He highlighted the role played by large-scale property agencies in attracting customers.

“Big property agencies like Midland have the most number of agents and more customer sources, so whenever someone is selling a property, they will definitely contact these agencies,” he said.

Hong Kong’s antitrust watchdog said Midland had conspired with arch-rivals Centaline Property Agency and its subsidiary Ricacorp Properties, both of which were granted leniency in exchange for “fully cooperating” with the investigation and “providing substantial assistance”.

Midland and Centaline, are involved in nearly 90 per cent of the property transactions in Hong Kong, the world’s most expensive real estate market.

“The company places high importance on the matter and has always attached great importance to regulatory compliance in all aspects of its operations and will vigorously defend its position,” Midland Holdings said in a stock exchange announcement.

“The company reserves the right to challenge different aspects of the proceedings if and as appropriate.”

As the property market slows, developers generally raise agency commission rates to 2.5 per cent to 3 per cent for new projects, with developers paying as much as 4 to 5 per cent in some cases, according to a senior executive at one of the major developers in Hong Kong.

The official said that some small-scale projects executed by smaller developers may involve even higher commission rates to incentivise agents.

At the same time, front line property agents offer to pass on rebates to buyers of first-hand residential properties as a form of sales promotion. As the downtrend in home prices persists, some agents are vying for business opportunities by offering larger rebates to clients.

“The amount of rebates homebuyers can get from the agent determines which real estate agency gets the business,” said Joseph Tsang, chairman of property services firm JLL Hong Kong. “Because there are fewer homebuyers in the market, agents will try to ensure the purchaser will execute the deal through them”.

This scramble for retaining clients is resulting in property agents receiving lower payments, as the original fees are reduced by the incentive rebates they are paying out, he added.

In June, it was reported that Chuang’s China significantly increased the agency commission to 15 per cent for its project Aruna in Ap Lei Chau. VMS Group reportedly raised commissions it was paying for its Cheung Sha Wan project, The Vertex, to 15 per cent.

Developers are focused on maintaining their relationships with property agencies despite Midland’s legal challenges because of their pivotal role in attracting customers. Still, legal experts and analysts anticipate that Midland’s reputation is at stake after the controversy.

As the legal proceedings play out, the industry will closely monitor the situation, assessing the impact on Midland’s reputation and evaluating the financial implications of any potential fine. Experts say real property agents and other businesses in the real estate sector found guilty of violations may be fined up to 10 per cent of their annual turnover for violations.

“The outcome of this case will serve as a significant reference point for real property agents and businesses,” said Lilian Chiang, senior partner at Deacons, who emphasised the importance of compliance with competition regulations towards maintaining a good reputation within the industry.