ComCom takes Ronovationz to court

Ron Hoy Fong

The Commission announced today that it has filed High Court proceedings against Ronovation Limited for price fixing in Auckland’s residential real estate market.

Ronovation, trading as Ronovationz, was set up in April 2009 and it ran a business advising its members on how to acquire and improve investment properties in Auckland.

By March 2018 Ronovation had more than 400 paid members.

However, the company had run into problems back in May 2017 after a furore erupted over a tutoring video by Fong became public.

The video, which was distributed to members of the Auckland Property Investors Association (APIA), showed Fong coaching investors to give vendors false names, work in packs to drive down prices and target desperate families or "dummies" who don't know the value of their home.

At the time, Fong denied exploiting people and said nothing he advocated was illegal. He also claimed he had never suggested his students should make offers for property in groups in a bid to drive down prices.

But the fallout from the video – which APIA immediately withdrew and publicly apologised for, saying it didn’t condone behaviour that led to people to be taken advantage of – included sponsors leaving APIA and a complaint to the Commerce Commission.

That complaint, which was laid by Labour Party MP Michael Wood, led the Commission to launch an investigation into “possible bid rigging under the Commerce Act”.

Now the Commission alleges that Ronovation developed rules in September 2011 to govern the conduct of members. They included rules which prevented Ronovation members from competing for properties.

The Commission alleges these rules, which applied between September 2011 and September 2018, amounted to cartel conduct in breach of section 30 of the Commerce Act.

It said in a statement that the Commerce Act bans arrangements which have the effect of fixing prices as well as agreements not to compete at auctions or on tenders which is known as “bid rigging”. “

“Bid rigging occurs when there is an agreement among some or all of the bidders about who should win a tender or auction. Bid rigging is a form of cartel conduct and is prohibited by both the former and current section 30 of the Commerce Act.”

The Commission and Ronovation have entered into a settlement to resolve the proceedings and a penalty hearing will be scheduled in due course.

But, as the case is before the Court, the Commission says it is not able to comment further at this time.

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