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Estate agent cartel directors disqualified

Jun 01, 2018
The Competition and Markets Authority (CMA) has secured the disqualification of two directors whose company broke competition law. This follows an investigation that resulted in five Somerset estate agents being fined more than £370,000 last year for secretly agreeing between themselves the fees they charged.

Mr David Baker and Mr Julian Frost were, at the time, both directors of Abbott and Frost Estate Agents Ltd in Burnham-on-Sea. This was one of a group of estate agents who agreed to fix their minimum commission rates at 1.5%, so denying local home owners the chance of getting a better deal when selling their property.

During the investigation, the CMA identified that directors were actively involved in the cartel or were aware of it and failed to take any steps to stop it. The CMA secured legally binding undertakings from Mr Baker and Mr Frost which have the effect of disqualifying them as directors and preventing them from being involved in the management of any UK company.  Mr Baker has been disqualified for 3.5 years and Mr Frost has been disqualified for 3 years.

The CMA is continuing to investigate whether to seek the disqualification of other directors of companies involved in the fee-fixing agreement.  The CMA has the power to seek the disqualification of an individual from holding company directorships, under the Company Directors Disqualification Act 1986, where they have been director of a company which has breached competition law and their conduct makes them unfit to be a director.

This is the second time a disqualification has been secured on grounds that the company broke competition law, the previous case being in December 2016.

Michael Grenfell, Executive Director for Enforcement at the CMA, said: “Agreeing prices with competitors is one of the most serious ways a company can break competition law, as it harms individuals, businesses and the economy. When, as in this case, estate agents agreed among themselves commission fee rates, the effect is to stop people from shopping around for the best deal on one of the biggest financial decisions any of us make – selling a house.”

Company directors have an important responsibility to ensure that their companies don’t engage in illegal anti-competitive practices.

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