Real estate firm ordered to pay $1.25m penalty in price-fixing case

Unique Realty Limited has been ordered to pay a penalty of $1.25 million following a hearing in the Auckland High Court. 

Unique Realty Limited has been ordered to pay a penalty of $1.25 million following a hearing in the Auckland High Court. Unique is the first of 13 national and regional real estate agencies to appear in court after the Commission filed proceedings in relation to three separate alleged price-fixing and anti-competitive agreements among national real estate agencies, Hamilton real estate agencies and Manawatu real estate agencies.

In December 2015, the Commission filed proceedings in the Auckland High Court for alleged price-fixing and anti-competitive behaviour and also issued warnings to an additional eight agencies for their role in the conduct.

The proceedings relate to alleged conduct in 2013 and 2014 by agencies in response to Trade Me’s change from a monthly subscription fee to a per-listing fee for properties advertised for sale on its website.

In addition to the settlement agreed with Unique, the Commission has agreed settlements with Bayleys, at the national level, and Hamilton-based Success Realty. Penalty hearings have not yet been held for either party.

The Commission alleges that the defendants breached the Commerce Act by agreeing with each other, and other Manawatu agencies, that they would each pass on to vendors the full cost of advertising a property on Trade Me.

Unique reached a settlement with the Commission, prior to court proceedings being filed, under which it has admitted its conduct breached the prohibition on price-fixing in the Commerce Act.

In the High Court ruling Justice Venning said all residential listings in Manawatu were affected by the anti-competitive behaviour, impacting on ordinary New Zealanders at a time they were making one of the most significant financial decisions they will make.

While Unique did not intend to eliminate competition from the market, Justice Venning said its conduct was nevertheless serious in that the agreement was entered into by at least 11 real estate agencies across the Manawatu region which represented approximately three-quarters of the market. In addition, the agreement was entered into by Unique’s staff at its highest level and the agreement had the potential to affect a large number of transactions.

He said “The actions had potential to harm vendors in that a limited number of vendors paid the full $159 fee that Unique passed on to them, but more importantly some vendors may have elected not to list on Trade Me because they were facing a full $159 fee. The fact of not having a listing on Trade Me may have led to a lower number of “buyer eyes” or interest in their particular property. It might have meant they have missed out on potential purchasers and ultimately a potentially higher price for sale. The market for real estate sales in the Manawatu was affected.”

The Commission’s case against the other defendants in the Manawatu proceedings remains before the Court.