Publications

Supreme Court clarifies scope of the cartel prohibition

Home Insights Supreme Court clarifies scope of the cartel prohibition

Contributed by:

Contributed by: Troy Pilkington, Sarah Keene and Louisa Blair

Published on:

Published on: April 02, 2020

Share:

The Supreme Court's long-awaited decision in the real estate agency price fixing case has been released this morning (decision available here).
 
This was the final appeal by two of the original 13 real estate agencies prosecuted by the Commerce Commission for price fixing. The Commerce Commission alleged that by agreeing to pass on Trade Me's fees for advertising properties to house vendors, the real estate agencies had breached the prohibition on price fixing in the Commerce Act.
 
The original decision from the High Court held this arrangement was not sufficient to fix or control the price of real estate services, however, this was overturned by the Court of Appeal, which decided that the arrangement was sufficient for breach, even though:

  • the agreement was not to fix the total price, but only a small proportion of it;
  • the parties retained some discretion to depart from the arrangement.

The Supreme Court has upheld the decision of the Court of Appeal finding:

  • "there was an apparent meeting of the minds of the representatives of the Hamilton agencies at [a meeting between them], from which arose an expectation that.. none of the Hamilton agencies would continue to offer, as a default option, the absorption of the Trade Me listing fee";
  • the fact that the agencies retained some discretion to depart from that default option did not remove the arrangement from the scope of the price fixing prohibition (as the "agencies were restrained by the agreed position of adopting vendor funding as the default option");
  • that "although the arrangement related to a mathematically small component of the overall charges by the Hamilton agencies to customers who successfully sold their properties, it was nevertheless a sufficiently significant component of the overall price to bring the arrangement within the ambit of [the price fixing prohibition]".

This decision will have important implications for the interpretation of New Zealand's cartel prohibitions, and we will publish a further article with our assessment shortly. 

Read more:
Competition Update
Talk to one of our experts:
Related Expertise