The competition watchdog is writing to every estate agent in the country warning them they are breaking the law if they agree restrictive adverts with newspapers.

The Competition and Markets Authority (CMA) will tell estate agents they are at risk of breaking the law if they cut anti-competitive advertising deals with newspapers barring the display of all fees and discounts in the industry.

The move comes after the body fined three estate agents and a local paper in Surrey £735,000 i n March for breaking competition law.

The agents were members of a local trade association who did not advertise their fees in adverts they took out. They convinced a local paper not to take ads from any estate agent who wanted to display its fees.

The CMA said this agreement limited the ability of agents to compete with each other on fees and made it harder for consumers to compare prices and get value for money.

The competition watchdog added that it is also writing a sterner letter to around 50 agents and papers that it suspects of having struck similar deals. It will tell them to end any such agreement.

Ann Pope, acting executive director of enforcement at the CMA, said: "The CMA is keen to work with businesses across the property and newspaper publishing industries to explain the implications of this case and ensure they understand what they need to do to comply with competition law and can recognise where they may be at risk of breaking it."

Firms that break competition law can be fined up to 10% of their annual worldwide turnover and company directors can be disqualified for up to 15 years.

Very serious cases of cartel activity carry a sentence of up to five years and unlimited fines.