Several Harcourts real estate franchisees have been accused of price-fixing. (File photo) Photo: RNZ / Tim Graham
The Commerce Commission is accusing several Christchurch Harcourts real estate franchisees of price-fixing.
The commission launched civil proceedings against the franchisor - Harcourts Group Limited - and four franchisees - Four Seasons Realty 2017 Limited, Gold Real Estate Group Limited, Grenadier Real Estate Limited, and Holmwood Real Estate Limited.
Commerce Commission chairperson John Small said the franchisees competed with each other for customers so entering into agreements that affected the prices they charged customers, including commission rates, constituted alleged cartel conduct under the Commerce Act.
The franchisor, Harcourts Group, was a party to those agreements, he said.
"The commission alleges this conduct was damaging because, between them, the franchisees had a significant share of the Christchurch real estate market.
"For most Kiwis, buying and selling a house is a major transaction. People should be able to trust the process is free of collusion."
Buying and selling a house is a major transaction. (File photo) Photo: 123rf
The commission was not looking to challenge the franchise model generally, Small said.
"The franchise model is tried and tested, and can work really well for Kiwis. Typically, franchises are organised so that franchisees don't compete with each other," he said.
Where franchisees were in competition, the law preventing cartel conduct applied to them, just like any other business, Small said.
"In this specific case, it just so happens that the cartel conduct we are alleging took place in the context of a franchise relationship," he said.
"Franchisees need to be aware of when and where they compete with one another and ensure that they do not engage in cartel conduct, which carries significant risks such as criminal sanctions and potential penalties under the Commerce Act."
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