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Few housing associations terminate deals with building management firms after cartel suspicions

Price fixing claims have not prompted housing associations to switch building management firms.

The Finnish Competition and Consumer Authority (KKV) alleges building management companies and the industry federation agreed on fees for management services and strove to push up price levels in the sector nationwide between 2014 and 2017. Image: Henrietta Hassinen / Yle

Few housing associations opted to switch building management firms after news of suspected price fixing emerged this past winter, an Yle study finds.

Mia Koro-Kanerva of the Real Estate Management Federation said that while the case had cast suspicion on the entire sector, it was still relatively rare for housing associations to fire their management company.

"If ten percent of housing associations have asked for competing offers from other management companies, that’s not a lot," she said.

In February, the Finnish Competition and Consumer Authority (KKV) said that the Finnish Real Estate Management Federation and six property management firms formed a price cartel to artificially boost profits in the sector.

Half a dozen property management firms and the industry association are alleged to have conspired to push up prices. The Real Estate Management Federation denied the allegations, saying the watchdog's findings were incorrect and were merely suspicions at this point.

50 terminate contracts with Realia

Around 50 housing associations have terminated their agreements with market leader Realia Services Oy, which faces the largest proposed fines of some 15 million euros.

"But this can also be due to annual fluctuation," said Veli Huotari, senior VP at Realia Isännöinti.

Realia has some 6,000 clients, and some 100 are now seeking offers from competitors. Huotari said that to increase transparency, the company has introduced an electronic system where housing association boards can monitor pricing and invoicing.

Koro-Kanerva of the Real Estate Management Federation said that as housing associations gather for shareholders’ meetings in the coming months, more boards may decide to seek new offers.

In February, the KKV's Director-General stressed that inflated prices have ultimately been paid for by the residents of housing associations, describing the suspected price fixing by building management companies as "long-lasting, systematic cartel activity."

The Market Court will rule on the case in the autumn and impose possible penalties. The watchdog is calling for fines totalling 22 million euros for the industry group and the individual companies, which are based in various parts of the country.