The Competition and Markets Authority (CMA) has issued two open letters, one to the property industry and one to newspaper publishers, reminding them that they must comply with competition law.
The competition regulator's warning came after it imposed fines of over £735,000 on a number of estate agents, their trade association and a newspaper for agreeing not to publish estate agents' fees. In a related move, it has also sent individual letters to a number of estate agents it suspects of having entered into similar anti-competitive agreements.
The CMA's investigation uncovered evidence that members of a local estate agents' trade organisation in Hampshire had agreed not to advertise fees or to make any reference to their fees or discounts in a local newspaper - the Surrey and Hants Star Courier. The newspaper also agreed that it would reject any advertisements from estate agents that referred to their fees or to discounts.
In its open letters, the CMA draws attention to three important points:
- that an agreement between competitors not to advertise prices, including fees and discounts, is likely to infringe competition law. It notes that consumers drive competition when they are able to shop around for the best deals. If their access to price information is restricted, then their ability to find the most competitively priced products is limited, which in turn reduces incentives for sellers to be more competitive. A business can, of course, decide not to advertise its own fees or discounts, but this decision must be its own. It must not discuss this with its competitors or other companies, such as newspapers or online portals. And newspapers must not encourage or facilitate agreements between competitors not to advertise prices
- that trade associations can break competition law if they behave in a way that limits the commercial freedom of their members. Trade associations can be fined by the CMA in the same way as individual companies, and companies cannot avoid competition law penalties by blaming the breach on the actions of the trade association
- that the consequences of infringing competition law can be severe and companies that break the rules can be fined up to 10% of their worldwide group turnover. In addition, the company directors may be disqualified for up to 15 years and individuals who commit the most serious competition law breaches may face prosecution and up to five years in prison
Commenting on this case, the CMA has again underlined how important it is for businesses to create a competition compliance culture within their organisations. A business whose employees understand the requirements of the competition law rules are less likely to find themselves on the receiving end of a costly CMA investigation.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.