Property investment guru Ron Hoy Fong's company fined $400,000 for illegal bid-rigging

Property investor Ron Hoy Fong. Photo / File

An Auckland company owned by property investment guru Ron Hoy Fong has been penalised $400,000 for price fixing.

The Commerce Commission filed High Court proceedings against Ronovation Limited following a Herald investigation into Fong.

In 2017, the Weekend Herald revealed a tutoring video by Fong was being supplied free to members of the Auckland Property Investors Association (APIA).

It encouraged investors to look for the "seven Ds" - targeting deceased estates, desperate homeowners facing foreclosure, developers on the brink of bankruptcy, divorcees and "dummies" who didn't know the value of their home.

The video, used to promote Fong's Ronovationz company, also advised people to work in packs to drive down prices, and give vendors false names when making repeat offers.

"Some places are already a bargain," Fong told viewers in the video. "That's simply because the vendor's a dummy. He doesn't know what it's worth."

The Commission alleged that Ronovation developed rules (the "Priority Rules") in September 2011 to govern the conduct of members, including rules that prevented members from competing for properties.

In her ruling, Judge Sarah Katz said she was "satisfied that the Priority Rules were deliberately anti-competitive and designed to suppress competition between members".

"They were explicitly stated to be necessary due to a perception that increased competition among members would drive up prices for the properties they were seeking to acquire.

"The conduct was designed to suppress the normal rivalry between members of a competitive sale and purchase of a property, in a way that was potentially to the detriment of vendors."

Katz said there was no evidence, however, that Fong, or the members, realised that this type of anti-competitive conduct breached New Zealand's competition laws.

Ron Hoy Fong, director of Ronovationz, said they have accepted responsibility for their role relating to the historic Priority Rules Agreement that guided our members looking to purchase properties.

"As the judgement observed, it was never our intent to breach the Commerce Act, and there was no direct gain to Ronovationz by doing so. As soon as the Commerce Commission outlined its concerns about the Priority Rules Agreement, we immediately acted and revised our procedures with members, which the Court acknowledged.

"Our Priority Rules Agreement has not been in place for more than a year and there had been no prior concerns raised around this agreement before then.

"While we are incredibly disappointed that this has occurred, we have been working with the Commission throughout the investigation and are pleased to have now achieved a resolution.

"Our focus continues to be helping more Kiwis and our growing membership achieve their property goals."

A 35 per cent discount was applied to the range of a $550,000 to $650,000 penalty for Ronovation's acceptance of responsibility and agreeing settle the proceedings on terms acceptable to the Commission.