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August 26, 2016

Agents’ attempt to hit online main players unsuccessful

 

An attempt by Property Media Group Pty Ltd (PMG) – a group representing individual real estate agents offices from all over Australia – to challenge the market control of Domain and Realestate.com.au looks set to fall over.

The Australian Competition and Consumer Commission (ACCC) has issued a draft determination proposing to deny authorisation to PMG, which is seeking to collectively bargain and boycott suppliers of online and print real estate advertising, including the two main players.

PMG made the application for authorisation on behalf of itself and 170 real estate agents ranging from individual agents to representatives of large franchise groups.

A collective boycott involves two or more competitors agreeing not to acquire goods or services from a target supplier. In this case, PMG has indicated that a boycott may include agents agreeing not to acquire premium property listings, or participating agents in a region agreeing not to enter into contracts with a real estate platform.

However, PMG would have broad discretion to select what kind of boycott activities for real estate agents to engage in, including the possibility of a national boycott of a real estate advertising platform by all of the participating real estate agents.

“While the ACCC considers that collective bargaining and boycott action can be in the public interest in certain circumstances, we are not satisfied that the conduct proposed by PMG would result in significant public benefits,” ACCC commissioner Roger Featherston says.

“The ACCC is particularly concerned by the potential size and scope of collective bargaining groups and boycott activities, combined with uncertainty about how PMG will ultimately conduct negotiations and implement any boycotts.”

PMG has sought authorisation for the conduct because it sees realestate.com.au and Domain.com.au as having significant market power, charging excessive prices and essentially forcing real estate agents on to premium contracts.

However the ACCC considers that while the two websites have some market power, there is evidence of competition, both between each other and from other small and mid-tier players.

The ACCC also received information showing that real estate agents can and do enter into a diversity of contracts and listing types, including within the same region.

Realestate.com.au is part of REA, 61.6 per cent of which is owned by News Corp, while Domain is owned by Fairfax.

It’s not the first time a group of agents has united to try and wield some of the power away from the market leaders. In 2014, Real Estate Digital Marketing Services was formed as a response to price hikes in real estate advertising.

The ACCC is now seeking submissions from Property Media Group and interested parties in relation to its draft determination, before making a final decision, expected in October 2016.

 

 

 

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