Bayleys Corporation Limited and Hamilton-based Success Realty Limited have been ordered to pay penalties of $2.2 million and $900,000 respectively following penalty hearings in the Auckland High Court.

Bayleys and Success, which operates under the Bayleys brand, are among 13 national and regional real estate agencies the Commerce Commission filed court proceedings against in December 2015. The proceedings relate 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 response to Trade Me changing its fees for listing properties for sale on its website.

Bayleys and Success are the first agencies to appear in court in relation to the national and Hamilton cases respectively. Both agencies cooperated with the Commission’s investigation at an early stage. Bayleys reached a settlement with the Commission prior to court proceedings being filed, while Success reached a settlement shortly after. Each has admitted its conduct breached the prohibition on price fixing in the Commerce Act.

In her ruling on Bayleys released today, Justice Patricia Courtney acknowledged the seriousness of the conduct and its potential to affect a large number of transactions for residential properties. Justice Courtney also noted that competition in the sector had permanently changed due to the head office agreement, stating that the “possibility of competition was removed altogether for the period of the agreement and that situation meant that a new status quo existed when the revised model was introduced. This meant that the scope for competition after the agreement came to an end was open to influence.”

In the case of Hamilton firm Success, Justice Courtney said she did “not accept that this conduct falls at the lower end of the spectrum. The listing of properties on Trade Me was a widespread and popular means of advertising for vendors and the agreement had the effect of depriving vendors of access to that service or, at the least, of the ability to negotiate for that service.”

The Commission has now achieved penalties from an agency in each of the three separate national, Hamilton and Manawatu proceedings. The cases against the remaining 10 agencies, Property Page Limited and three individuals remain before the Court. No further comment will be given at this time.

Copies of the High Court rulings will be available shortly on the Enforcement Response Register.

Background

In December 2015, the Commission filed proceedings in the Auckland High Court for 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 3 individuals. The Commission 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 the national head offices of five major real estate companies, and separately by agencies in Hamilton and Manawatu. The alleged conduct occurred 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. Further information can be found here.

The Commission agreed settlements with Bayleys, at the national level, Hamilton-based Success Realty and Manawatu-based Unique Realty. Each of these cases has now been concluded, with the court-imposed penalties totalling $4.35 million.

The Commission has not agreed settlements with any other defendants in this case at this time.