Four Wokingham borough estate agents have been accused of taking part in a price fixing cartel.
An investigation by the Competition and Markets Authority (CMA) has provisionally found that the companies – Michael Hardy, Prospect, Richard Worth and Romans – allegedly broke competition law by taking part in a price-fixing cartel where members set minimum levels of commission fees for the sale of residential properties.
The CMA said that the alleged cartel took place in Berkshire from at least September 2008 for almost seven years.
And they added that as a result of the alleged price-fixing homeowners may have been denied the chance of securing the best possible deal when selling properties, as they were unable to shop around all of their local agents for better rates.
In a Statement of Objections, the CMA provisionally found that the four estate agents:
- agreed that they would all apply minimum commission rates for residential property sales;
- exchanged confidential pricing information;
- held meetings and colluded to make sure that they were all enforcing and maintaining the agreed minimum commission rates.
Howard Cartlidge, senior director of cartels for the CMA, said: “Everyone knows selling your home is expensive. So it’s important that people should be able to shop around all of their local estate agents to make sure they are getting the best possible deal.
“Estate agents who conspire to set minimum commission rates are cheating homeowners and breaking the law. Where we find evidence that this is happening, we will not hesitate to take action to protect people selling their home.”
The Statement of Objections are currently provisional and the CMA said that they will not necessarily lead to a decision that the companies have breached competition law. The companies have been invited to submit their responses.
Responding to the allegations, the CEO of Romans, Peter Kavanagh, said: “In June 2017, senior directors of Romans became aware that, some years ago, a small number of Romans Residential Sales executives across a few branches had acted in a manner totally contrary to the standards and values of the company.
“We immediately alerted the Competition and Markets Authority (the “CMA”) about this matter and have assisted with the CMA’s subsequent investigation under its leniency programme.
“We also undertook our own investigation and, based on our findings, have taken the appropriate disciplinary action against those individuals involved. We also reviewed and strengthened our training, management and compliance procedures to ensure that all our staff act with integrity at all times and adhere to the company’s high ethical standards.
“We are truly sorry that the judgment and behaviour of these individuals did not meet the standards of behaviour expected by our people, our customers and our colleagues in the industry.
“As the investigation by the CMA is ongoing, we are unable to comment further at this time.”
Colin Wells, Founder of Prospect Estate Agency, said that the branches in the agency’s network had still been able to offer commission rate flexibility, and that it had inadvertently broken anti-competition law in an effort to survive the 2008 economic downturn.
He added: “As a business that holds the customer very dear, we are very disappointed by the CMA’s initial findings. This was never a situation of us wanting to decrease competition or market choice for consumers.
“In fact we wanted the exact opposite. 2008 was a difficult year for everyone and we were worried the larger agents could remove local agencies from UK high streets altogether by using their financial strength to undercut the market.
“I am truly sorry my actions have been viewed in this way. At Prospect, we always try to do what is right for the customer, employees and wider community. This matter was over 10 years ago and we now have incredibly stringent processes and procedures in place to ensure we operate with the highest levels of transparency and compliance.
“In accordance with CMA guidance back in 2015, we immediately introduced an Anti-Competition Policy, and have continued to build on this ever since.
“Furthermore, to ensure others do not make the same error, I have also been working closely with the CMA, and will continue to do so.”
Michael Hardy said that they were not in a position to comment as they had only just received the CMA’s findings and did not have full details of the allegations being made against the firm.
And a spokesperson for the Adelfas Property Group said: “Richard Worth Estate and Land Agents is a trading style of Adelfas Property Group Ltd and as pointed out by the CMA in its statement is not one of the companies under investigation.
“The internal checks and procedures of Adelfas Property Group will ensure that it will never be placed in a position that could be construed as anti-competitive.
“It would however be remiss of us not to recognise that Richard Worth Ltd (in administration), from whom we bought the name and assets, is subject to the CMA’s investigation but this is not a matter we are able to comment on.”
The CMA said that tackling cartels is a fundamental part of its work, and this is the third case brought against estate agents in recent years. Previous actions include fining four estate agents in Somerset over £370,000 for colluding to set minimum commission rates, and charging three members of the Three Counties Estate Agent Association £735,000 for breaking competition law in relation to estate agent and letting fees.
- The Richard Worth named by the CMA is not Adelfas Property Group Ltd, currently trading as Richard Worth Estate and Land Agents. This new company is not one of the companies subject of this provisional decision.
