REA Group drops realestate.com.au contract restrictions

REA Group will remove restrictions from its contracts with real estate agencies after the competition watchdog raised concerns that the provisions may have breached competition law and limited rival property listing services.

In simple terms, this means real estate agents will have greater freedom to choose where and how they advertise properties, rather than being locked into listing them on realestate.com.au or paying for higher-priced features.

The ACCC has accepted a court-enforceable undertaking from the ASX-listed company, which operates realestate.com.au, requiring changes to its contracting practices for three years.

The undertaking prevents REA from requiring or incentivising agencies to list all, or most, of their properties on realestate.com.au.

“REA’s undertaking resolves this issue in a timely manner and addresses our concerns. We expect that ultimately the benefits will flow from the real estate agents to their clients, Australian property owners,” ACCC Chair Gina Cass-Gottlieb said.

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Agents locked into listing properties

Under most of REA’s previous contracts, agencies were required to list all properties offered for sale or lease on realestate.com.au.

The contracts also required or encouraged agencies to use listing features that attracted higher fees for all, or a portion, of their properties.

The ACCC said the provisions restricted agencies’ choices and hindered competing property listing services.

“Because of the ACCC’s intervention, REA will give greater flexibility to agents in how their vendor and landlord clients list their properties for sale and rent,” Cass-Gottlieb said.

“This is a win for competition in the real estate listing market and is expected to enable real estate agents to offer their vendor or landlord clients the listing service that best meets their property advertising needs.”

Three-year undertaking

REA has acknowledged the ACCC’s concerns that its conduct may have breached section 45 of the Competition and Consumer Act, which prohibits anti-competitive agreements.

The company has committed to changing its operations for three years under the undertaking. The watchdog said it heard from numerous real estate agents concerned about REA’s contractual requirements during its investigation.

“We encourage vendors and landlords to discuss available listing options with their agents following REA’s undertaking, so they can consider the different listing options and fees on different portals to determine what best suits them,” Cass-Gottlieb said.

“The ACCC will continue to prioritise investigating companies entering agreements with restrictive provisions which hinder competition, and will always take a strong stance on these issues.”

REA operates Australia’s largest online residential property listing portal. The undertaking is available through the ACCC.