Non-Confidential Infringement Decision
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Decision of the Competition and Markets Authority Competition Act 1998 Residential estate agency services Case 50543 17 December 2019 Confidential information in the original version of this Decision has been redacted from the published version on the public register. Redacted confidential information in the text of the published version of the Decision is denoted by []. Certain names of individuals mentioned in the description of the infringement in the original version of this Decision have been removed from the published version on the public register. These names have been redacted or replaced by a general descriptor of the individual's role. Contents Page 1. INTRODUCTION AND GLOSSARY ..................................................................... 1 A. Introduction ......................................................................................................... 1 B. Glossary ............................................................................................................. 2 2. THE INVESTIGATION .......................................................................................... 4 A. Launch of the investigation ................................................................................. 4 B. Leniency ............................................................................................................. 4 C. State of play meetings ........................................................................................ 4 D. Evidence gathering and assessment .................................................................. 5 E. Statement of Objections ..................................................................................... 9 F. Settlement ........................................................................................................ 10 G. Draft Penalty Statement ................................................................................... 10 3. INDUSTRY BACKGROUND AND THE PARTIES .............................................. 11 A. Industry Background ......................................................................................... 11 B. The Parties ....................................................................................................... 15 C. Key Individuals ................................................................................................. 20 4. CONDUCT OF THE PARTIES............................................................................ 22 A. Introduction ....................................................................................................... 22 B. The origins of the Minimum Fee Arrangement.................................................. 22 C. The Minimum Fee Arrangement ....................................................................... 32 D. The implementation of the Minimum Fee Arrangement .................................... 43 E. The breakdown of the Minimum Fee Arrangement ........................................... 70 5. MARKET DEFINITION ........................................................................................ 74 A. The relevant market .......................................................................................... 74 6. LEGAL ASSESSMENT ....................................................................................... 79 A. Introduction ....................................................................................................... 79 B. Undertakings .................................................................................................... 79 C. Agreements and/or concerted practices between undertakings ....................... 80 D Single and continuous infringement .................................................................. 87 E. Object of preventing, restricting or distorting competition ................................. 91 F. Appreciable restriction of competition ............................................................. 102 G. Duration ......................................................................................................... 103 H. Application of Article 101 TFEU: Effect on trade between EU member states 105 I. Effect on trade within the UK or a part of it ...................................................... 105 J. Exclusions and exemptions ............................................................................. 106 K. Attribution of liability ........................................................................................ 108 7. THE CMA'S ACTION ........................................................................................ 115 A. The CMA's decision ........................................................................................ 115 B. Directions ....................................................................................................... 115 C. Financial penalties .......................................................................................... 115 D. Calculation of the penalty ............................................................................... 119 E. Payment of penalty ......................................................................................... 130 1. INTRODUCTION AND GLOSSARY A. Introduction 1.1 By this decision (the ‘Decision’), the Competition and Markets Authority (the ‘CMA’) has concluded that the persons listed at paragraph 1.2 have infringed the prohibition imposed by section 2(1) (the ‘Chapter I prohibition’) of the Competition Act 1998 (the ‘Act’). 1.2 This Decision is addressed to: (a) Michael Hardy & Company (Wokingham) Limited and Geocharbert UK Ltd (together ‘Michael Hardy’) (b) Prospect Estate Agency Limited and Prospect Holdings (Reading) Limited (together ‘Prospect’) (c) Richard Worth Limited (in administration) and Richard Worth Holdings Limited (together ‘Richard Worth’) (d) The Romans Group (UK) Limited and Romans 1 Limited (together, ‘Romans’) which, in this Decision, are referred to singularly as a ‘Party’ and collectively as the ‘Parties’. 1.3 The CMA has found that between at least 1 September 2008 and 19 May 2015 (the ‘Relevant Period’) the Parties infringed the Chapter I prohibition by participating in a single and continuous infringement through an agreement and/or concerted practice which had as its object the prevention, restriction or distortion of competition within the UK by fixing and maintaining a minimum level of commission fees to be charged for the provision of traditional residential estate agency services in the five areas of Wokingham, Winnersh, Crowthorne, Bracknell and Warfield (the ‘Relevant Areas’), including through the exchange of confidential pricing information and taking steps to monitor or reinforce compliance (the ‘Infringement’ or the ‘Minimum Fee Arrangement’). 1.4 The CMA has also imposed financial penalties under section 36 of the Act on Michael Hardy, Prospect and Richard Worth. 1 B. Glossary 1.5 In this Decision, the following terms have the definitions set out below. Where in this Decision it is helpful for the reader to reference a defined term in the text, such term may also be defined in the text. Term Definition the Act the Competition Act 1998 the agreement and/or concerted practice between the Parties to fix and maintain a minimum level of commission fees to be charged for the provision of traditional residential estate agency services in the Infringement Relevant Areas during the Relevant Period, including through the exchange of confidential pricing information and taking steps to monitor or reinforce compliance, with the object of preventing, restricting or distorting competition TFEU Treaty on the Functioning of the European Union the CMA the Competition and Markets Authority the Competition Act 1998 (Competition and Market the CMA Rules Authority's Rules) Order 2014, SI 2014/458 the Chapter I the prohibition in section 2(1) of the Competition Act prohibition 1998 agency services for and related to the sale of property traditional residential offered by estate agents that operate with a ‘high street’ estate agency presence. This does not encompass other services which services can be provided by estate agents, such as services for the letting of property. the First Wokingham the meeting at which the Minimum Fee Arrangement was meeting established Michael Hardy & Company (Wokingham) Limited and Michael Hardy Geocharbert UK Ltd the agreement and/or concerted practice between the Parties to fix and maintain a minimum level of Minimum Fee commission fees to be charged for the provision of Arrangement traditional residential estate agency services in the Relevant Areas during the Relevant Period, including through the exchange of confidential pricing information 2 and taking steps to monitor or reinforce compliance, with the object of preventing, restricting or distorting competition Party or Parties Michael Hardy, Prospect, Richard Worth and Romans CMA’s Guidance as to the appropriate amount of a Penalty Guidance penalty (CMA73, 18 April 2018) Prospect Estate Agency Limited and Prospect Holdings Prospect (Reading) Limited the five areas of Wokingham, Winnersh, Crowthorne, Relevant Areas Bracknell and Warfield Relevant Period between at least 1 September 2008 and 19 May 2015 Relevant Turnover turnover in the market affected by the Infringement Richard Worth Limited (in administration) and Richard Richard Worth Worth Holdings Limited Romans The Romans Group (UK) Limited and Romans 1 Limited Settling Parties Michael Hardy and Prospect Statement the Statement of Objections