The head offices of four real estate agencies will collectively pay $9.8 million following a price fixing penalty hearing in the Auckland High Court.
Barfoot & Thompson, Harcourts, LJ Hooker and Ray White are among 13 national and regional real estate agencies the Commerce Commission filed court proceedings against in December 2015.
The proceedings relate to three separate price fixing and anti-competitive agreements among national real estate agencies, and Hamilton and Manawatu agencies, in response to TradeMe changing its fees for listing properties for sale.
The penalties handed down to the four agencies conclude the national proceedings.
Commission chairman Mark Berry says the national agreement was formed at a Property Page board meeting, which was convened to discuss a combined, industry-wide response to TradeMe changing its pricing model. Property Page is an incorporated company owned by the four agencies and Bayleys. It owns 50% of property listing website realestate.co.nz, a competitor to TradeMe.
At that meeting the parties agreed that they would all pass on the cost of listing on TradeMe to vendors.
“Trade Me’s change from a subscription-based pricing model to a per-listing fee meant real estate agencies faced substantially increased costs in order to list properties on the website,” says Dr Berry.
“As national competitors with significant influence across the country, it was vital that each agency made its own decision on how it responded to Trade Me.”
“Instead, the defendants agreed that they would each pass on the increased costs to vendors. This agreement removed the risk of the agencies competing in relation to the TradeMe charges thereby exposing vendors to harm,” he says.
In his judgment, Justice Heath noted that the parties to the agreement were the five largest and most influential agencies in New Zealand who together control a significant share of the real estate markets and that the agreement was entered into by staff at the highest levels.
He also said the agreement had the potential to affect a large number of transactions undertaken by ordinary New Zealanders when buying and selling houses.
Both Barfoot and Thompson were penalised $2.57 million, LJ Hooker has to pay $2.48 million and Ray White $2.2 million.
Each of the defendants reached separate settlement agreements with the Commission under which they admitted their conduct breached the Commerce Act. Ray White faced a lower penalty as, unlike the other parties, it did not implement vendor funding and, as such, the conduct did not harm its vendors.
Property Page did not face a court penalty, however under the terms of its settlement it agreed to pay $100,000 towards the Commission’s investigation costs.
The Commission has also agreed settlements with Bayleys and the regional agencies. Court-imposed penalties currently total $5.6 million.