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Trade Me Wanganui Property Power Grab

Updated: Jan 10


Commerce Commission logo Trade Me Wanganui

Below is part of the Commerce Commission's report into Trade Me Limited (Trade Me) to buy 100% of PropertyNZ Limited (Homes.co.nz). It makes for interesting reading. The Commerce Commission gave its permission for the purchase to go ahead in August 2021 and withdrew its concerns about competition.


Public Version



Statement of Unresolved Issues

ISBN 978-1-869459-11-6


Trade Me Limited / PropertyNZ Limited


30 June 2021


Introduction


1. On 18 February 2021, the Commerce Commission registered an application (the

Application) from Trade Me Limited (Trade Me) for clearance to acquire 100% of the shares or assets of PropertyNZ Limited (Homes), which owns and operates the homes.co.nz website (the Proposed Acquisition).¹


2. The Commission will give clearance if it is satisfied that the Proposed Acquisition

will not have, or would not be likely to have, the effect of substantially lessening competition in a market in New Zealand.


3. Since registering the Application, we have published:


3.1 a Statement of Preliminary Issues (SoPI) setting out the issues that we considered

important at the start of our investigation in deciding whether or not to grant clearance;² and


3.2 a Statement of Issues (SoI) setting out the potential competition issues that we had

identified following our initial investigation.³


4. The SoPI and the SoI also provided background information about Trade Me and Homes (together, the Parties) and the real estate industry in which they operate. These documents are available on our website, along with public versions of the submissions we received following publication of the SoPI and SoI.


5. This Statement of Unresolved Issues (SoUI) sets out the potential competition issues

that have not been resolved to date and that we therefore continue to test. This is so


¹ A public version of the Application is available on our website at:

http://www.comcom.govt.nz/business-competition/mergers-and-acquisitions/clearances/clearances-register/.

² SoPI dated 10 March 2021 is available at

https://comcom.govt.nz/__data/assets/pdf_file/0026/244277/Trade-Me-Limited-and-PropertyNZ-

Limited-Statement-of-Preliminary-Issues-10-March-2021.pdf.

³ SoI dated 23 April 2021 is available at

https://comcom.govt.nz/__data/assets/pdf_file/0020/253334/Trade-Me-Limited-and-PropertyNZ-

Limited-Statement-of-Issues-23-April-2021.pdf.


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that the Parties and other interested parties have an opportunity to comment and provide us with additional information.


6. In reaching the preliminary views set out in this SoUI, we have considered information provided by the Parties and other industry participants. We have not yet made any final decisions on the issues outlined below (or any other issues) and our views may change, and new competition issues may arise, as the investigation continues.


7. We invite interested parties to provide comments on the likely competitive effects of

the Proposed Acquisition. We request that parties who wish to make a submission do so by 14 July 2021. All parties will have the opportunity to cross-submit on the public versions of submissions from other parties by close of business on 21 July 2021.


The concerns we have been testing


The issues where we still have concerns


8. We are currently not satisfied that the Proposed Acquisition will not have, or would

not be likely to have, the effect of substantially lessening competition due to horizontal

unilateral effects resulting from a loss of competition in the supply of:


8.1 online classified advertising for residential real estate for sale to agents and agencies

(the listings market); and


8.2 listings information and other property-related data and information (including editorial content) to the audience (the audience market).


9. Our unresolved concerns in relation to the supply of the above services arise from our current view that:


9.1 Homes has been expanding within the listings market and audience market, and will

continue to expand in future in the counterfactual.


9.2 Trade Me likely holds significant market power in the listings market. Homes growth would make it a significant competitor to Trade Me in the listings market. The Proposed Acquisition would eliminate that potential competition and raise barriers to entry, and this will have a flow-on effect of reducing competition in the audience market as a result of network effects.


9.3 There is a real chance that the remaining actual and potential competition in the markets in question would not be sufficient to replace the constraint lost with the Proposed Acquisition.


10. For these reasons, we are not yet satisfied that the Proposed Acquisition would be

unlikely to substantially lessen competition in the listings market. We are still considering

whether the flow-on effects on competition in the audience market would be substantial.


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11. We discuss these outstanding concerns in more detail further below.


The issues where we no longer have concerns


12. On the basis of the information we have gathered to date, we do not have concerns in

relation to:


12.1 horizontal unilateral effects in the supply of classified advertising for residential real

estate for rent to agents and agencies. This is because Homes is a small player in the rental

market with few listings and there is a broad range of competitors in the market;


12.2 horizontal unilateral effects in the supply of digital advertising to advertisers. This is

because the evidence suggests that advertisers (including real estate agents and agencies) are likely to have a broad set of competitive options available to them;


12.3 vertical effects in any market. This is because the evidence does not support that the

Proposed Acquisition would result in any competitor being foreclosed from accessing any category of data/information; and


12.4 conglomerate effects in any market through bundling products or services. The bundles we are considering are likely within the same market. As such, we consider that it is more appropriate in this case to analyse these bundles in the context of a strengthening of network effects as part of our assessment of horizontal unilateral effects.


Process and timeline


13. We have agreed an extension with Trade Me until 6 August 2021 from the initial 40 working day statutory timeframe in which to decide on the Application.


14. We would like to receive submissions and supporting evidence from the Parties and other interested parties on the issues raised in this SoUI. We request responses by close of business 14 July 2021, including a public version of any submission made.⁴ Please read the instructions for making a submission, which can be found on page 34 of this document.


15. All submissions received will be published on our website with appropriate redactions.

All parties will have the opportunity to cross-submit on the public versions of submissions from other parties by close of business on 21 July 2021.


16. Submissions and cross-submissions should be provided within the notified submission timeframe. This ensures that we continue to progress the investigation in a timely fashion. We may place less weight on submissions received after our


⁴ Confidential information must be clearly marked (by highlighting the information and

enclosing it in square brackets). At the same time, a schedule must be provided which sets out each of the pieces of information over which confidentiality is claimed and the reasons why the information is confidential (preferably with reference to the Official Information Act 1982).


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deadline. Parties wishing to make a submission that are unlikely to meet our deadline should let us know beforehand and explain why.


The parties


Trade Me Limited

17. Trade Me operates an online marketplace and classified advertising platform

(trademe.co.nz) where real estate sellers/renters can advertise their properties to potential

buyers/tenants. It also operates the dedicated real estate platform Trade Me Property

(trademe.co.nz/property).


18. Trade Me Property is the largest online property listings site in New Zealand, both by

total audience and number of listings.⁵ ⁶ Of the main dedicated property platforms in New Zealand (Trade Me Property, Realestate.co.nz, OneRoof, and Homes), Trade Me is the only platform that:


18.1 charges a fee for base listings; and


18.2 allows private vendors (ie those vendors not represented by an agent) to list on the

platform.


19. Along with a property listing, Trade Me presents other useful information to the

audience, including a mortgage calculator, the location of nearby schools, the potential

purchaser’s commute time to work from that property, and the rateable value of other properties in the area.


20. Trade Me also operates the ‘Property Insights’ microsite of the Trade Me Property website (trademe.co.nz/property/insights). Consumers can search Property Insights for free for any street address, suburb or city, and will be presented with property-related data/information on individual properties (to the extent Trade Me holds that data), including an estimated valuation range for the property, council data, rateable value (RV) information and a history of any significant upgrades to the property. Property Insights also contains a section on property news and advice, which includes articles on a range of property-related topics.⁷


21. Trade Me submits that it provides property-related data/information as an adjunct to its primary business as a listings platform.⁸


⁵ The standard means by which platforms measure audience numbers is “unique audience”. Unique audience is the total number of unique people that visited a site during a specified time period. For example, a person that visited a website three times in the period would only be counted once. Unique audience is an important metric for platforms (as opposed to similar platform visits) as it reflects the number of eyeballs viewing the platform. For ease, we refer to just “audience” in the paper.


⁶ See Confidential Annex 1.

⁷ https://www.trademe.co.nz/c/property/property-news

⁸ The Application at [35].


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Homes


22. Homes operates a free online property data and information resource for consumers

(homes.co.nz). It launched in 2016. Consumers can search for property information by entering a property’s address, suburb, or city. For each property, Homes provides a range of property-related data/information, including a valuation estimate called a ‘HomesEstimate’. This estimate is based on a proprietary formula. It draws on information such as public data, registered valuers’ valuations and real estate agents’ comparable market analyses.⁹ It also features a section called Homes Inspiration, which acts as a mood board of interior design tips (filterable by room), which can be sponsored by companies offering interior design products (such as Resene and Mitre 10).¹⁰


23. Homes’ strategy is to monetise consumer attention by selling to agents, agencies and

other advertisers the opportunity to market themselves to Homes’ audience in different ways,

including banner, display, and native advertising.


24. Homes also features online listings for sale and rent on its platform. We understand that month-to-month it lists a large proportion, ~[ ]%, of the total monthly residential properties for sale that are advertised on Trade Me, and this number has been increasing.¹¹ Unlike Trade Me, Homes does not charge agencies for base listings.


25. Along with a property listing, Homes shows the audience other information, such as a home loan repayment calculator, a direct link to contact Kiwibank for home loan inquiries, an estimated rental yield calculator, a solar power calculator (which is sponsored by Harrisons Energy Solutions), as well as other expense estimates (such as home internet (sponsored by Sky Broadband).


26. Trade Me submits that “Just as Trade Me Property offers property data and information as an adjunct to its main listings business, Homes does the reverse; Homes offers listings as an adjunct to its property data and information product.”¹²


Other industry participants


27. The main competing real estate platforms are:


27.1 Realestate.co.nz: Realestate.co.nz offers listings for sale and for rent, as well as some property data/information on properties (including a valuation range). Realestate.co.nz is owned 50% by five of the largest real estate agencies in New Zealand (Barfoot and Thompson, Harcourts, Ray White, LJ Hooker and Bayleys), with the remaining 50% owned by the Real Estate Institute of New Zealand (REINZ). Along with a property listing, Realestate.co.nz also shows the audience information such as an automated valuation, nearby recently sold properties, schools in the area, broadband


⁹ https://homes.co.nz/homesestimate

¹⁰ https://homes.co.nz/inspiration

¹¹ See Figure 5 in Confidential Annex 1.

¹² The Application at [35]


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availability (provided by Broadband Compare), and a mortgage calculator (provided by Kiwibank)


27.2 OneRoof. OneRoof offers listings for sale and for rent, as well as property-related

information on properties (including a valuation range). OneRoof is 80% owned by the media

organisation NZME Limited (NZME), and 20% owned by Hougarden.com Limited (Hougarden). OneRoof was established in 2018 but has grown swiftly.¹³ This may in part be due to NZME’s ability to leverage its media assets to promote and grow the OneRoof platform.¹⁴ Because NZME’s media assets (such as the NZ Herald) are concentrated predominantly in Auckland, OneRoof has a larger presence in the Auckland region than in other regions.¹⁵ Along with a property listing, OneRoof shows audiences information such as nearby schools, a commuter map, various home loan and repayment calculators. OneRoof real estate news and editorials which feature both on the OneRoof website and on NZMEs news websites (such as the NZ Herald).


28. Other entities that offer listings on their online platforms include the following.


28.1 Facebook: Facebook offers a product called Facebook Marketplace, which is a searchable online listings platform.¹⁶ Currently Facebook’s search functionality for properties for sale is limited to price, but Facebook also offers a more advanced search functionality for renters searching for properties to rent.


28.2 Hougarden: Hougarden operates the largest Chinese-language real estate platform in New Zealand, with just over 50% of site visits coming from mainland China.¹⁷ Hougarden is a 20% shareholder in OneRoof.


28.3 Neighbourly: Neighbourly is a private neighbourhood website owned by Stuff Limited.¹⁸ Neighbourly allows real estate agents to list properties for sale within a particular

neighbourhood.¹⁹


29. Finally, there are several further entities that supply property data/information, but

which do not currently feature listings on their websites:


¹³ For example, OneRoof claims that: as of November 2020, OneRoof had the most residential for sale listings in Auckland; and, as of September 2020, was the fastest-growing real estate site in New Zealand with +92% YoY growth. OneRoof refers to itself as a “strong #2 in market”. OneRoof “New Zealand Media and Entertainment Investor Day” (16 November 2020) at 105, 106.


¹⁴ OneRoof offers agents free ads on NZ Herald as part of their OneRoof advertising packages (see https://advantage.oneroof.co.nz/)

¹⁵ OneRoof “New Zealand Media and Entertainment Investor Day” (16 November 2020) at 105.

¹⁶ https://www.facebook.com/marketplace/auckland/propertyforsale

¹⁷ https://about.hougarden.com/

¹⁸ Neighbourly “What is Neighbourly?” <https://www.neighbourly.co.nz>.

¹⁹ https://www.neighbourly.co.nz/public/property


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29.1 CoreLogic: CoreLogic is a provider of valuations, property information, analytics,

property-related risk management and geospatial location intelligence in Australia and New Zealand. It operates the consumer-facing website PropertyValue.co.nz, which provides some property data/information for free to consumers, with additional data/information available if users log in to the website, and further data/information available in paid packages. CoreLogic has also recently entered into a partnership with Trade Me under which CoreLogic will enhance Trade Me’s Property Insights database and Trade Me will provide CoreLogic with additional datapoints to improve the offerings on CoreLogic’s platforms;²⁰ and


29.2 Valocity: Valocity is a New Zealand-based international property data expert which

specialises in providing property valuation services to lenders. It operates the consumer-facing website MyValocity.co.nz. Like CoreLogic, some of this data/information is offered for free, some is behind a free login, and some is paid for as part of a package. Valocity also provides valuation services to OneRoof.²¹


Background to the industry


The different kinds of audience that can be attracted to property trading information platforms

30. The merging parties operate property platforms that seek to attract audiences through the provision of property listings, property data/information, and other content such as editorial articles, and then advertisers the opportunity to advertise to those audiences. Property platforms such as those operated by the merging parties do not directly facilitate real estate transactions. Rather, the platforms provide information to the audience and facilitate phone or email communication between sellers and potential buyers, in the hope that an audience member will then initiate an “off platform” transaction with a relevant seller on the other side of the platform.


31. A simplified diagram of the main groups of advertisers and audiences that the platforms serve is below.²²


You can read the full report at comcom.govt.nz/__data/assets/pdf_file/0035/258479/Trade-Me-Limited-and-PropertyNZ-Limited-Statement-of-Unresolved-Issues-30-June-2021.pdf


If you are looking for property in Whanganui, Waverley, Marton & Bulls rather than fumbling through Trade me Property Wanganui simply search houses for sale Wanganui.


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