Supreme Court upholds Commission win in Hamilton real estate cartel case

The Supreme Court has upheld a Court of Appeal judgment which found Hamilton-based Lodge Real Estate and Monarch Real Estate and their directors engaged in price-fixing in breach of the Commerce Act.

“This is an important decision from the Supreme Court. It confirms the long-standing approach the Commission has taken to determining whether competitor collusion has occurred,” said Commission Chair Anna Rawlings.

The Commission filed proceedings against Lodge and Monarch in December 2015 alleging that those firms and other Hamilton real estate agencies and their directors had agreed a planned regional response to a 2013 increase in Trade Me’s pricing for real estate listings.

The Commission’s case centred on the real estate agencies’ so-called “vendor funding” model, whereby the Hamilton agencies would no longer meet the costs of Trade Me property listings for their vendors, as had been the previous practice. Instead, the seller of the property or their agent would pay.

In November 2017 the High Court dismissed the Commission’s claims against Lodge and Monarch and their directors. Justice Jagose held that there was an arrangement or understanding between the respondents, to which they gave effect, but that it did not have the purpose or effect of fixing, controlling, or maintaining the price for Trade Me listings services.

The Commission’s appeal against that decision was upheld in November 2018. The Court of Appeal held that the agreement fixed prices because consumers “lost the opportunity to be offered a price which had been set… in response to working competitive market forces”.

Lodge, Monarch and their directors then appealed to the Supreme Court which today upheld the Appeal Court’s judgment.

“Cartels can harm consumers and businesses, by raising prices, restricting supply and changing the competitive dynamic between businesses. To protect the competitive process we will continue to investigate and prosecute anti-competitive cartel conduct,” said Ms Rawlings.

“This case will inform our future work and we urge businesses and their advisors to understand the Court’s findings, and the scope of the prohibition against pricing collusion between competitors.”

Ms Rawlings noted that from April 2021 cartel conduct can be a criminal offence punishable by up to 7 years’ imprisonment.

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