17 Dec 2015

Agencies accused of price fixing

7:37 pm on 17 December 2015

The Commerce Commission is taking some of the country's biggest real estate agencies to court, accusing them of price fixing and anti-competitive behaviour.

A house for sale sign outside a home (stock shot).

Photo: 123RF

The action relates to the way the agencies dealt with changes to online property advertising on Trade Me, the commission said.

It has filed proceedings in the High Court in Auckland for alleged price fixing and anti-competitive behaviour by 13 national and regional real estate agencies, three individuals, as well as a company owned by a number of national real estate agencies.

The national agencies are the head offices of Barfoot & Thompson, Harcourts Group, LJ Hooker New Zealand, Ray White (Real Estate) and Bayley Corporation.

The Commerce Commission claims that in 2013 and 2014 they coordinated opposition to Trade Me's move to charge a single fee for each property listing on its website, instead of a fixed monthly subscription.

It said the companies agreed a planned industry response to the new pricing model - so that vendors would have to pay the listing fee, and agencies would not commit to preferential or discounted fees with the website.

It also alleges Property Page (NZ) Limited aided and abetted the agencies in establishing and implementing the agreement. Property Page is a company owned by Harcourts, LJ Hooker, Ray White, Barfoot & Thompson and Bayleys, and owns 50 percent of property listing website realestate.co.nz, which is a competitor of Trade Me.

The commission is also taking action against several agencies in Hamilton and Manuwatu, as well as three individuals, for coming up with regional responses to the price changes.

It has issued warnings to another eight agencies for their conduct.

The commission has agreed a settlement in principle with Bayleys, which involves the real estate firm making admissions that its conduct breached the Commerce Act and paying a penalty to be imposed by the court.


In Hamilton, the commission has accused Monarch Real Estate Limited (trading under the Harcourts banner), Lodge Real Estate (Hamilton) Limited, Lugton's Limited, Online Realty Limited (trading under the Ray White banner), Success Realty Limited (trading under the Bayleys banner) and two individuals of breaching the Commerce Act by agreeing a planned regional response to Trade Me's changed pricing model. The individuals work for Monarch and Lodge.

The allegation is that parties agreed all listings would be removed from Trade Me's website and vendors would have to pay the listing fee to have their property advertised on the site.

The commission has agreed a settlement in principle with Unique Realty, involving the company admitting its conduct breached the act and paying a court-imposed penalty.


In Manawatu, the commission has filed proceedings against Property Brokers Limited, Manawatu 1994 Limited (trading under the LJ Hooker banner), Unique Realty Limited and one individual, alleging that they breached the Commerce Act by agreeing with each other and other agencies in Manawatu a planned regional response to Trade Me's changed pricing model. The individual works for Property Brokers.

The commission alleges the parties agreed vendors would have to pay the listing fee to have their property advertised on Trade Me.

Property sector responds

A spokesperson for Property Page and its shareholders said it disputed it had breached the Commerce Act.

"On receiving advice of Trade Me's fee increases, the main focus of their actions was to serve the best interests of clients and consumers by enhancing the products and services of realestate.co.nz, which they operate with their joint venture partner REINZ [Real Estate Institute of New Zealand].

"Competitiveness was improved as a result, and costs avoided."

Barfoot & Thompson, LJ Hooker and Bayleys said they would not comment on the allegations. Ray White declined an interview request but said it had not agreed to any settlement with the Commerce Commission.

REINZ said it was not involved in any court proceeding and would not comment.

Real Estate Agents Authority chief executive Kevin Lampen-Smith said the Commerce Commission's accusations were not a good look for the industry.

Agents must let vendors choose the best way to market their homes, he said.

Property Investors Association chief executive Andrew King said he could not understand why such companies were being prosecuted.

"It's quite surprising that the Commerce Commission are bringing action against them because I believe that Trade Me, when they changed their policy, [it] was really just to increase their earnings, and they actually advised the agencies to pass it on to consumers," he said.

"So I wouldn't have thought there would have needed to be any colluding amongst them."

Home Owners and Buyers Association president John Gray said it supported the court action.

"We object to anything that reduces the options that buyers and sellers might have in trading in property, and clearly this was a move that was taken by certain players in the real estate industry to cut out the Trade Me portal."

Trade Me said it was still considering the commission's allegations.