Hamilton real estate agency Lugton’s Limited has been ordered to pay a penalty of $1 million following a penalty hearing in the Auckland High Court on Friday 16 December.

The Commerce Commission filed proceedings in December 2015 alleging Monarch Real Estate (trading under the Harcourts banner), Lodge Real Estate, Online Realty (trading under the Ray White banner), Success Realty (trading under the Bayleys banner) Lugton’s and two individuals breached the Commerce Act by agreeing a planned regional response in Hamilton to Trade Me’s changed pricing model.

Lugton’s admitted that it had agreed with the other defendants that each of them would pass on the cost of listing on Trade Me to vendors who wished to have their properties listed for sale on Trade Me. Lugton’s also admitted that it agreed with the other agencies that vendors’ existing listings would be removed from Trade Me. This conduct constituted unlawful price fixing.

Lugton’s is the second Hamilton real estate agency to appear in Court after it reached a settlement with the Commission admitting its conduct breached the prohibition on price fixing. Success Realty was earlier this year ordered to pay a penalty of $900,000 for its role in the Hamilton agreement. Monarch, Lodge, Online and the two individual defendants continue to defend the proceedings, with a hearing set down for September 2017.

In his judgment released today Justice Heath commented on the seriousness of the conduct. He observed that the listing of properties on TradeMe was a widespread and popular means of advertising for vendors, and that “Lugton’s was not an initiator in the process but was an important player”.  Justice Heath also observed that in short, the agreement “compromised the ability of individual vendors to negotiate a better price.”

As this proceeding is still before the Court, the Commission will not be commenting further.

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 three 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 in the media release.

In addition to the settlement agreed with Lugton’s, the Commission has agreed settlements with Success Realty, Manawatu-based Unique Realty and Manawatu 1994, as well as Bayleys, Barfoot & Thompson, Harcourts, LJ Hooker, Ray White and Property Page New Zealand. Court-imposed penalties currently total $16.425 million.