$1.5m fine for property company and its director
Manawatu’s biggest real estate company and its director have been fined a combined $1.5 million for price fixing.
A High Court judge called Property Brokers Manawatu the ‘‘ringleader’’ of the operation and fined it $1.45m, and also ordered company director Tim Mordaunt to pay $50,000.
Mordaunt said the penalty was ‘‘extraordinarily expensive’’, considering ‘‘no-one’’ suffered financial loss.
The fine came after the Commerce Commission alleged Property Brokers and other agencies Clarke came home in 1973, agreed they would pass on the full cost of advertising a property on Trade Me to vendors rather than absorbing those costs as overheads.
The agreement was made as Trade Me increased its listing costs. When the new costs came into effect, Property Brokers stopped offering to advertise client listings on Trade Me, and would only make such a listing if asked to do so. In such cases, the cost was passed on.
Mordaunt said the move came after Property Brokers Manawatu’s Trade Me fees were hiked up to $550,000 from $57,000.
‘‘What we were trying to do was protect our clients from having to pay exorbitant fees on Trade Me,’’ he said.
Mordaunt admits he was in breach of the Commerce Act but when he initially met with other agencies, which included Manawatu 1994 and Unique Realty, he did not realise this was the case.
Commerce Commission chairman Mark Berry said Property Brokers and Mordaunt acted as the lead facilitators in establishing the agreement between Manawatu agencies that vendors would have to pay the listing fee to have their property advertised on Trade Me.
The judge said price fixing was serious misconduct. Property Brokers was the ‘‘ringleader’’, Gilbert said.
‘‘Price-fixing agreements fundamentally undermine the proper functioning of competitive markets and have the potential to substantially erode the benefits the public is entitled to expect from them.’’
As the sole director of the largest real estate agency in Manawatu, Mordaunt was in a ‘‘strong position to influence the behaviour of other market participants’’.
‘‘He organised, hosted and chaired the meeting at which the Manawatu price-fixing agreement was reached. He directed the follow-up correspondence confirming the terms of the agreement reached and ensured that other parties implemented it as soon as their contracts with Trade Me expired.’’
Berry said the agreement left vendors with either the option to pay extra to advertise on Trade Me or not to advertise on the site at all.
‘‘The penalties awarded in this case send a clear message that such collusion is taken seriously as it can cause significant harm to consumers.
‘‘It is vital that businesses compete with their rivals.’’
The commission accepted Property Brokers did not knowingly break the law.
Unique Realty and Manawatu 1994 were fined $1.25m each in 2016.
Property Brokers and Mordaunt are the final defendants to appear in court in the Commerce Commission’s Manawatu proceedings. The commission has also agreed settlements with Hamilton-based Success Realty and Lugton’s. Court-imposed penalties to date total almost $18m. Settlements have not been agreed with Monarch Real Estate (Harcourts), Online Realty (Ray White), Lodge Real Estate Ltd and two individuals in the Hamilton proceedings. These proceedings remain before the court.