REA Group Drops Contract Restrictions After ACCC Concerns
Synopsis
REA Group will remove contract restrictions affecting real estate agencies after the ACCC raised concerns that the terms could limit competition from rival property listing platforms.
Key Highlights
- REA Group will change its contracts with agencies to a less restrictive format.
- Some terms could have the effect of restricting competition from other property listing platforms, according to the ACCC.
- Agencies will no longer need to list all property on realestate.com.au under the affected arrangements.
- As part of a court-enforceable undertaking, REA made changes regarding three years’ worth.
REA Group has agreed to remove certain restrictions from its contracts with real estate agencies after the Australian Competition and Consumer Commission (ACCC) raised concerns about competition in the property listing market.
The agreement means real estate agencies will have more freedom to choose where they advertise properties for sale or lease. The ACCC said some of REA’s previous contract terms could make it harder for rival property listing services to compete.
What REA Is Changing
In previous contracts, real estate agencies had to list all the properties they had for sale or lease on realestate.com.au. Contractors required or strongly urged agencies to list all or a portion of their properties using features that attracted higher fees.
The ACCC had been worried these arrangements would lessen the options available to agencies, and their clients. It also felt that the restrictions might hinder rival property platforms in attracting properties. For three years REA has now agreed to lift the relevant restrictions and amend its operations under a court-enforceable undertaking accepted by the regulator.
Implications for Real Estate Agents and Property Owners
The modifications could provide added leeway for realty agents when it involves advertising a property. Rather than being limited by specific contractual language, agencies are able to use a wider variety of listing services for their clients. For property owners and landlords, this could mean agents have more choices when marketing a property.
The change, well, realestate.com.au is no longer accessible to agencies or agents have to exit the platform. Instead, it is concerned with addressing a restriction in its contract that the ACCC claimed could impede competition.
What it Means for Businesses & Entrepreneurs in Australia
For property businesses, it could open up a wider field to pitch their services against the larger more well-established listing platforms. Encouraging agencies to have more options to publish properties on a variety of property websites should give new and smaller property listing web portals much greater access to win over attractive agencies.
And for entrepreneurs, the case also illustrates why contract terms can matter when a company grows large in a market. The higher the competition, the more incumbent businesses must check that their contracts do not needlessly inhibit customers from looking towards competitors’ services.
Source: Capital Brief
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
