Four major real estate agencies have been ordered to pay close to $10 million for price fixing.
In the High Court at Auckland today, Barfoot & Thompson, Harcourts, LJ Hooker and Ray White were found to have breached the Commerce Act when they joined forces to avoid increases in Trade Me's pricing system.
Following a lengthy Commerce Commission investigation, it was found that the companies had agreed to pass the addition costs on to vendors.
They also agreed not commit to any preferential or discounted listing fees with Trade Me.
The deal came after Trade Me stopped allowing the companies to pay a monthly subscription, instead charging them for every property they listed.
In front of a packed court room, Justice Paul Heath ordered Barfoot & Thompson to pay $2.575 million, Harcourts $2.575m, LJ Hooker $2.475m and Ray White $2.2m.
Bayleys was also subject to the action but that case was settled earlier this year after the firm agreed to pay a $2.2m penalty.
Justice Heath said the agreement the companies reached "had the potential to affect a large number of transactions for residential properties" adding that it had "affected ordinary New Zealanders in the buying and selling of houses".
"I find that some vendors were likely to have been prejudiced by being required to pay more than they would otherwise have had to pay for a Trade Me listing."
The companies did not deliberately set out to breach the Commerce Act, Justice Heath said, emphasising that they had sought legal advice before embarking on the arrangement, but this did not raise any red flags.
There were a number of mitigating factors in the case, including the companies' lack of intent to breach the Act, the fact that none had done so before, and the substantially increased costs that Trade Me's new pricing scheme entailed.
Commission lawyer John Dixon said the companies were the largest and most influential in the industry and had the potential to affect a large number of transactions.
He added that the arrangement was entered into by staff who occupied positions at the highest levels.
"The conduct was certainly deliberate but it wasn't a knowing breach of the Act. The seniority of the employees is important because we're not just dealing with rogue employees," Mr Dixon said.
Barfoot & Thompson lawyer Miriam Dean said the new Trade Me pricing regime would have meant a 700 percent increase for the company - from about $30,000 per year to some $2 million.
LJ Hooker lawyer James Craig said his client was smaller than other defendants, and that it was subject to the agreement for a shorter period of time.
Simon Ladd for Ray White pointed out the company's early admission and co-operation with the Commerce Commission.
He said the company did not gain financially from the deal.
Harcourts lawyer Andrew Peterson said the company believed it was inevitable that the new fees would be vendor-funded.
"Trade Me knew that price increases of this magnitude could not be absorbed and, from the outset, recommended that the cost be passed on. Trade Me also encouraged real estate agents to charge a commission on top of the new price," he said, adding that it had not been the company's intention to breach the Act.
Another company, the Property Page (NZ) Limited, was also party to the proceedings because the price fixing agreement was made at one of its meetings.
The Property Page is an incorporated company owned by Harcourts, LJ Hooker, Ray White, Barfoot & Thompson and Bayleys and owns a 50 per cent share of Trade Me competitor realestate.co.nz.
Justice Heath found that no penalty needed to be made against the company, noting it had already made a $100,000 contribution towards the investigation.
