Hamilton based Lodge Real Estate and Monarch Real Estate have been ordered to pay price-fixing penalties nearly double that of competitors who pleaded guilty earlier to price fixing: Lodge fined $2.1 million; Monarch $1.9 million.
Commerce Commission clamped down after discovering a group of Waikato real estate firms jointly decided in 2013 to boycott Trade Me’s then plans to restructure pricing for property listings. Acting as a cartel, they agreed to withdraw all listings from Trade Me; further listings to be vendor funded only. As an agreement not to compete on price, this amounted to price fixing in breach of the Commerce Act.
Success Realty Ltd (fined $900,000), Lugtons (one million dollars) and Online Realty ($1.05 million) ‘fessed up. They then provided supporting evidence for Commerce Commission legal action against Lodge Real Estate and Monarch Real Estate. There was evidence that Lodge’s Jeremy O’Rourke initiated discussions on a local response to Trade Me’s proposed pricing; Monarch’s Brian King offered his boardroom as a venue for everyone to meet.
Lodge and Monarch hotly denied they participated in price fixing, fighting unsuccessfully all the way to the Supreme Court. It was back to the High Court to fix penalties. Both Lodge and Monarch said they each avoided paying Trade Me listing fees of less than $150,000 during the period vendors were forced to pay. Any penalty should be minimal, they said. Money saved is not the criteria, Justice Jagose ruled. It is the extent to which price fixing may achieve structural change in market share. Fines are intended as a deterrent; penalties must be set at a level to deter those business tempted to offend.
Lodge Real Estate was ordered to pay $2.1 million, Monarch Real Estate $1.9 million. Commerce Commission also asked for fines against Lodge’s Jeremy O’Rourke and Monarch’s Brian King. Justice Jagose declined. They did not set out to enforce the price fixing agreement. And the two were in no different position from directors at other Hamilton real estate firms who also participated at the price fixing meeting but had not been sued as individuals by Commerce Commission.
Commerce Commisssion v. Lodge Real Estate Ltd & Monarch Real Estate Ltd – High Court (8.09.20)
20.152