Real estate agents face wrath of regulator

The competition watchdog believes all is not right with the real estate industry.
LUKE APPLEBY/FAIRFAX NZ

The competition watchdog believes all is not right with the real estate industry.

The real estate industry has returned fire on the country's competition watchdog.

Property Page – the company at the centre of a string of prosecutions by the Commerce Commission over alleged anti-competitive conduct and price-fixing – denied wrongdoing and said it had been doing right by consumers. 

Thirteen real estate companies are being prosecuted by the commission over tactics that may have discouraged their clients from advertising properties on Trade Me.

The commission said the estate agents colluded to pass on – or make home-sellers directly pay – Trade Me listing fees in full, without taking any available discounts. It said that amounted to "price-fixing and anti-competitive behaviour".

READ MORE: Property probe explained

The effect may have been to divert property listings to rival website realestate.co.nz, which is half-owned by estate agents.

Barfoot and Thompson, Harcourts, LJ Hooker, Ray White and Bayley Corporation are among the firms being prosecuted. 

The competition watchdog said it had also filed proceedings against Trade Me rival Property Page, which is owned by the five real estate chains, and three individuals. Another eight real estate firms had received warnings, the commission said.  

Property Page half owns realestate.co.nz, which is Trade Me's main rival in the market for online property listings.

Property Page said in a statement late on Thursday that it "refuted" the commission's allegations that it had breached the Commerce Act.

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The statement, issued in the name of the company and its shareholders, said they had responded to a "massive" fee increase by Trade Me by enhancing realestate.co.nz, which they said was in consumers' best interests. "Competitiveness was improved as a result, and costs avoided," it said.

The Commerce Commission began its investigation in February last year in the wake of allegations that some real estate agents had boycotted advertising properties on Trade Me in response to proposed increases in listing-fees.

The alleged boycott prompted Trade Me founder and director Sam Morgan to label the estate agents as "turkeys". However, the competition watchdog said in April that the scope of its inquiry had changed to focus on the way Trade Me fees had been passed on to home sellers.

The commission claimed the defendants breached the Commerce Act by agreeing a planned industry response to Trade Me's changed pricing model, with Property Page "aiding and abetting" that collusion. 

It alleged the parties agreed clients selling homes would have to pay Trade Me's listing fees in full to have their properties advertised on Trade Me, and that the agencies would not commit to taking advantage of fee discounts offered by Trade Me.

The competition watchdog said Bayley and Unique Realty in Manawatu had agreed in principle to admit guilt and to pay a court-imposed fine.

Lugton's managing director Simon Lugton said the Hamilton company was involved in "constructive dialogue" with the commission but would not confirm it also intended to settle. 

In Manawatu, three companies and one individual are being prosecuted. Those are: Property Brokers Limited, Manawatu 1994 Limited (trading under the LJ Hooker banner), Unique Realty Limited and Property Brokers managing director Tim Mordaunt.

Morduant said the company was very disappointed that the Commerce Commission had taken the action it did.

 "The model TradeMe was proposing was bad for the consumer in my opinion," he said.

Companies can be fined up to $10 million for breaches of the Commerce Act, or more if their gains from any illegal activities were greater than that. 

The largest ever fine in a cartel case was a $7.5m fine against Air New Zealand.

 - Stuff

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