Two Hamilton-based real estate agencies have been ordered to collectively pay $4 million in penalties for price fixing over Trade Me fees.
Both parties are among 13 national and regional real estate agencies the Commerce Commission filed court proceedings against in December 2015.
It alleged the real estate agencies and their directors had agreed a planned regional response to a 2013 increase in Trade Me’s pricing for real estate listings.
The High Court at Auckland has now ordered Hamilton-based Lodge Real Estate to pay $2.1 million and Monarch Real Estate to pay $1.9 million for engaging in price-fixing in breach of the Commerce Act.Advertisement
The Commission’s case centred on the real estate agencies’ so-called “vendor funding” model, whereby the Hamilton agencies would no longer meet the costs of Trade Me property listings for their vendors, as had been the previous practice.
Instead, the default position would be that the seller of the property or their agent would pay.
The High Court did not require a director of Lodge and a director of Monarch to pay a penalty despite the Court of Appeal finding they did engage in unlawful conduct, which was upheld in the Supreme Court.
“It is not unusual for industries to experience price increases from suppliers and this case illustrates how important it is that companies avoid any discussions with their competitors on how they could or should respond to such a change,” says Commission Chair Anna Rawlings
“Cartels can harm consumers and business, by raising prices, restricting supply and changing the competitive dynamic between businesses.
The case had been dismissed in November 2017, but the Commission’s appeal against that decision was upheld in November 2018.
Lodge, Monarch and their directors then appealed to the Supreme Court which subsequently upheld the Appeal Court’s judgment.
Thirteen companies and three individuals have been ordered to pay a total of nearly $23 million dollars in penalties related to this case.
“The nearly $23 million in total penalties handed down in this case is substantial and from April next year cartel conduct will also be a criminal offence subject to a maximum term of 7 years’ imprisonment,” says Ms Rawlings.
“We strongly urge businesses to familiarise themselves with the law and ensure they have processes in place to guard against collusion with their competitors.”