The Australian Competition and Consumer Commission has launched a probe into a joint APN-Fairfax Domain real estate advertising venture on the Sunshine Coast, after it offered property sellers a raft of allegedly illegal below-cost deals.

A confidential internal sales document, obtained by Crikey, reveals that executives at the APN-owned Sunshine Coast Daily recently spruiked a one-page ad in its mid-week Domain insert for the bargain basement price of $198.

According to an estimate provided by one of Australia’s largest printers, the raw cost of the paper alone to produce a 48-page publication is about $1000 a tonne or $270 a page. On that measure, the loss-leading ploy — pioneered by global coffee behemoth Starbucks — would cost APN and Fairfax a massive $250,000 per year without the extra imposts of printing, selling, producing, writing and distributing the publication.

An official complaint has now been lodged by an upstart competitor, My Property Preview, under section 46 of the Competition and Consumer Act that explicitly bans schemes aimed at driving competitors to the wall or preventing new market entrants.

The weekly glossy and associated website, part-owned by local real-estate agents, has ripped about $15 million in revenue out of APN’s clutches since it launched in 2008. APN has responded in kind, slashing its one-page rate in its top-selling Saturday edition from $4300 to $2150, and now to as low as $1450 per page.

Last month it went even further, setting up a new real estate section, Mid-Week Domain, inserted into the Caloundra Weekly, the Kawana Weekly, the Buderim Chronicle, the Nambour Weekly and the Maroochy Weekly with a combined distribution of 74,000. Under the controversial deal, booking an ad in the Saturday Sunshine Coast Daily would receive a bonus, below-cost, page in Thursday’s Domain insert.

Real estate insiders put the value of the prestigious Sunshine Coast property advertising market — which stretches from Caloundra to Coolum — at about $20 million. Domain is the main brand used by Fairfax nationally to spruik its dwindling rivers of hard-copy and online house p-rn. On the Sunshine Coast APN struck a deal last year with Fairfax to siphon off a share of online advertising profits in exchange for the Daily‘s use of the Domain brand.

The Sunshine Coast Daily‘s Saturday edition has seen double-digit circulation declines in recent years with the latest Audit Bureau of Circulations figures putting it at 28,023 against a population of 325,000. In 2008, its headline number was 37,004.

The coast’s real estate advertising market has become an increasingly bitter battleground over the past year. In addition to My Property Preview, News Limited has also entered the fray using its Brisbane Courier-Mail masthead as a Trojan Horse. Next Saturday News will print an additional 20,000 copies of the downmarket tabloid featuring a Sunshine Coast-specific insert, Journal Property Extra, at no additional charge to advertisers.

The ACCC told Crikey its usual policy was not to comment on individual cases. However, energetic ACCC chairman Rod Sims this morning signalled a looming crackdown on misuses of market power under section 46 of the Act.

“The ACCC now believes that it is time to resolve the unanswered questions surrounding section 46. Recent amendments to the Act and likely future court actions are providing guidance on how to successfully prosecute companies that misuse their market power,” Sims told the Law Institute of Victoria this morning.

Crikey understands that local Fisher MP Peter Slipper has also been informed of the complaint and is preparing to raise the issue in federal Parliament.

A spokesperson for APN, Katrina Stone, did not respond to repeated requests for comment.