New Zealand Law Society - $1.25 million penalty imposed for price fixing

$1.25 million penalty imposed for price fixing

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The High Court has imposed a penalty of $1.25 million on Manawatu (1994) Ltd, trading under the LJ Hooker banner, finding that its conduct in being party to an anti-competitive price fixing agreement contravened section 27 of the Commerce Act 1986.

In October 2013, in response to price increases resulting from a change in Trade Me's pricing model for online advertising, Manawatu (1994) Ltd entered into an agreement with at least 10 other real estate agencies in the region to pass the costs on to vendor clients instead of absorbing them as overhead as they had previously done.

Manawatu admitted that it was a party to the agreement, which operated from 1 February 2014 until 1 August 2014. It also agreed with the Commerce Commission, subject to the Court's approval, to pay a penalty of $1.25 million for anti-competitive conduct.

In the High Court on 28 November 2016, Gilbert J found the recommended penalty was in line with penalties imposed by the Court against other real estate agencies in similar circumstances. A penalty of $1.25 million was imposed on Unique Realty Ltd for its role in the agreement earlier in 2016.

“Participation in price fixing agreements is regarded as serious misconduct," Justice Gilbert said.

"In this case, the agreement involved at least 11 real estate agencies representing most of the relevant market in the region. The agreement therefore had the potential to affect a large number of consumers. Balanced against this, the agreement did not eliminate all price competition, nor was this the aim, and Manawatu did not initiate the agreement.”

In addition to imposing the penalty, Justice Gilbert made a declaration that Manawatu (1994) Ltd's conduct contravened section 27 of the Commerce Act 1986.

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