Agent wants Commerce Commission to block offer by Trade Me for web site homes.co.nz

The agent cited Trade Me's 66.5% of online real estate advertising. Photo / George Novak

A real estate agent wants the Commerce Commission to reject Trade Me's takeover attempt of the business which owns listings site homes.co.nz, saying it will restrict competition.

Graeme Berryman, principal of New Lynn agency Berryman Nationwide and a registered valuer, said he was "concerned" about the proposed takeover's effect on the market limiting choice.

Trade Me has applied to buy PropertyNZ but the commission is yet to decide.

Berryman encouraged the rejection of the deal in a submission to the regulator.

"The number of websites for the property market is severely constrained already and the
purpose of this takeover is to reduce competition to the advantage of the dominant player in the market, Trade Me, which is elaborated in Trade Me's own submission, where they detail that they hold 66.5 per cent of the online spend of real estate advertising," his submission said.

His business was a small player and fairness of operation should be paramount.

"The best that your commission can do is not approve the takeover, do nothing and let the market determine through competition the best service. It is obvious in the Trade Me submission that homes.co.nz is struggling to provide a service of value. Just let homes.co.nz close down and let their owners take the loss," Berryman said.

Trade Me wants to buy the site which says it has 1.8 million house listings and valuations on its site every month and has 24 employees.

Trade Me's submission revealed how Homes had operating losses. It said if it was allowed to buy the business, it would be able to "convert Homes from a negative EBITDA business to a positive one and increase Trade Me's enterprise value".

The two businesses "each have a different focus for their business, and the acquisition will enable Trade Me to improve the product it can provide to consumers and advertisers.

"Trade Me believes that this will enhance rather than lessen competition in all relevant markets."

Trade Me Property, realestate.co.nz and the NZME's OneRoof were the three main online real estate advertising businesses, its application said.

So Homes.co.nz was a much smaller participant.

Trade Me Property is today displaying 21,606 properties for sale on its site.

PropertyNZ is owned by Spark with 22.2 per cent and founders Jamie Kruger with 17.52 per cent and Michael Gibbs with 14.70 per cent. Homes.co.nz is a free online property data and information business.

Homes.co.nz makes no money from consumers looking at the properties on its site but "monetises consumer interest ... by providing real estate agents, property-related partners and others with the opportunity to market themselves to consumers who use Homes", Trade Me's submission said.

Revenue figures and many other numbers were redacted.

"Homes has established a position selling digital advertising services to real estate professionals and other advertisers wishing to target the Homes audience. This is not an area where Trade Me has traditionally focussed its attention, and therefore the acquisition provides an immediate revenue upside for Trade Me. Moreover, the acquisition case and the price paid depends on Trade Me continuing to grow this part of Homes' business," it said.

Homes also allows users to register, claim their property and update the information about the property so Trade Me would gain this data which, when combined with its existing data will enable it to offer advertisers with more targeted and engaging marketing opportunities to a wider set of viewers, it said.

Head of Trade Me Property Alan Clark said in February: "We've reached a conditional agreement with homes.co.nz to purchase their business. Homes has a great suite of tools for New Zealanders interested in property, that they've built up over the last few years."

Trade Me competes with NZME-owned OneRoof and the real estate industry's realestate.co.nz in the online listings market.

"We're confident the Commerce Commission will be happy with the purchase but we'll go through the process with them and know more in the coming months," Clark said in February.