New Zealand Franchisees Face Price Fixing Allegations in Real Estate

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 activities. The franchisees involved are Four Seasons Realty 2017 Limited, Gold Real Estate Group Limited, Grenadier Real Estate Limited, and Holmwood Real Estate Limited. The commission contends that these franchisees entered into agreements that influenced the prices charged to customers, including commission rates, which is classified as cartel conduct under the Commerce Act.

According to John Small, chairperson of the Commerce Commission, this alleged conduct is concerning due to the significant market share held by these franchisees in the Christchurch real estate sector. He stated, “For most Kiwis, buying and selling a house is a major transaction. People should be able to trust the process is free of collusion.”

The commission clarified that its intention is not to undermine the franchise model as a whole. Small emphasized, “The franchise model is tried and tested and can work really well for Kiwis.” He noted that franchises are typically structured to minimize competition between franchisees, but in this case, the commission alleges that competition was compromised.

The allegations highlight the importance of compliance within franchise relationships. Small pointed out that franchisees must recognize when they are competing with each other and must refrain from engaging in practices that could be interpreted as cartel conduct. He warned that such actions carry serious risks, including criminal sanctions and substantial penalties under the Commerce Act.

The proceedings represent a significant moment for the real estate market in New Zealand, where trust and transparency are crucial for consumers navigating property transactions. As the case unfolds, the implications for the involved parties and the broader franchise landscape will become clearer.

The Commerce Commission’s actions reflect a commitment to maintaining fair competition within the real estate sector, ensuring that consumers can engage in transactions without concerns over collusive practices. The outcome of this case may set important precedents for franchise operations in New Zealand and beyond.