Catalano claims News Ltd offering 'illegal' payments

By By David Blight | 11 September 2012

Fairfax-affiliated publisher Antony Catalano has accused News Limited titles of offering “large cash amounts” to convince real estate agents to sign ad contracts, but News has dismissed the claims as an “elaborate smokescreen”.

Catalano, whose Melbourne-based Metro Media Publishing (MMP) is 50% owned by Fairfax, has argued that the News Limited-owned Leader Publications and REA Group have been offering cash payments to real estate agents to get them to sign ad contracts using their clients' funds. News Limited is the majority owner of REA Group, which owns RealEstate.com.au.

Catalano told AdNews: “It is illegal for a publisher to be complicit in the retention of a rebate, either directly or indirectly. I'm suggesting that what is being done is illegal.”

He said in a statement: “It is a version of the age-old divide and conquer approach that works like this: sign up the big players with cash and other incentives, thereby locking them in. Then you ramp the price for all other agents and their vendors.

“Make no mistake, if the money was intended to be passed on as a benefit to vendors, it would be passed on in the form of lower advertising costs. Quite clearly, this activity has had the opposite effect, driving the cost of advertising higher for vendors.

“To accept these cash inducements, lavish incentive trips, staff training and free ads without returning the benefit to vendors is to breach the law. MMP has already referred matters to Consumer Affairs Victoria and the Australian Competition and Consumer Commission and will continue to do so. In the past two weeks we have become aware of several agents who have been offered six figure sign-on fees.”

However, both News Limited and REA Group have hit back at Catalano.

A News Limited spokesman said in a statement: “Mr Catalano is mistaken. Leader does not write cheques to agents to stop them signing up their clients with other publishers. Leader deals with agents in a proper and lawful way. This is all an elaborate smokescreen by Mr Catalano to try to hide the fact that he has been increasing his rates to clients very substantially of late.”

REA Group chief executive Greg Ellis said: “REA encourages fair competition in the Australian property advertising market and believes in full market transparency for property seekers, vendors and agents.

“We would welcome a full and thorough review of the media industry’s current and historical business practices.

“Our customers benefit from committing to longer term subscription products by the ability to provide discounted enhanced products to vendors. REA has also entered into various cooperative marketing initiatives with franchise head offices, in strict compliance with applicable laws.

“Our customer contracts do not include cash payments to agency sales offices and REA’s business practices comply with all state and federal laws.”

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