The final decision has now been published in full by the Competition and Markets Authority in the so-called agents’ cartel case – presenting evidence that lays bare what was going on, with a series of emails not seen before.
The document runs to 223 pages, covering the agents in Fleet, Hampshire, their local association and a local newspaper which between them agreed that fees should not be published.
The emails – reproduced complete with the original spelling mistakes – also show the amount of control being exerted not just over advertising but also editorial in the local newspaper’s property supplement.
One email from Hamptons threatens to cut its advertising by half after a reference to another agent’s fees slips through the editorial net.
In the same email, Hamptons also says that the association will now go back to considering the launch of its own newspaper.
Another email tells an agent that “advertising any rates, whether it be sales commission or rental, is prohibited as a member of the Association, I must ask you to stop advertising your fees with immediate effect”.
The agents, Three Counties, Waterfords, Castles, and Countrywide firm Hamptons, have all been fined, as has the Three Counties Estate Agents Association and Trinity Mirror title Surrey & Hants Star Courier. All have less than a month to pay their fines in full.
The document shows just how long-running the case has been, with the first complaint received in 2008 by the then Office of Fair Trading.
The OFT was sufficiently concerned to raise issues with the Three Counties rules, gave the association advice and apparently believed that one of its rules – Rule 21 – had been removed. However, it appears the rule banning the advertising of fees was not removed.
It was a complaint in 2013 raising concerns about the Three Counties Estate Agents Association and its relationship with the local paper that sparked the investigation which started in December that year.
The investigation’s final document, likely to elicit sharp intakes of breath, includes interviews with the participants, emails and references to conversations, and changes in Three Counties’ rules.
For example, at one point the original terms and conditions were changed, apparently to give dispensation to online agents, to say: “Members shall not, unless granted a waiver by the Committee in writing, advertise any sales commission rates whether directly or indirectly in the Property Paper and shall obtain the express approval of the Committee for any proposed advert … which in any way contains reference to a promotion, reduction, fee, special offer or discount… Any waiver … will only be granted in exceptional circumstances and only where the advertiser has no shop fronted premises at all in the area covered by the paper.”
However, one agent who wanted to include customer quotes in their advert, including “The fact you only charge 0.8% is an added bonus”, received an email saying: “You should also be aware that I am getting grief from other agents about the fact your [sic] allowed to advertise your fees & ‘why can’t we’ comments are coming through.”
It was then decided that no member agent of Three Counties should be allowed to advertise their fees.
When the same agent then asked whether the revised rules would allow them to advertise “We won’t be beaten” on price, committee members suggested during email correspondence that the rule should be extended to prohibit any direct or indirect reference to fees, as well as the fees themselves.
Another email, sent from Hamptons to an agent wanting to open a new office offering 0% commission for three months, said: “I would bring to your attention, with the rules of member of the 3 Counties Association, Section 21, making reference to advertising sales or letting commission rates and trust that if you decide to join the 3 Counties Association to benefit from the reduced advertising rates, this section of our rules is adhered to”.
Hamptons also wrote to the local newspaper saying: “I am aware that [Current Member C] are soon to launch new/rebranded offices in Fleet and Yateley and they are offering 0% fees to entice new clients to them, please can we ensure that the likely promotion advertising in the Courier over forthcoming weeks has no reference [to] fees.”
Another damning email, this time to members of Three Counties, said: “We have negotiated a fantastic deal with the Courier which includes substantial savings on current advertising exclusive to the Three Counties Members… I am pleased to say that the paper have now agreed not accept advertising from any agent who advertises rates.
“The Courier have agreed the above terms provided we sign a 3 year agreement with them.”
Yet another revealing email was sent by Hamptons to the local newspaper in 2013, saying: “I am frustrated that not withstanding our numerous conversations, a half page editorial featuring [an agent] promoting their ‘Pick and Mix’ service ‘at a fraction of the cost of a conventional agent’.
“With immediate effect Hamptons will reduce their advertising this year by half and I expect you to resolve this immediately, I will in the meantime be taking steps to re-engage the 3 Counties discussions to produce our own newspaper.”
The equally revealing reply from the local paper was: “The original press release that came in had references to fees and other services. They cut the bulk of the editorial sent. This sentence was missed on this occasion.
“Editorial have been vigilant for the last few years on cutting any reference … We apologise that it happened this time and editorial have assured that further checks will now be in place.”
In the case, Hamptons – together with Countrywide – were fined £349,473; Hamptons itself was fined £232,982; Waterfords was fined £46,186; Castles was fined £46,186; Three Counties was fined £90; and Trinity Mirror was fined £91,257.
All of the penalties must by paid in their entirety by July 13.
It is understood that the CMA is investigating a number of similar cases.
The full document is here
Wow – this looks like the sort of stuff I am regularly copied on from local agents. If the cma are investigating this sort of stuff I think they’ll be busy for a long time…
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Gosh. What an old fashioned attempt to fix the market. What they should have done is start up a website, a nice clean fresh one with no ads on it, then only allow certain agents to use it, probably just those who’s costs are restricted by higher costs and so on to ensure fair game and so on. That would have been a much better idea.
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The point of your troll being? If you had a whisper of an idea what is going on and how there is a 68% chance that your agency is …. better stop there Ros and Nick will get a bit twitchy!
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No please carry on Robert……… You’ve lost me. And for the record I know the case quite well. The idea behind my post was a bit of light banter as I’m sure many people will see slight similarities between this and OTM.
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I apologise, I didn’t recognise that as banter! There isn’t any price fixing going on as far as I can see. We have 15 AM agents local to me all who scrap for every instruction as they always have do, so even tough you were jesting its a bit of mud that doesn’t need to fly let alone stick.
To use smilies to indicate banter on word press 😀 type : grin : (without the spaces )
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Sorry, here is the missing ‘h’ 😳 : oops : (no spaces)
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😀 thanks for the tip. Although I am not directly concerned as I have not joined OTM for various reasons.. I do feel that their controlling rules, such as the one other rule, and not allowing the same customers as the other portals do, i.e. online agents is restrictive and not in the interest of the public, which ultimately are the people who make or break any portal. Long term a leading portal needs to have all the homes for sale, not just those from a certain type of agent. I get the whole idea of service, as that’s what I sell to clients everyday, but the likes of Purplebricks and so on aren’t going away.
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@IndAgent: The big question must be is OTM being media, alike the newspaper seen as a different entity to the AgentsMutual members group who have rules in place restraining access to OTM advertising.
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I’m not sure. If a newspaper owned by agents banned agents from stating their charges, it would be OK, as they own the publication, but it wouldn’t benefit the consumer who was searching for an agent basing part, or all of their decision on fee. Going forward, if this agent owned paper was to suddenly try to take down a national competitor, who had complete control over the market, they would have less chance of doing so by restricting what companies could advertise in the paper, especially as the trend, no matter how much we all may not want it to, is over time going to slowly become more online based.
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As I said to Ric, I learned a lot from my days in Agency; ruthless (fair) competition control was one of them. I am open with my concerns over the effectiveness of the one other portal rule but without it I would not have been able to identify and evidence wrong doing that affects most agents.
The likes of Purblebricks probably won’t go away but with only 12 month to go before their deadline for predicted £25,000,000 profits :bellylaugh: are supposed to come in, time is putting a relentless glacier of pressure on performance. The “Sheep” investors (their words not mine) will be wanting their pound of flesh and I can’t see where that cash is coming from in a market that is cooling and contracting month by month. The PI/COAR business model is the antithesis of what vendor’s need (I can show why)
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shame! the belly laugh, legs in the air smiley does’t work! 😆
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Robert – I agree on this. There are lots of ‘back of fag’ packet models that have been peddled to investors which look good on Crowd Cube type sites, with a fancy long term growth projection charts. It means jot if the real P & L does not come through. Smacks of the dot.com boom.
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That’s fine Robert, but if they all got in a room to decide i) to go with OTM and ii) which portal they decided to use, they are stuffed.
I know there are loads of emails flying around where agents have incriminated themselves. They’d better hope their competitors don’t take advantage and whistleblow.
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So are we all part of a cartel for leaving EAT and posting on EYE?, are the emails I have sent stating how I was fed up with the constant stream of blow hard, self publicity incriminating evidence?
Neither portal has being dealt a mortal wound by OTM. Both Rightmove and Zoopla have been affected, Zoopla more so but with them crowing how marvellous things are it will be difficult to then claim they’re being adversely affected by any carrying ons.
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Anonymous postings on a portal is not evidence of wrongdoing Robert. Witnessed crowd meetings of agents openly voting on where they are removing their advertising is collusion and potentially the actions of an illegal cartel. The punishment for this is potentially 10% of global turnover and potentially prison in the worst cases.
Most agents consider themselves to be consumers, protected by consumer law. The reality is that they are not consumers, but instead businesses governed by competition law. The CMA has more power than any other regulatory body in the UK. They move slowly but if they are given hard evidence (as can be seen here in the case of Hamptons et al), they can massively hurt offending agents.
I have been told on good authority that agents have actively got together in cartels and decided to drop Zoopla/Rightmove (more the former than latter, as you say), and in some cases have agreed to reduce additional spend on the portal they have retained. The question is not whether this is illegal (without any doubt it is, especially if 40% or more agents got together), but rather if or when someone decides to act.
It would be really interesting if the portals got hold of evidence. They could sue participating agents for any loss of business they have suffered. This could run into many millions of pounds. I would be absolutely bricking it if I’ve taken part in these meetings, and would be packing my suitcase if I am implicated by email/in writing.
If it becomes clear that OTM is hear to stay and those agents who have done this have no intention of returning to the portal they have left, the portals will have nothing to lose by pursuing them.
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Surely there are much smaller portals who can demonstrate much greater % loss than RM or Z. When I was doing a bit of work last summer competing for the same space and spend as Rightmove, Zoopla and OTM, the OTM restrictions placed on 25% of Agents wasn’t a concern, there was still 75% to go after. I am not sure whatever is going on is damaging enough to RM or Z to warrant all that aggro.
From personal experience AM is a good thing and has enabled me to bring about change that you will now benefit from; things will be quietly better. That is bought about by revealing holes in the competitions offering and raising their game for them.
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Good. Stopping the lager agents having it all their own way. Why should they stop others advertising fee as long as it’s honest.
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Agreed, never understood fee advertising however, to easy to combat and particularly dangerous if you have existing clients not on a deal you are promoting to boost stock levels.
We have an agent not far from us advertising “We will not be beaten on fee’s” imagine knowing you will not win the instruction based on fee’s, you could simply quote £195 inc VAT and watch them “not be beaten into bankruptcy”
Anyway the above reads very “Bully Boys” mentality doesn’t it….. If I were the paper I would have said go for it, good luck with everything associated with getting a newspaper to a door step on the same level the local papers do.
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That made me chuckle. We were always beaten on fees, always! Somehow always managed to pick up the 3% multiple agency sales 6 weeks later when Cheap Fees & co had done their sole agency with an over egged asking price attempt at selling.
Agency isn’t just about selling property it is about controlling the space. I learned a lot from being an agent!
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The [name of local paper removed by moderator] Times does exactly the same sort of thing going on.
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What an unbelievably thick bunch of idiots!
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Hang on a minute… I’m sure Hamptons and Countrywide’s fine was closer to £700,000 last time this story was ‘big news’ – they’ve got away with less than half of what they should have paid in fines? How on Earth is that fair?
Yay big corporates, keep fixing the game and getting away with it…
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“One email from Hamptons threatens to cut its advertising by half after a reference to another agent’s fees slips through the editorial net.”
I have ceased advertising in local publications because some new low cost online style cheap agents plastering pages not with property but with their £200-£300 fees along with how they “do the same as high street agents”.
I didn’t want to be seen alongside them, like many other pro high street agents, we pulled out. I did tell the publications that I would pull out if they carried these adverts and when they said they wouldn’t pull them that’s when we ceased our advertising with them.
There was no organised response from the professional agents in pulling out and I can’t see this as on offence.
Hamptons threatening to pull out (or half their advertising) if the publication carried agencies fee quotes is surely their choice?
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It is only a suggestion (based on experience) Boast about/advertised your massive fees and show why paying 3% to have the job done properly netted the vendor net xx% more.
I rarely do any tech training direct to Agent staff these days but the data that is available and with the ability of systems it is easily possible to produce KPI’s for your competition which will show why paying nothing achieves nothing.
I know bored you with my last formula so I won’t post this one but it is possible to present an evidence based report to a vendor showing the likely net loss of instructing Cheap & Co. Another tactic is match commission plus 10% on anything achieved over the valuation figure. £100 for every £1000 achieved over is a brilliant USP in a strong and rising market. Back in the day I did that haggle on 1.75% and ended up achieving 3.6%. We both enjoyed that particular deal! £1350 base commission plus £3000 for the extra £30k achieved over the Black Horse valuation, Sweet!
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Fees aside, It is also about being “seen” alongside these “cheap” adverts from “cheap agents” that I feel is not in the best interests of our brand Robert.
You don’t see Rolex advertising in “Socialist Worker” newspaper.
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You are not wrong Wilko but you are making it easy for you competitors to be slovenly. With nothing to compare against suddenly a budget Constant watch is the best on offer.
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Seriously, surely nobody is surprised by this? Back in 2004 I worked for an online agent and the same thing was happening – the editor or the local property rag played golf/lunched with the directors of the corporates and conspired to sensor us. I’m afraid our industry’s general reputation is well deserved.
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oh I agree…. the bl99dy newspapers are so easily corrupted!
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What amazes me is how all guilty parties thought they could actually get away with such blatant corruption. Clearly the agents mentioned are to blame, but surely the newspaper group should have just knocked this on the head from the outset by saying no, did they rally think Hamptons would go through all the hassle of setting up their own publication?!
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Declining print margins and a bunch of Agents threatening to pull the lot if they don’t get their own way is a pretty bad combo for a local paper. I’m surprised by the relatively low amount of comments on this story. Somehow OTM still got a look in!
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I don’t think the CMA would try tackling OTM. Suspect they’re afraid of the bad PR if they failed. Maybe OTM are indeed to big to be tackled given the companies involved.
If one day OTM rules the roost then the agents will become just a franchisee of Springett Inc!
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