Scots fight off MMC income probe

A BID by the Monopolies and Mergers Commission to prize fee income information out of Scottish law firms has been thwarted by the Law Society of Scotland after a battle in the high court.

The society moved against the MMC after it discovered that the commission was about to send out questionnaires to Scottish firms seeking details of their gross fee income.

The MMC, which has powers to demand information relevant to its enquiries, wanted the information as part of its investigation to determine whether Scottish solicitors' property centres are anti-competitive.

The society first secured an interdict (injunction) on the MMC preventing it from sending out the questionnaire.

And last Wednesday, at the Court of Session, Scotland's Supreme Court, MMC officials agreed to amend their questionnaire so questions on income were only asked of solicitors directly involved in estate agency or conveyancing work.

The tussle could prove a precursor to a similar confrontation in England and Wales where the Office of Fair Trading is mid-way through an investigation into alleged conveyancing price fixing.

New Scottish Law Society president Grant McCulloch said: “What they wanted was to send out questions about gross fee income to all solicitors' firms in the country, regardless of whether they do estate agency work or not.

“We don't have to reveal our income as solicitors or partners to anyone other than the Inland Revenue, so why in the name of goodness should we make it available to the MMC?”

The probe came about after estate agents complained to the Office of Fair Trading earlier this year that property centres, which collectively advertise properties for solicitors and account for 46 per cent of the residential estate agency market in Scotland, exclude advertising from non-solicitor agencies.

The Director General of Fair Trading, John Bridgeman, referred the issue to the MMC in March. Although the Scottish Law Society claims centres are an efficient way of pooling costs and keeping fees down, Bridgeman said independent research showed that solicitors using property centres charged higher fees for estate agency and conveyancing services.

The MMC sent the questionnaire to the Scottish Law Society early in May stating its intention to send a copy to all Scottish solicitors within a week. The questionnaire requested details of gross fee income from all sources regardless of whether the firm did any estate agency work.

McCulloch said: “We still have reservations, but we would never have achieved what we have had we not taken rapid and decisive action.”

He said that although the society had won the first battle, a bigger war was to come. The MMC will issue a new questionnaire this week “which we will find far harder to resist”.

The MMC has until the end of the year to complete its investigation and report to the Secretary of State for Trade and Industry. The MMC said it could not comment.