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NEWS FLASH: CMA writes open letter to agents warning them about portal collusion
Original Author: Rosalind Renshaw
The Competition and Market Authority yesterday morning published an open letter to estate agents on choosing property portals.
OnTheMarket has responded by saying that the CMA’s advice “accords entirely with the advice consistently given over time” by OTM itself.
The letter warns that agents must not collude with other agents about their decisions. It also makes it clear that it has some evidence that such collusion may have already taken place, and in more than one area.
Notably, the letter has gone out to agents, with the CMA saying that it “has no reason to write to OnTheMarket in this connection at this time”.
It says of the letter: “The CMA is taking this step after becoming aware that estate agents in some local areas may have made a collective decision to join the OnTheMarket portal and at the same time to remove their business from other portals that compete with OnTheMarket.
“The CMA has already been in contact with some agents and trade associations in this regard.
“However, given some evidence that such collusion may be happening between estate agents in more than one local area, we are issuing this open letter to all estate agents, advising them that this kind of conduct may break competition law and that agents engaging in it could therefore face significant fines.”
The letter goes on to say: “If an estate agent discusses with its competitors its commercial intentions or agrees to make joint decisions with them (such as which supplier or portal to go with), this may break competition law.”
The CMA says that the consequences of breaking competition law are severe, with agents who have breached it being fined up to 10% of annual turnover, and directors being banned from UK company directorships for up to 15 years.
City analyst William Packer, of Exane BNP Paribas, was quick to react, sending out a note to investors saying of the CMA’s action that “We see this as a positive for Zoopla and will fuel market hopes of a rapid rebound in members”.
He went on to say: “This is further negative newsflow for OTM after recent internal issues highlighted in the trade press.”
Packer said he expects Zoopla shares to respond favourably.
OTM yesterday morning told its members that, “as you would expect, the board and management team of Agents’ Mutual has always been scrupulous about building a pro-competitive business”. It says it has taken legal advice, and shared that advice with current and prospective members.
OTM’s email to members re-iterates the advice given by this morning’s open letter from the CMA, while Mark Hayward, managing director of the NAEA and who is a board member of Agents’ Mutual, said: “All NAEA members are aware of their obligations in regards to competition law around online property portals.
“We continue to remind members of these rules, and are happy to work with the CMA on these obligations to ensure agents act independently when deciding which portals to list on.”
The CMA letter is here
