The Commerce Commission has begun civil proceedings alleging cartel activity involving several major players in the Christchurch real estate market.
The Commission alleges that Harcourts franchisees Four Seasons Realty 2017 Limited, Gold Real Estate Group Limited, Grenadier Real Estate Limited, and Holmwood Real Estate Limited, along with their franchisor Harcourts Group Limited, entered into agreements that affected the prices charged to customers, including commission rates.
Commerce Commission Chair Dr John Small said because the franchisees competed with each other for customers, any agreements that influenced pricing amounted to alleged cartel conduct under the Commerce Act.
“The Commission alleges this conduct was damaging because, between them, the franchisees had a significant share of the Christchurch real estate market,” Small said.
“For most Kiwis, buying and selling a house is a major transaction. People should be able to trust the process is free of collusion.”
Small said the proceedings were not intended to challenge the franchise model in general.
“The franchise model is tried and tested and can work really well for Kiwis. Typically, franchises are organised so that franchisees don’t compete with each other,” he said.
“However, where franchisees are in competition, the law that prevents cartel conduct applies to them, just like any other business. In this specific case, it just so happens that the cartel conduct we are alleging took place in the context of a franchise relationship.”
He warned franchisees that cartel conduct carries significant risks, including criminal sanctions and potential penalties under the Commerce Act.
A cartel is an arrangement where businesses agree not to compete with each other. This can include fixing prices, allocating markets, rigging bids, or restricting the supply of goods and services. Such conduct is illegal because it makes services more expensive, reduces choice, and lowers quality for consumers.
The Commission said tackling cartels is one of its enforcement priorities.
