Friday, May 18, 2007

Some thoughts on the FTC/DOJ Report

After reading the FTC/DOJ Competition Report cover-to-cover, one thing seemed quite clear to me: this is not the last we will be hearing from these two agencies on the subject of competition in the real estate brokerage industry. Undoubtedly Recommendations 1 and 2 of the Report are, in part, shots across the bow of continuing and future troublemakers:

1. “The Agencies should continue to monitor the cooperative conduct of private associations of real estate brokers, and bring enforcement actions in appropriate circumstances. While cooperation among brokers through a multiple listing service can provide consumers with important efficiencies, cooperation used to adopt rules that hinder rivals can be anticompetitive and, as recent Agency actions indicate, may violate the antitrust laws.” (emphasis added)

2. “The Agencies should continue to provide state legislators and industry regulators with information concerning the competitive consequences of state legislation and regulations that threaten to or already do restrict competition and consumer choice in the real estate brokerage industry, and take enforcement action in appropriate circumstances.” (emphasis added)

Also, for innovative brokers that find themselves the target of agreements among traditional brokers or others to restrain competition, remember that would-be prosecutors need solid EVIDENCE of such conduct before they will act. For example, note the quasi-invitation for evidence on page 69 of the Report (“Limiting the Effects of Steering”): “The agencies have recently investigated allegations of boycotts by groups of brokers. In those investigations, however, the Agencies have not found evidence sufficient to establish an agreement jointly to steer clients away from or boycott a particular rival and have declined to bring an antitrust case.” (emphasis added). In other words, no evidence, no case.

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