Real estate firms Barfoot, Harcourts, LJ Hooker, Ray White to pay $9.8M for price fixing

Friday 16th December 2016

Major real estate firms Barfoot & Thompson, Harcourts, LJ Hooker and Ray White will pay a combined $9.8 million for price fixing after they agreed to pass on increased Trade Me Group fees for property listings as part of a response to the auction site's increasing dominance in the market

The real estate agents breached the Commerce Act by agreeing a planned nationwide industry response to Trade Me’s changed pricing model at a board meeting for Property Page (NZ), which is owned by the four firms and Bayleys. Property Page is also the half owner of Trade Me rival realestate.co.nz, the Commerce Commission said in a statement. The parties agreed vendors would have to pay the listing fee to have their property advertised on Trade Me.

Each vendor reached separate settlement agreements with the regulator where they admitted they breached the Commerce Act in 2013 and 2014. The High Court in Auckland ordered Barfoot pay $2.6 million, Harcourts $2.6 million, LJ Hooker $2.5 million and Ray White $2.2 million. Ray White incurred a lower penalty as it didn't implement vendor funding so didn't harm its vendors, unlike the other agencies, the commission said.

"Trade Me’s change from a subscription-based pricing model to a per-listing fee meant real estate agencies faced substantially increased costs in order to list properties on the website. As national competitors with significant influence across the country, it was vital that each agency made its own decision on how it responded to Trade Me," commission chairman Mark Berry said. "Instead, the defendants agreed that they would each pass on the increased costs to vendors. This agreement removed the risk of the agencies competing in relation to the Trade Me charges thereby exposing vendors to harm."

The competition watchdog has already agreed settlements with Bayleys at a national level, as well as Success Realty (trading as Bayleys in Hamilton) and Manawatu-based Unique Realty and Manawatu 1994 (trading as LJ Hooker) at a regional level, with court-imposed penalties totalling $5.6 million before today's decision. Property Page was not given a penalty by the court but agreed to pay $100,000 towards investigation costs as part of its settlement.

In Hamilton, the commission alleged several real estate firms agreed that 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 Trade Me.

Eight agencies also received warnings for their conduct. The agencies were Coast to Coast (trading as Bayleys), Alrose (trading as REMAX Palmerston North), Rural and Lifestyle Sales.com, Real Estate House Manawatu (trading as Ray White), Harcourts Team Manawatu Realty, Watson Real Estate, PGG Wrightson Real Estate and Monty’s Real Estate.

Trade Me shares last traded at $4.90 and have gained 16 percent this year.

BusinessDesk.co.nz

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