CN05 - Spanish competition authority finds real estate brokers and software providers

The Spanish competition authority ("CNMC") has imposed fines on several real estate brokers for their participation in a price fixing cartel affecting commissions charged to consumers. Penalties have also been imposed on software providers, which the authority considered to be cartel facilitators. 

Key takeaways

• The infringement as identified by the CNMC consisted in the exchange of information and agreements between real estate brokers on the minimum level of commission to be charged to customers.
• Software and IT services providers were considered to be "key players" in the infringement, as they actively and consciously contributed to the implementation of certain mechanisms to ensure compliance with the agreement on minimum fees.

The CNMC has imposed penalties on several real estate brokers for their participation in a price fixing cartel. A number of software and IT services providers to those brokers have also been fined for their role as cartel facilitators.

According to the CNMC's findings, the cartel was based on the so-called "Multiple Listing Service" system ("MLS"). It is common that, in the process of buying or renting a property, clients contract with a real estate broker on an exclusive basis. The MLS system is a collaboration mechanism which allows real estate brokers to share properties they have obtained on an exclusive basis with all of the other brokers forming part of the MLS network. The contracting broker shares information regarding the property with the rest of the network (including details of the commission agreed with customers as remuneration for the brokerage services) and the sale can therefore be carried out by any broker in the network. If the contracting broker is not the seller, the commission is shared between the contracting broker and the seller.

The infringement identified by the CNMC consisted in the exchange of information and agreements between brokers on the minimum level of commission to be charged to customers for properties shared by means of the MLS system (generally, 4% in the case of a sale and two months' rent in the case of a property rental, to be shared between the intervening brokers). 

Non-compliance with the above could lead to disciplinary sanctions and even suspension from the MLS network, which would entail the revocation of access to the pool of properties in the network.

As regards the network's software and IT services providers, the CNMC considered them to be "key players" in the development of the MLS system, in particular, by actively and consciously contributing to the implementation of certain mechanisms to ensure compliance with the agreement on minimum fees (e.g., introducing specific filters to prevent brokers from importing properties for which the level of commission was not disclosed or did not comply with the minimum fee rules into the MLS system). Their contribution was thus deemed to go beyond the mere development of a tool in compliance with clients' instructions, and was instead considered to be a form of continuous collaboration, allowing them to present themselves as technological partners and suppliers of the MLS system.

This decision may thus prove of particular relevance for companies in the digital sector, which must remain conscious of the fine line dividing the mere provision of services and collaboration in the activities of their customers.