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Two Hamilton-based real estate agencies have been ordered collectively to pay $ 4 million in penalties for setting prices on Trade Me fees.
Houses (archive image). Source: istock.com
Both parties are among the 13 national and regional real estate agencies against which the Commerce Commission filed court proceedings in December 2015.
It alleged that real estate agencies and their directors had agreed to a planned regional response to a 2013 increase in Trade Me prices for real estate listings.
Auckland High Court has ordered Hamilton-based Lodge Real Estate to pay $ 2.1 million and Monarch Real Estate $ 1.9 million for engaging in price fixing in violation of Trade Act .
The Commission’s case focused on the real estate agency “vendor financing” model, whereby Hamilton agencies would no longer cover the costs of Trade Me property listings for their vendors, as had been the practice. previous.
Instead, the default position would be for the seller of the property or their agent to pay.
The Superior Court did not require a Lodge director and a Monarch director to pay a fine despite the Court of Appeal finding that they engaged in unlawful conduct, which was upheld by the Supreme Court.
“It is not unusual for industries to experience price increases from suppliers and this case illustrates how important it is for companies to avoid any discussion with their competitors about how they could or should respond to such a change,” says the Commission President Anna Rawlings.
“Cartels can harm consumers and businesses by raising prices, restricting supply, and changing the competitive dynamics between businesses.
The case had been dismissed in November 2017, but the Commission’s appeal against that decision was confirmed in November 2018.
Lodge, Monarch and their directors then appealed to the Supreme Court which subsequently upheld the judgment of the Court of Appeals.
Thirteen companies and three individuals were ordered to pay a total of nearly $ 23 million in fines related to this case.
“The nearly $ 23 million in total penalties imposed in this case are substantial and, as of April next year, the cartel’s conduct will also be a crime subject to a maximum penalty of 7 years in prison,” says Ms. Rawlings. .
“We strongly urge companies to familiarize themselves with the law and make sure they have processes in place to protect themselves against collusion with their competitors.”
