Commerce Commission v Barfoot & Thompson Ltd - [2016] NZHC 3111

SAVE FOR THE REDACTED VERSION OF THE AGREED SUMMARY OF FACTS, THE COURT FILE SHALL NOT TO BE SEARCHED COPIED OR INSPECTED WITHOUT LEAVE OF A JUDGE, ON AN APPLICATION MADE ON NOTICE TO ALL PARTIES.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST

CIV 2015-404-3047 [2016] NZHC 3111

BETWEEN
COMMERCE COMMISSION

Plaintiff

AND

BARFOOT & THOMPSON LTD First Defendant

HARCOURTS GROUP LTD Second Defendant

L J HOOKER NEW ZEALAND LTD Third Defendant

RAY WHITE (REAL ESTATE) LTD Fourth Defendant

PROPERTY PAGE (NZ) LTD Fifth Defendant

Hearing: 16 December 2016

Counsel:

J C L Dixon, L C A Farmer and A McConachy for Plaintiff
M Dean QC for First Defendant
A Peterson and I Denton for Second Defendant
J Craig for Third Defendant
S Ladd and J Trezise for Fourth Defendant
M N Dunning QC for Fifth Defendant

Judgment:

16 December 2016

(ORAL) JUDGMENT OF HEATH J

COMMERCE COMMISSION v BARFOOT & THOMPSON LTD [2016] NZHC 3111 [16 December 2016]

Introduction

[1] Part 2 of the Commerce Act 1986 (the Act) is directed at the regulation of trade practices that have the effect or likely effect of substantially lessening competition in a market. Section 27 creates the prohibition. Section 30 deems certain price fixing arrangements to substantially lessen competition.

[2] Sections 27 and 30 of the Act provide:

27 Contracts, arrangements, or understandings substantially lessening competition prohibited

(1) No person shall enter into a contract or arrangement, or arrive at an understanding, containing a provision that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.

(2) No person shall give effect to a provision of a contract, arrangement, or understanding that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.

(3) Subsection (2) applies in respect of a contract or arrangement entered into, or an understanding arrived at, whether before or after the commencement of this Act.

(4) No provision of a contract, whether made before or after the commencement of this Act, that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market is enforceable.

30 Certain provisions of contracts, etc, with respect to prices deemed to substantially lessen competition

(1) Without limiting the generality of section 27, a provision of a contract, arrangement, or understanding shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition in a market if the provision has the purpose, or has or is likely to have the effect of fixing, controlling, or maintaining, or providing for the fixing, controlling, or maintaining, of the price for goods or services, or any discount, allowance, rebate, or credit in relation to goods or services, that are—

(a) supplied or acquired by the parties to the contract, arrangement, or understanding, or by any of them, or by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NZHC 3111
Decision Date: 16 December 2016

CaseChat Overview and Summary

In Commerce Commission v Barfoot & Thompson Ltd, the Commerce Commission brought an action against five real estate companies that were alleged to have entered into an anti-competitive arrangement in response to a change to the pricing model of a competitor. The five companies, Barfoot & Thompson, Harcourts, LJ Hooker, Ray White and Bayleys, as well as Property Page, were all alleged to have contravened the Commerce Act 1986 by agreeing to absorb the cost of fees payable to the competitor and pass those costs on to vendors. The Commission and the companies had agreed to a range of penalties. The Court was asked to determine whether the penalties were appropriate, and whether there were grounds to defer the payment of penalties by two of the companies. The Court found that the penalties reflected the culpability of the parties and the mitigating factors that applied to them. It also found that there were grounds for the deferral of penalty payments. The Court made declarations of contravention and imposed the penalties as recommended.

Orders