Commission files proceedings for price fixing in Auckland real estate market
Published08 Jul 2019
The Commerce Commission has filed High Court proceedings against Ronovation Limited for alleged price fixing in Auckland’s residential real estate market.
Ronovation (trading as Ronovationz) was set up in April 2009 and conducted business advising members on how to acquire and improve investment properties in Auckland. By March 2018, Ronovation had over 400 paid members.
The Commission alleges that Ronovation developed rules in September 2011 to govern the conduct of members, including rules that prevented Ronovation members from competing for properties.
The Commission alleges the rules, which applied between September 2011 and September 2018, amounted to cartel conduct in breach of section 30 of the Commerce Act.
The Commission and Ronovation have entered into a settlement to resolve the proceedings, and a penalty hearing will be scheduled in due course. As this case is before the Court, the Commission cannot comment further at this time.
The Commerce Act has recently been amended by the Commerce (Cartels and Other Matters) Amendment Act 2017. The Amendment Act came into force on 15 May 2018 and as a result the Commission has brought proceedings for two separate periods:
conduct in the period prior to 15 May 2018 that may breach section 27 via 30 of the Act; and
conduct from 16 May 2018 that may breach the amended section 30 of the Act.
Before the Amendment Act, section 27 via section 30 of the Commerce Act prohibited contracts, arrangements or understandings between competitors that had the purpose, effect, or likely effect, of fixing, controlling or maintaining the prices for goods or services.
The Amendment Act introduced a prohibition on entering into or giving effect to a cartel provision. A ‘cartel provision’ includes provisions contained in a contract, arrangement, or understanding related to price fixing, restricting output, or market allocation.
Agreements not to compete at auctions or on tenders are also commonly known as “bid rigging”. “Bid rigging”, or collusive tendering, occurs when there is an agreement among some or all of the bidders about who should win a tender or auction. Bid rigging is a form of cartel conduct and is prohibited by both the former and current s 30 of the Commerce Act.