Hefty penalty for real estate price fixing

Unique Realty Limited was the first of the agencies involved in a long-running Commerce Commission case to appear in court – and it was ordered to pay a penalty of $1.25 million following its hearing.

Last December, the Commission filed charges, in the Auckland High Court, against 13 real estate agencies around the country.

The charges, which followed a long investigation, were for three separate alleged price fixing and anti-competitive agreements among national real estate agencies, Hamilton real estate agencies and Manawatu real estate agencies.

In the Manawatu case, the Commission alleged the defendants breached the Commerce Act by agreeing with each other that they would pass the full cost of advertising a property on Trade Me on to vendors.

This conduct occurred in response to Trade Me’s change from a monthly subscription fee to a per-listing fee for properties advertised for sale on its website.

Unique saw its day in court first as it had reached a settlement with the Commission, before the proceedings were filed.

In the settlement Unique admitted its conduct breached the prohibition on price fixing in the Commerce Act.

In the High Court ruling, Justice Geoffrey Venning said all residential listings in Manawatu were affected by the anti-competitive behaviour, which impacted on ordinary New Zealanders when they were making one of the most significant financial decisions they will make.

“A limited number of vendors paid the full $159 fee that Unique passed on to them, but more importantly some vendors may have elected not to list on Trade Me because they were facing a full $159 fee,” Justice Venning said.

“The fact of not having a listing of Trade Me may have led to a lower number of ‘buyer eyes’ or interest in their particular property. It might have meant they have missed out on potential purchasers and ultimately a potentially higher price for sale”.

The Commission’s case against the other defendants in the Manawatu proceedings is still before the Court.

Along with the settlement agreement with Unique, the Commission reached settlements with Bayleys, at the national level, and Hamilton-based Success Realty.

However, penalty hearings have not yet been held for either of these settlements.