$1 million penalty for Hamilton price fixer
A Hamilton real estate agency has been handed down a hefty penalty for its part in the Commerce Commission’s price-fixing case.
Monday, December 19th 2016, 12:00AM
by Miriam Bell
Lugton’s Limited was today ordered to pay a penalty of $1 million by the Auckland High Court, following a penalty hearing on Friday.
The agency reached a settlement with the Commission earlier this year after admitting its conduct breached the prohibition on price fixing in the Commerce Act.
The conduct in question involved an agreement between Lugton’s, four other Hamilton real estate agencies and two individuals to enact a planned regional response 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.
It also admitted that it agreed with the other agencies that vendors’ existing listings would be removed from Trade Me.
In the court’s judgement, Justice Paul Heath said the conduct was serious and that the agreement “compromised the ability of individual vendors to negotiate a better price”.
He added that although Lugton’s was not an initiator in the process it was an important player.
Lugton’s was the second Hamilton agency to be penalised for its part in the agreement. Success Realty was earlier this year ordered to pay a penalty of $900,000 for its role.
The other agencies and individuals involved continue to defend the proceedings and the hearing is set down for September 2017.
The charges against Lugton’s were part of the suite of price fixing charges against 13 real estate agencies around the country that the Commission filed with the High Court last December.
To date, the Commission has agreed settlements with Lugton’s, 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.
It was just last Friday, that the High Court imposed penalties totalling $9.825 million on the head offices of Barfoot & Thompson, Harcourts, LJ Hooker and Ray White for their roles in the national price-fixing agreement.
Justice Heath said those involved were the country’s largest and most influential agencies who together controlled a significant share of the real estate markets and that the agreement was entered into by staff at the highest levels of these companies.
The agreement had the potential to affect a large number of transactions undertaken by ordinary New Zealanders when buying and selling houses, he said.
Each of the defendants reached separate settlement agreements with the Commission under which they admitted their conduct breached the Commerce Act.
Ray White faced a lower penalty as, unlike the other parties, it did not implement vendor funding and, as such, the conduct did not harm its vendors.
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