New Zealand Real Estate Franchisees Face Price Fixing Charges

The New Zealand Commerce Commission has initiated civil proceedings against the real estate franchisor Harcourts Group Limited and four of its franchisees for alleged price fixing. The franchisees involved are Four Seasons Realty 2017 Limited, Gold Real Estate Group Limited, Grenadier Real Estate Limited, and Holmwood Real Estate Limited.

According to John Small, chairperson of the Commerce Commission, these franchisees were competing for the same customer base. The commission claims that their agreements, which influenced the prices charged to clients, including commission rates, constitute cartel conduct under the Commerce Act. Small emphasized that the franchisor was implicated in these agreements.

“The commission alleges this conduct was damaging because, between them, the franchisees had a significant share of the Christchurch real estate market,” Small stated. He highlighted that for most New Zealanders, buying and selling a home is a significant financial commitment. “People should be able to trust the process is free of collusion,” he added.

The commission clarified that it does not seek to undermine the franchise model as a whole. “The franchise model is tried and tested and can work really well for Kiwis,” Small noted. He explained that franchises are generally structured to prevent competition among franchisees. However, when franchisees do compete, the laws against cartel conduct apply just like they do to any other business.

In this instance, the commission asserts that the alleged cartel conduct occurred within the framework of a franchise relationship. Small cautioned franchisees to understand their competitive dynamics and refrain from engaging in practices that could be construed as cartel conduct, which carries serious legal repercussions, including criminal sanctions and penalties under the Commerce Act.

As the case unfolds, it raises important questions about the integrity of pricing practices in New Zealand’s real estate sector. The outcome may have implications not only for the franchisees involved but also for the broader real estate market, where consumer trust is paramount.