Court of Appeal: Commerce Commission v Lodge Real Estate

Court of Appeal: Commerce Commission v Lodge Real Estate Limited

Commerce Commission v Lodge Real Estate Limited
23 November 2018
[2018] NZCA 523

Appeal allowed. Cross-appeal dismissed. Declaration that the respondents’ conduct contravened s 27 of the Commerce Act 1986. Case remitted back to the High Court for an assessment of penalties. Costs order.

Commercial law — competition. Anti-competitive conduct — price-fixing.

The Commerce Commission claimed that the respondents participated in price-fixing by entering into an arrangement or understanding with other real estate agencies that the cost of Trade Me standard listings would be passed on to the vendors, and would generally not be funded by the agency as had previously been the case. The High Court dismissed the Commerce Commission’s claims.

Issue: Did the respondents enter into an arrangement or understanding that Trade Me listings would generally be vendor funded?

Held: Yes. The evidence objectively established a consensus and mutual expectations between the agencies that they would move to vendor funding. Whilst many of the agencies were unlikely to be able to absorb the increased costs of Trade Me listings and were likely to shift to vendor funding, the evidence established that the agencies appreciated that, unless they all shifted to vendor funding, they may lose listings to other agencies. The arrangement, which involved a co-ordinated withdrawal from Trade Me and shift to vendor funding in January 2014, was not simply conscious parallelism.

Issue: In order for there to be an arrangement or understanding, is it necessary for the Commerce Commission to establish that the parties had a moral obligation to adhere to the terms of the arrangement?

Held: No. Provided there is consensus and mutual expectations, it is not necessary for the Commerce Commission to establish the existence of a moral obligation.

Issue: Did the arrangement have the purpose or likely effect of fixing, controlling or maintaining the price?

Held: Yes. The fact that the agencies retained a discretion to fund Trade Me listings themselves did not mean there was no anti-competitive effect. An arrangement as to a starting point or offer price has the purpose and likely effect of price-fixing. A consensus need not be absolute in order to be anti-competitive.

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