The real estate cartel pinged

The Herald reports:

New Zealand’s top consumer advocate says house buyers and sellers could have suffered from the alleged real estate agency price-fixing.

Suzanne Chetwin, Consumers Institute chief executive, expressed concern for parties involved in the massive house selling industry, with an annual $1.2 billion turnover.

Ms Chetwin was reacting to today’s announcement that real estate agencies across the country are facing charges from the Commerce Commission of alleged price fixing and anti-competitive behaviour.

Agents allegedly agreed that vendors – not the agencies – would have to pay Trade Me listing fees which increased in early 2013.

“From a consumer perspective, the actions of the real estate agents meant properties for sale were not being viewed as widely as they should and vendors were being asked to pay to have properties listed on Trade Me,” Ms Chetwin said.

“In that regard, real estate agents were not acting in the best interests of sellers or buyers, but trying to force Trade Me to give them a better offer for advertising,” she said.

Yep, and when they often get $20,000 or so on a house sale, they were complaining about a $100 or so listing fee.

The Commission alleges the parties agreed that vendors would have to pay the listing fee to have their property advertised on Trade Me, and that the agencies would not commit to any preferential or discounted listing fees with Trade Me.

Bayleys has agreed a settlement in principle with the commission.

Bayleys has admitted its conduct breached the Commerce Act and has agreed to settlement terms. None of the other agencies have settled.

If one has settled that strongly suggests the Commission has a strong case.

Under the Commerce Act, price-fixing agreements between competitors are illegal. If the charges can be proven, the real estate agencies face penalties up to $10 million, three times the value of the commercial gain from the agreement, or 10 per cent of the turnover of the company.

If the law has been broken, you want penalties that will be a deterrent.