CMA probes estate agents restriction on advertising fees and discounts

CMA probes estate agents restriction on advertising fees and discounts

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Author: Amanda Howlett

The importance of companies being able to freely advertise their fees or discounts has again been highlighted by the Competition and Markets Authority (CMA).

On 10 December 2014 the CMA announced its investigation of an association of estate agents, some of its members and a local newspaper. The CMA allege they have breached competition law by agreeing to prevent estate and lettings agents from advertising their fees or discounts in the local property newspaper. The parties can now make representations following which the CMA will decide whether the law has in fact been infringed.

In the CMA announcement 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'.

In March 2014 the Office of Fair Trading (now merged with the Competition Commission to form the CMA) issued its decision that Pride Mobility Products Limited and some of its retailers had infringed competition law as they had entered into arrangements preventing them from advertising online prices below Pride's recommended retail price for certain models of mobility scooter.

Philip Marsden, CMA Inquiry Chair, in a recent speech at the 11th Baltic Competition Conference in Vilnius, said of policies requiring minimum advertised prices: 'As restrictions on consumer choice go, such practices could not be more obvious. They reduce price transparency and significantly increase search costs for consumers, of particular concern when the internet is important for search and consumers face high search costs.'

The consequences of breaching competition law can be very severe: fines of up to 10% group worldwide turnover; the cost and time of a competition authority investigation; damage to reputation; unenforceability of the unlawful provision and potential damages claims.

Our competition team would be pleased to help anyone who has any concerns about a possible breach.

Disclaimer

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.

About the Author

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Amanda Howlett

Partner

03700 86 5804

Amanda is a partner in the firm's EU and competition law practice. She has extensive experience advising on competition law compliance, merger control, price fixing and cartels, complaints to the competition authorities and more. She also has considerable experience in negotiating and drafting commercial contracts.

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