The Australian Competition and Consumer Commission proposes to deny authorisation* to the Articles, Code of Practice, Multiple Listing Service By-Laws and Standard Form Agreements of the Real Estate Institute of Western Australia, in a draft determination issued today.
"The ACCC accepts that these documents, which are in effect agreements between competitors, could provide benefits to the public", ACCC Commissioner responsible for adjudication, Dr David Cousins, said today. "However, as they are currently drafted they are also likely to give rise to detriments. On balance, the detriments, including the adverse impacts on competition, are considered to outweigh the benefits".
Denial of authorisation means that the agreements will not have immunity from prosecution under the Trade Practices Act 1974.
The ACCC saw public benefits in requirements for professional standards of behaviour for members, for requiring members to have professional indemnity insurance, from the operation of the Multi Listing Service and from standard contract documentation. However some restrictions on conduct were excessive, including for example limiting flexibility to negotiate standard contract terms, not allowing agents to engage employees of other agents and not permitting conjoining agents to contact each other's clients; reporting arrangements were not sufficiently transparent; and the appeals process was not sufficiently independent.
"In proposing to deny authorisation, the ACCC has indicated to REIWA how it could construct the arrangements in such a way that they would result in a net public benefit. If the arrangements are changed in the way we have indicated, we would be prepared to grant authorisation for five years".
REIWA is an industry association of real estate agents in Western Australia. It provides a range of services particularly to real estate and business agents, and to the general public.
REIWA's Articles address, among other things, matters relating to membership, disputes involving members and appeals. The Codes of Practice address a number of issues regarding relationships between agents and vendors/lessees, other agents and purchasers/lessees. The Multiple Listing By-Laws address elements of conjunctional agreements and members' obligations in relation to MLS arrangements.
REIWA also applied for authorisation of ten of the standard form of sales and management agency agreements it approves for use by its members. REIWA applied for authorisation after it had revised its articles of association, standard clauses, rules of practice, and operating directives in response to consent orders issued by the Federal Court of Australia. The Court orders followed a 1998 prosecution launched by the ACCC against REIWA with respect to breaches of section 45 of the Trade Practices Act. The orders were issued by the Court on a consent basis after they were proposed by the REIWA and the ACCC.
Dr Cousins indicated that whilst many of the objectionable aspects of the agreements had been removed, further changes would be required before the ACCC would be prepared to authorise them.