Tuesday, March 13, 2007

FTC reports to Congress

Deborah Platt Majoras, Chairman of the FTC, also appeared before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights on March 7, 2007 to provide an overview of the agency’s antitrust activities. Here is an excerpt of the FTC’s prepared statement (footnotes omitted):

III. Real Estate
Purchasing or selling a home is one of the most significant financial transactions most consumers will ever make. Given this fact, the FTC has actively investigated restrictive practices in the residential real estate industry, including efforts by private associations of brokers to impede competition from brokers who use non-traditional listing arrangements. In the past year alone, the agency has brought eight enforcement actions against associations of realtors or brokers who adopted rules that allegedly withheld the valuable benefits of the multiple listing services they control from consumers who chose to enter into non-traditional listing contracts with real estate brokers. These association policies allegedly limited the ability of home sellers to choose a listing type that best served their specific needs.

In July 2006, the Commission charged the Austin Board of Realtors with violating the antitrust laws by preventing consumers with real estate listing agreements for potentially lower cost unbundled brokerage services from marketing their listings on important public web sites. In September 2006, the FTC issued a final consent order settling charges against the Austin Board of Realtors. Under the terms of the settlement, the Austin Board of Realtors is prohibited both from adopting or enforcing any rule that treats one type of real estate listing agreement more advantageously than any other listing type and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers. In December 2006, the Commission protected consumers by requiring a series of consent orders in five matters relating to the operation of multiple listing services in parts of Colorado, New Hampshire, New Jersey, Virginia, and Wisconsin. These matters were: (1) Williamsburg Area Association of Realtors, Inc.; (2) Monmouth County Association of Realtors; (3) Northern New England Real Estate Network, Inc.; (4) Realtors Association of Northeast Wisconsin, Inc.; and (5) Information and Real Estate Services, LLC. The complaints charged the associations with violating the FTC Act by adopting anticompetitive rules or policies that, when implemented, prevented properties with non-traditional listing contracts from being displayed on a wide range of public web sites. Each respondent, prior to the Commission’s acceptance of the consent orders for public comment, rescinded or modified its rules to discontinue the challenged practices. The orders require that these services be open to all types of listing agreements.

In October 2006, the agency filed administrative complaints against both RealComp II Ltd., and MiRealSource, Inc. The complaints charged that these two real estate groups illegally restrained competition by limiting consumers’ ability to obtain low-cost real estate brokerage services. The first complaint alleged that MiRealSource adopted a set of rules to exclude low cost listings from its multiple listing service, as well as other rules that restricted competition in real estate brokerage services. The second complaint alleged that Realcomp II engaged in anticompetitive conduct by prohibiting information on Exclusive Agency Listings and other forms of nontraditional listings from being transmitted from the multiple listing service it maintains to public real estate web sites. The complaints alleged that the conduct was collusive and exclusionary, because in agreeing to keep non-traditional listings off the multiple listing service and/or public web sites, the brokers enacting the rules were, in effect, agreeing among themselves to limit the manner in which they compete with one another, and withholding valuable benefits of the multiple listing service from real estate brokers who did not go along. In February 2007, the Commission approved a consent order for public comment in the matter of MiRealSource, in which MiRealSource agreed to provide its services to all member brokers.

The FTC is currently in the process of litigating the Realcomp II complaint.

. . .

Mr. Chairman and Members of the Subcommittee, we appreciate this opportunity to provide an overview of the Commission’s efforts to maintain a competitive marketplace for American consumers, and we appreciate the strong support that we have received from Congress. I would be happy to answer any questions that you may have.

The FTC’s prepared statement in its entirety can be viewed on the agency's website.

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