The Australian Competition and Consumer Commission has obtained declarations and injunctions in the Federal Court, Perth, in its proceedings against the Real Estate Institute of Western Australia and its Executive Director, Mr Michael Griffith.
After considering joint submissions from the ACCC, REIWA and Mr Griffith, the Court declared in consent orders that REIWA had breached the anti-competitive provisions of the Trade Practices Act 1974. It restrained REIWA from engaging in similar conduct in the future and ordered REIWA to institute a trade practices compliance program. It also ordered public notices and payment of the ACCC's costs. The Court also made declarations that Mr Griffith was knowingly concerned in the breaches in his capacity as Executive Director.
REIWA, whose membership comprises some 80 to 85 per cent of real estate agents operating in Western Australia, admitted that certain of its Rules and Rules of Practice had the effect of substantially lessening competition in the WA real estate market and breached the Act. It also admitted that it entered into agreements with the South West Regional College of TAFE and the West Coast College of TAFE (known at the time of the agreement as the North Metropolitan College of TAFE) which fixed the student fee for a training course, breaching the Act's price fixing provisions.
The Court made further declarations that REIWA's legal advisor, Mr Conal O'Toole, was knowingly concerned in the price fixing when he prepared the agreements with the TAFE colleges. He was also ordered in February this year to refrain from engaging in similar conduct in the future and to take part in a trade practices compliance program.
In his judgment Justice French said that: "prior to the resolution of these proceedings, [there was] a strong, indeed it might be said righteous belief within REIWA of its entitlement to behave in the way in which it did, which was in blatant contravention of various provisions of Part IV*. In light of that entrenched culture of non-compliance, no doubt based upon misunderstanding of the application of Part IV, there is a need for the development in REIWA of an institutional sensitivity to and understanding of the principal provisions of Part IV."
"This case serves as an important reminder to professional bodies that they are subject to the Act and, in particular, highlights the pitfalls for professional bodies that do not ensure that their own regulatory frameworks do not contravene the provisions of the Act," ACCC Chairman, Professor Allan Fels, said today.
"Further, the decision sends a clear warning to professional bodies about contracts or arrangements which they enter into with others in connection with their professional activities. Also, officers of professional bodies must ensure that their actions comply with the law as the ACCC has and will continue to take action against individuals involved in such breaches.
Further to the Court orders consented to earlier this year by the TAFEs and Mr O'Toole and, pursuant to REIWA's declarations today regarding the Licence of Copyright Agreement, both the TAFEs and Mr O'Toole have also provided declarations by way of Court order admitting contravening of the Act. Mr O'Toole has also consented orders for the publication of public notices in Brief and The West Australian"The orders made with respect to Mr O'Toole highlight the need for legal practitioners to comply with the Act when providing advice to clients. Legal practitioners who are, directly or indirectly, knowingly concerned in, or a party to, a contravention of the Act face a serious risk of being implicated in that contravention".
As a result of the ACCC action, the particular anti-competitive Rules and Rules of Practice have been removed to ensure that REIWA's professional standards no longer breach the Act. The changes mean that member agents can compete more actively by, for example, allowing REIWA real estate agents to provide information about their services to home-owners even if the sellers have already signed up with another agent. This will allow home-owners to be better informed about their options. Agents may also offer consumers incentives such as prizes and reward points that were previously not allowed. Finally, the changes give greater flexibility to franchise real estate agents as to whether they want to be REIWA members or not.
The ACCC acknowledges that REIWA's agreement to the Court orders helped achieve a timely and effective outcome. REIWA's The message to all business is that identifying trade practices issues early and fixing the problem fast is better than expensive, time-consuming litigation.
*Part IV of the Trade Practices Act 1974 deals with anti-competitive conduct.
After considering joint submissions from the ACCC, REIWA and Mr Griffith, the Court declared in consent orders that REIWA had breached the anti-competitive provisions of the Trade Practices Act 1974. It restrained REIWA from engaging in similar conduct in the future and ordered REIWA to institute a trade practices compliance program. It also ordered public notices and payment of the ACCC's costs. The Court also made declarations that Mr Griffith was knowingly concerned in the breaches in his capacity as Executive Director.
REIWA, whose membership comprises some 80 to 85 per cent of real estate agents operating in Western Australia, admitted that certain of its Rules and Rules of Practice had the effect of substantially lessening competition in the WA real estate market and breached the Act. It also admitted that it entered into agreements with the South West Regional College of TAFE and the West Coast College of TAFE (known at the time of the agreement as the North Metropolitan College of TAFE) which fixed the student fee for a training course, breaching the Act's price fixing provisions.
The Court made further declarations that REIWA's legal advisor, Mr Conal O'Toole, was knowingly concerned in the price fixing when he prepared the agreements with the TAFE colleges. He was also ordered in February this year to refrain from engaging in similar conduct in the future and to take part in a trade practices compliance program.
In his judgment Justice French said that: "prior to the resolution of these proceedings, [there was] a strong, indeed it might be said righteous belief within REIWA of its entitlement to behave in the way in which it did, which was in blatant contravention of various provisions of Part IV*. In light of that entrenched culture of non-compliance, no doubt based upon misunderstanding of the application of Part IV, there is a need for the development in REIWA of an institutional sensitivity to and understanding of the principal provisions of Part IV."
"This case serves as an important reminder to professional bodies that they are subject to the Act and, in particular, highlights the pitfalls for professional bodies that do not ensure that their own regulatory frameworks do not contravene the provisions of the Act," ACCC Chairman, Professor Allan Fels, said today.
"Further, the decision sends a clear warning to professional bodies about contracts or arrangements which they enter into with others in connection with their professional activities. Also, officers of professional bodies must ensure that their actions comply with the law as the ACCC has and will continue to take action against individuals involved in such breaches.
Further to the Court orders consented to earlier this year by the TAFEs and Mr O'Toole and, pursuant to REIWA's declarations today regarding the Licence of Copyright Agreement, both the TAFEs and Mr O'Toole have also provided declarations by way of Court order admitting contravening of the Act. Mr O'Toole has also consented orders for the publication of public notices in Brief and The West Australian"The orders made with respect to Mr O'Toole highlight the need for legal practitioners to comply with the Act when providing advice to clients. Legal practitioners who are, directly or indirectly, knowingly concerned in, or a party to, a contravention of the Act face a serious risk of being implicated in that contravention".
As a result of the ACCC action, the particular anti-competitive Rules and Rules of Practice have been removed to ensure that REIWA's professional standards no longer breach the Act. The changes mean that member agents can compete more actively by, for example, allowing REIWA real estate agents to provide information about their services to home-owners even if the sellers have already signed up with another agent. This will allow home-owners to be better informed about their options. Agents may also offer consumers incentives such as prizes and reward points that were previously not allowed. Finally, the changes give greater flexibility to franchise real estate agents as to whether they want to be REIWA members or not.
The ACCC acknowledges that REIWA's agreement to the Court orders helped achieve a timely and effective outcome. REIWA's The message to all business is that identifying trade practices issues early and fixing the problem fast is better than expensive, time-consuming litigation.
*Part IV of the Trade Practices Act 1974 deals with anti-competitive conduct.