The Commerce Commission has initiated civil legal action accusing four Harcourts franchises and their franchisor of engaging in cartel conduct.
The alleged behaviour concerns the franchisor, Harcourts Group Limited, along with the franchisees Four Seasons Realty 2017 Limited, Gold Real Estate Group Limited, Grenadier Real Estate Limited, and Holmwood Real Estate Limited.
Commerce Commission chairperson John Small stated that authorities considered the franchisees to hold a “significant share” of the market, making the alleged conduct harmful.
He explained that since the franchisees competed against each other for customers, making agreements that influenced the prices they charged—including commission rates—amounts to alleged cartel conduct under the Commerce Act.
Harcourts Group, the franchisor, was involved in those agreements.
“The franchise model is tried and tested and can work really well for Kiwis. Typically, franchises are organised so that franchisees don’t compete with each other,” Small said.
The regulator stated that when franchisees competed, the law prohibiting cartel conduct applied to them as it does to other businesses.
Small said, “It just so happens that the cartel conduct we are alleging took place in the context of a franchise relationship.”
“Franchisees need to be aware of when and where they compete with one another and ensure that they do not engage in cartel conduct, which carries significant risks such as criminal sanctions and potential penalties under the Commerce Act.”
A spokesperson for Harcourts Group Limited said the company confirms that it has received proceedings from the Commerce Commission.
“We take any allegations seriously and have cooperated with the Commerce Commission’s process. As this is a legal matter, we will not be making further comments.”