Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Ronovation to pay $400k for price fixing


The High Court has ordered Ronovation Limited to pay a penalty of $400,000 after it admitted to price fixing in Auckland’s residential real estate market.

Ronovation (trading as Ronovationz) was set up in April 2009 and conducted business advising members on how to acquire and improve investment properties in Auckland. By March 2018, Ronovation had over 400 paid members. As Ronovation’s membership grew its members found themselves competing with each other to purchase houses they had identified as suitable targets for investment. In 2011 Ronovation’s director Mr Hoy Fong developed a set of rules to ensure members were not competing against each other.

In summary, the rules required members to notify the group of their interest in a property. The first member to notify their interest then had priority over other members, who were not permitted to negotiate or bid for that property in competition with the first member. The conduct came to an end in 2018.

Commission Chair Anna Rawlings said the Ronovation case was the first time the Commission had brought proceedings against a buyer side cartel.

“Even agreements entered into by competing buyers can amount to price fixing. It is important that businesses and individuals are aware of the risks of engaging in this type of conduct, especially since price fixing will become a criminal offence from April 2021,” Ms Rawlings said.

“The purpose of the rules was to remove competition between members for those properties. While we cannot calculate the loss, some properties may have sold for less than they would have if Ronovation members had been competing against each other. A house is many New Zealanders’ most valuable asset, and it is important that the integrity of the sales processes for properties is maintained.”

In her judgment, Justice Sarah Katz said Ronovation’s rules were deliberately anticompetitive and designed to suppress competition between members in a manner that was to the detriment of vendors. Justice Katz noted there was no evidence that Mr Hoy Fong, or the members, realised that the conduct breached New Zealand’s competition laws.

“The clear aim of the Agreement was to supress competition between members, due to concerns that increased competition between members would drive up prices for the properties they were seeking to acquire. The conduct was therefore designed to supress the normal rivalry between members that would arise in a competitive sale process, in a manner that was to the detriment of any vendors who were directly impacted by the operation of the Agreement,” Justice Katz said.

“Publication of the facts of this case, and the penalty imposed, will likely lead to greater public awareness of the unlawfulness of anticompetitive buyer side conduct of this nature, and the serious consequences that can result from engaging in such conduct.”

A copy of the judgment will be available shortly on the Commission’s website.

Background

The Commerce Act has recently been amended by the Commerce (Cartels and Other Matters) Amendment Act 2017. The Amendment Act came into force on 15 May 2018 and as a result the Commission brought proceedings for two separate periods:
• conduct in the period prior to 15 May 2018 that may breach section 27 via 30 of the Act; and
• conduct from 16 May 2018 that may breach the amended section 30 of the Act.
Before the Amendment Act, section 27 via section 30 of the Commerce Act prohibited contracts, arrangements or understandings between competitors that had the purpose, effect, or likely effect, of fixing, controlling or maintaining the prices for goods or services.

The Amendment Act introduced a prohibition on entering into or giving effect to a cartel provision. A ‘cartel provision’ includes provisions contained in a contract, arrangement, or understanding related to price fixing, restricting output, or market allocation.

Agreements not to compete at auctions or on tenders are also commonly known as “bid rigging”. “Bid rigging”, or collusive tendering, occurs when there is an agreement among some or all of the bidders about who should win a tender or auction. Bid rigging is a form of cartel conduct and is prohibited by both the former and current s 30 of the Commerce Act.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Transport: International Arrivals In May Lowest In 61 Years

The number of people that arrived in New Zealand in May 2020 was the lowest for any month since May 1959, because of COVID-19-related border and travel restrictions, Stats NZ said today. There were 5,600 arrivals in May 2020 compared with 4,700 in ... More>>

ALSO:

It’s All In The Genomes: New Study Reveals Scale Of Havelock North Campylobacteriosis Outbreak

When the campylobacteria outbreak hit Havelock North in 2016, no-one fully understood how widely it affected the local communities. Gene-sequencing technology used by scientists has shown the true scale of the outbreak. The joint study from ESR, Massey ... More>>

ALSO:

Tiwai Point: Rio Tinto Announces Plans To Close Tiwai Point Smelter

Rio Tinto has just announced that it will wind down New Zealand Aluminium Smelters - the Tiwai Point smelter - saying the business is no longer viable. More>>

ALSO:

Freight: New Report On Auckland Port Relocation

The Government has released a major new report on the options for relocating the Port of Auckland’s freight operations while deferring any decision on the issue. More>>

ALSO:

Energy Sector: Meridian Spilled Water To Hike Electricity Prices - Authority Ruling

The Electricity Authority has found that generator Meridian Energy manipulated the power market, costing consumers about $80 million. More>>

ALSO:

XE Data Update: RBNZ Official Cash Rate Decision

The RBNZ will keep the Official Cash Rate (OCR) at 0.25%. T he key points in the RBNZ statement are: RBNZ keeps the OCR unchanged at 0.25% Maintain the LSAP (large scale asset purchase) at NZD$60 billion. Committee prepared to use additional monetary ... More>>

ALSO:

Electricity: Kiwis Ignore Promise Of Cheaper Power

Electric Kiwi and Flick Electric Co are joint winners of Canstar Blue’s award for Most Satisfied Customers | Electricity Providers From putting on an extra layer – rather than turning on a heater – to turning off lights and choosing the energy-saving ... More>>

ALSO:


ASB: Regional Economic Scoreboard Q1 2020

ASB NZ Regional Economic Scoreboard Gisborne still the place to be It has been Gisborne’s year, and the region comes out tops on our regional rankings for the fourth successive quarter. Like everywhere, question marks are about the COVID-19 impact on the future. ... More>>

RNZ: Economic Activity And Business Confidence Bouncing Back

Two surveys from ANZ show business confidence and economic activity have rebounded, but uncertainty about the future remains extreme. More>>

ALSO:

NIWA: The Climate Record That Keeps Getting Broken

Among the multitude of New Zealand climate statistics there is one record that continues to be broken month after month. Since January 2017 there has not been one month that recorded a below average nationwide temperature, according to NIWA’s seven station ... More>>

ALSO:

Govt: Extended Loan Scheme Keeps Business Afloat

Small businesses are getting greater certainty about access to finance with an extension to the interest-free cashflow loan scheme to the end of the year. The Small Business Cashflow Loan Scheme has already been extended once, to 24 July. Revenue and Small ... More>>

ALSO:

Science: 2019 Prime Minister’s Science Prizes Announced

The 2019 Prime Minister’s Science Prizes have been announced in a digital livestream event today. The Prizes recognise the impact of science on New Zealanders’ lives, celebrate the achievements of current scientists and encourage scientists of the ... More>>

ALSO:

Stardome Observatory: Young Kiwi Astro-Photographer Shoots For The Stars

Matariki by Josh Kirkley. The stars are aligning for up-and-coming Auckland-based astro-photographer Josh Kirkley (Kāi Tahu). During lockdown, one of his images was picked up by NASA and shared on the space agency’s Instagram to its 59.2 million ... More>>


DCANZ: Time For EU To Commit To A Level Playing Field For Trade

The Dairy Companies Association of New Zealand (DCANZ) has welcomed New Zealand Trade Minister David Parker’s statement that it is unacceptable for New Zealand exporters to continue facing an ‘unlevel playing field’ in the EU. Details leaked ... More>>

ALSO:

New Zealand Government: Supporting Kiwi Businesses To Resolve Rent Disputes

The Government will legislate to ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over commercial rent issues, Justice Minister Andrew Little announced today. More>>

ALSO: