September 26, 2020

2 Hamilton real estate agencies to pay $4 million for price fixing

The Auckland High Court has ordered Hamilton-based Lodge Real Estate Limited (Lodge) to pay $2.1 million and Monarch Real Estate Limited (Monarch) to pay $1.9 million for engaging in price-fixing in breach of the Commerce Act.

Lodge and Monarch have been penalised for their roles in coordinating the Hamilton regional response to Trade Me’s pricing decision. 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.

The Court’s penalty judgment brings an end to proceedings the Commission first filed in December 2015 against 13 national and regional real estate agencies and three individuals for agreeing to pass on the costs of Trade Me’s pricing change for real estate listings to vendors. The final total of penalties imposed in this case is just under $23 million.

“Cartels can harm consumers and business, by raising prices, restricting supply and changing the competitive dynamic between businesses.

“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. We strongly urge businesses to familiarise themselves with the law and ensure they have processes in place to guard against collusion with their competitors,” Commerce Commission Chair, Anna Rawlings said.

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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.

Thirteen companies and three individuals that have been ordered to pay a total of nearly $23 million dollars in penalties related to this case are:

  • Hamilton real estate agency, Online Realty Ltd (trading as Ray White) penalty of $1.05 million (Aug 2017)
  • Property Brokers Ltd and its director, Tim Mordaunt total penalties of $1.5 million (April 2017)
  • Hamilton real estate agency Lugton’s Ltd penalty of $1 million (Dec 2016)
  • Head offices of Barfoot & Thompson, Harcourts, LJ Hooker and Ray White total penalties of $9.825 million (Dec. 2016)
  • Manawatu 1994 Limited (trading as LJ Hooker) penalty of $1.25 million (Nov. 2016)
  • Bayleys Corporation Ltd and Hamilton-based Success Realty Ltd total penalties of $2.2 million and $900,000, respectively (July 2016)
  • Unique Realty Ltd penalty of $1.25 million (May 2016).
  • Lodge Realty and Monarch Realty total penalties of $2.1 million and $1.9 million, respectively (Sept. 2020)