penalty set out above (to which, if each observes the terms of settlement, a settlement discount of 10% will be applied, resulting in joint and several liability for a maximum penalty of £372,771).
- Waterfords has agreed to pay the CMA a maximum total penalty of £51,693, to which, if it observes the terms of settlement, a settlement discount of 10% will be applied, giving a maximum penalty payable of £46,524.
- Trinity Mirror Southern has agreed to pay the CMA a maximum total penalty of £101,397, to which, if it observes the terms of settlement, a settlement discount of 10% will be applied, giving a maximum penalty payable of £91,257. Trinity Mirror plc, as the ultimate parent company of Trinity Mirror Southern, has agreed that it is jointly and severally liable for this penalty.
- Three Counties has agreed to pay the CMA a maximum total penalty of £100, to which, if it observes the terms of settlement, a settlement discount of 10% will be applied, giving a maximum penalty payable of £90. This figure was applied in light of its lack of turnover in the market affected by the infringement and, more broadly, its very limited financial resources.
- 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 takes into account a number of factors including the seriousness of the infringement(s), turnover in the relevant market and any mitigating and/or aggravating factors. In addition, adjustments may then be made to reflect the specific size and financial position of the undertaking in question.
- 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. For more information see the CMA’s homepage.
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