Hamilton real estate agencies fined $4m for price fixing by High Court

NZ Herald

10 Sep, 2020 05:30 AM4 mins to read

Lodge and Monarch and other Hamilton real estate agencies were accused of planning a regional response to a 2013 increase in Trade Me's pricing for real estate listings. Photo / File

Two Hamilton real estate agencies have been fined $4 million for price fixing.

The High Court at Auckland ordered Lodge Real Estate Limited (Lodge) to pay $2.1m and Monarch Real Estate Ltd (Monarch) to pay $1.9m for breaching the Commerce Act.

A penalties hearing was held last Friday and the orders bring to an end court proceedings the Commerce Commission first filed in 2015.

The proceedings were against 13 national and regional real estate agencies and three people for agreeing to pass on the costs of Trade Me's pricing change for real estate listings to vendors.

The final penalties total imposed in the string of cases is just under $23m.

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

The commission had accused Lodge and Monarch and other Hamilton real estate agencies and their directors of an agreed and planned regional response to a 2013 increase in Trade Me's pricing for real estate listings.

However, the High Court did not require a director of Lodge or Monarch to pay a penalty despite the Court of Appeal finding 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 that companies avoid any discussions with their competitors on how they could or should respond to such a change," commission chair Anna Rawlings said in a statement today.

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

Rawlings said the nearly $23m in total penalties handed down is substantial and from April next year cartel conduct will also be a criminal offence with a maximum term of seven 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."

The proceedings' origin began in December 2015, when the Commission alleged price fixing and anti-competitive behaviour by 13 national and regional real estate agencies, a company owned by a number of national real estate agencies, and three individuals.

The commission also issued warnings to a further eight agencies.

Initially, in November 2017, the High Court dismissed the commission's claims against Lodge and Monarch and their directors.

Justice Pheroze Jagose held that there was an arrangement or understanding between the agencies but that it did not have the purpose or effect of fixing, controlling, or maintaining the price.

But an appeal by the commission was upheld in November 2018, with the Court of Appeal ruling the agreement fixed prices because consumers "lost the opportunity to be offered a price which had been set... in response to working competitive market forces".

Lodge, Monarch and their directors challenged the decision in the Supreme Court which upheld judgment in April this year.