Competition authorities have confirmed their investigation into possible market collusion by housebuilders has been dropped in return for a payment of £100m towards affordable homes and other measures agreed by the companies involved.
Yesterday (30 October), the Competition and Markets Authority (CMA) announced its acceptance of four “binding commitments” from seven housebuilders: Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry.
The terms of the settlement, proposed by the seven firms in July, require them to:
- Make a combined £100m payment, split between affordable housing programmes across all four nations of the UK.
- Work with the Home Builders Federation (HBF) and Homes for Scotland (HfS) to develop industry-wide guidance on information sharing.
- Agree not to share certain types of information with other housebuilders, including the prices houses have been sold for, “except in limited circumstances” (see box, below).
- Introduce enhanced compliance measures and training programmes.
The HBF told Construction News in a statement that its guidance on information exchange “will be published in the coming months”.
The CMA launched its probe into “suspected anti-competitive conduct by housebuilders” in February 2024.
Its investigation followed concerns that between January 2022 and February 2024 seven companies exchanged details about sales including pricing, number of property viewings and incentives offered to buyers, such as upgraded kitchens or stamp duty contributions.
In July, the CMA announced it would drop the investigation and not make a decision on whether they had infringed chapter 1 of the Competition Act 1998, after a settlement offer from the companies.
A two-week consultation was launched after the announcement.
In its statement yesterday, the CMA revealed it received more than 300 responses. It stated that “several” representations were not relevant to the issue, though it did not give an indication of how many this related to.
The watchdog said it contacted the companies after the consultation period and they agreed not to claim their share of the affordable homes payment as a deduction for the purposes of calculating their tax liability.
According to a summary of responses published by the CMA, some people called for the firms to also be subject to a wider ban on information sharing, including about land acquisition, planning and delivery processes prior to the sale of new-build housing.
These issues were raised due to concerns that collusion could be possible in relation to land acquisition and land banking.
But the CMA said these issues were not part of its investigation and it had not identified competition concerns about these.
Other concerns raised during the process included that the HBF and HfS are trade bodies, representing the interests of housebuilders, and there was a lack of involvement from independent consumer groups or homebuyers in the commitment terms.
These respondents were concerned “that the HBF and HfS developing and publishing the industry guidance could give rise to a lack of independence or rigour within that guidance”, the summary said.
However, the CMA said it did not consider that the concerns were well-founded as the guidance is required to be consistent with the terms of the information that cannot be shared by housebuilders, which was developed due to the nature of the suspected collusion, the CMA said.
Full terms of information sharing ban
Each of the parties commits to not directly share, with any other parties and/or with other housebuilders, information of the following types regarding any newly built residential house or flat in Great Britain unless that information is publicly available:
(a) the price at which the sale of a property was agreed;
(b) information relating to any proposed or actual incentives (including, but not limited to, any payment of stamp duty, or inclusion or upgrade of appliances or other features) offered or provided to any buyer of a property;
(c) the number of properties that had been reserved, sold, cancelled, exchanged and/or legally completed at housing developments;
(d) the fact that a particular property had been reserved, sold, cancelled, exchanged and/or legally completed; and/or
(e) information relating to the number, type, characteristics or interest of visitors to their developments
Exemptions apply where sharing information is necessary to comply with legal obligations, requests from statutory bodies or to satisfy the requirements and ensure the effective operation of the planning and land delivery process, or for the purposes of fulfilling contractual obligations such as joint ventures and consortiums (whether or not these arrangements ultimately proceed).
Where exemptions apply these should be limited to where the information sharing is necessary, and ensure it is only used for the specific purpose to which the exclusion applies.
