31 March 2009 - The Commerce Commission has warned the Real Estate Network Limited (REN) that it and its members risk breaching the Commerce Act. REN is a cooperative company representing approximately 95 per cent of licensed residential real estate agents in and around Christchurch. Last year it adopted a by-law setting a minimum for commissions payable between its members.

REN's 'network listings service' allows member agents to share with other members the details of properties for which they have sole agency. With effect from 1 June 2008, REN introduced a by-law under which it would decline network listings unless the fee to the selling agent was 40 per cent of the commission negotiated with the vendors. If the fee came to less than $3,000, a minimum fee of $3000 would apply. This by-law, known as the minimum commission provision, was voluntarily suspended by REN when it was notified of the Commission's investigation.

The Commission considers that the by-law constitutes an agreement between competitors, in this case REN members, that fixes, controls or maintains a price, being the fee payable by a listing agent to a selling agent on the sale of a property using the network listings service.

The Commission is also concerned that the minimum commission provision may be at risk of fixing, controlling or maintaining commissions payable by vendors on the sale of properties using the network listings service.

"As some vendors' commissions are less than $3,000 in total, setting a minimum commission may lead to agents increasing the commissions charged to vendors. It particularly affects those discount agents currently charging 1 per cent commission," said Deborah Battell, Commerce Commission Director of Competition.

"This warning serves as a reminder to all industries, not just the real estate industry, that price-fixing is illegal," Ms Battell said. "However, as the by-law had only been in place for a matter of weeks and REN co-operated with the Commission, a warning was considered appropriate in this instance."

"The Commission will continue to monitor behaviour in the real estate industry and will recommence investigations if any further concerns are raised about possible price fixing."