The move comes after the Competition and Markets Authority (CMA) became aware that some estate agents may be making joint decisions to join the OnTheMarket portal and to remove their business from competing portals, rather than reaching these decisions independently of each other. The CMA has also contacted some agents that it suspects may have been directly involved in such activity.
The CMA is also working closely with the National Association of Estate Agents (NAEA) and The Property Ombudsman (TPO) to raise awareness of this issue.
Ann Pope, CMA Senior Director Antitrust, said: "The online portals on which properties are listed is an important aspect of competition between estate agents and the choice of portal must be decided independently and not agreed with competitors.
Estate agents that are found to be breaking competition law in this way could face significant fines."
Mark Hayward, Managing Director, NAEA said: "All NAEA members should be 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."
Katrine Sporle, TPO, said: "TPO exists to provide independent redress to buyers, sellers, renters or landlords who feel they have been disadvantaged by the actions of an agent who is registered with the scheme. TPO is pleased to be able to work with the CMA to raise awareness of these issues with agents, and thus provide the best possible platform for consumer protection."
The open letter the CMA has sent to estate agents highlights 3 important points about competition law and the potential consequences of breaking it, as well as a previous case in which the CMA took action:
Agreeing with your competitors to restrict which suppliers you will deal with is likely to be unlawful. The decision as to whether an estate agent will or will not use the services of a particular property portal must be determined by that estate agent alone (or by its parent company), and must not be determined jointly between competitors.
The CMA continues to monitor the conduct of estate agents. This follows the CMA’s decision in 2015 that an arrangement on the advertising of estate and lettings agents’ fees breached competition law, which prompted the CMA’s subsequent competition law compliance work with the property industry.
The consequences of breaking competition law can be severe. Estate agents found to have breached competition law can be fined up to 10% of their annual worldwide turnover, and directors of infringing companies can be disqualified from UK company directorships for up to 15 years. In addition, individuals involved in certain cartel activity, such as agreements between estate agents to fix prices or allocate markets, may be prosecuted under the criminal cartel offence and could go to prison for up to 5 years and/or have to pay an unlimited fine.
The CMA is keen to assist estate agents and other businesses in the property industry to ensure they understand what they need to do to comply with the law and can recognise where they may be at risk of breaking it.
Russell Quirk, founder and CEO of eMoov.co.uk, commented: “The first thing that strikes me about this latest announcement is that it's about time given that I submitted a complaint to the CMA over a year ago.
The success of the online estate agency sector to date has been based on its consumer-first approach. But since day one OnTheMarket has moved against this consumer and has subjected its member agents and their customers to a dated, anti-consumer way approach that narrows choice. As a result, it's downfall was bound to be a swift one and that is certainly playing out in front of us all now.
Given the portal's monumental failure, it's beyond me why any agent would still be considering listing with OTM at the expense of either Zoopla or Rightmove, let alone conspire with other agents to do so in number.
For those OTM member agents that are unsure whether they may have breached any laws, my advice would be to seek legal advice, and quick. The penalties for this sort of collusion are hefty, to say the least, and the CMA won't take them lightly. 10% of global turnover is the current fine level and so for some of the big boys potentially implicated here that could be hundreds of millions of pounds.
Many of the founding OTM agents such as Savills, Knight Frank, Strutt and Parker and Douglas and Gordon etc dropped Zoopla in favour of OnTheMarket and all sat together as board members of OTM in doing so. How will they defend themselves now and say 'we didn't discuss dropping Zoopla together?
The OTM ship has been sinking for some time now especially given recent revelations at agents leaving them in droves and OTM trying to sue them, but its member agents can limit their exposure in this latest debacle by leaving OTM or lobbying to drop the one portal rule. So jumping ship whilst there is still a ship to jump from may be a smart idea, although those already contacted by the CMA due to their involvement, will probably be going down with it.
In light of this surely the NAE must step off the board and Ian Springett must step down as CEO?”
