Property agencies 'tried to stop destructive trend'

Ayra Wang

Real estate agencies Midland and Centaline might have cooperated to avoid destructive competition among frontline agents and not to fix prices, said Centaline Property Agency cofounder Denny Wong Man-yin.

Wong, now managing director of Easy Property, said yesterday the two biggest agencies in Hong Kong had no need to suppress other small agencies with price fixing, as they already have, between them, 85 percent of the primary market.

Midland Holdings and its subsidiaries Midland Realty and Hong Kong Property have been sued by the Competition Commission for allegedly fixing the minimum net commission rate at 2 percent with their rival, Centaline Group's Centaline Property Agency and Ricacorp Properties.

Wong said frontline agents were "forced" by buyers to offer higher rebates when housing-market sentiment turned negative, or they would compete by giving more rebates to attract more buyers to come up with a better sales performance.

"The cooperation between the two groups was not for anti-competitive reasons, rather, they cooperate to stop the trend of increasing rebates," he said.

Wong said "frontline agents are bold," as they usually go in for a larger volume of properties sold, even at the cost of a low net commission.

He added that the destructive competition of increasing rebates could also happen among frontline agents in the same company.

Wong said the two groups agreed to cooperate due to a common interest, and it could only be effective when the two groups agreed to fix the net commission together, as they have a large impact on the market.

Midland Realty's chief executive officer for residential division for Hong Kong and Macau Sammy Po Siu-ming, who is being taken to the Competition Tribunal by the Competition Commission, appeared at a press conference for the launch of a new property, Vertex, in Cheung Sha Wan yesterday.

He said the company's operation and his work were "normal as usual" and refused to comment on his current case.