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.
Tuesday, March 13, 2007
Thursday, March 8, 2007
Ass't. A.G. Barnett testifies before Senate Subcommittee
The following is an excerpt from prepared remarks submitted yesterday by Assistant Attorney General Thomas Barnett (U.S.D.O.J. – Antitrust Division) to the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights:
Real Estate Services--The Division's enforcement against anticompetitive agreements included its extensive efforts to stop anticompetitive practices in the real estate services industry, including its lawsuit against the National Association of Realtors (NAR). For many people, the purchase or sale of a home not only represents the fulfillment of the American dream but is their single most significant personal financial transaction. The Division has focused its enforcement activities to ensure that the industry and consumers can take advantage of newer business models. In addition, the Division, often in collaboration with the FTC, has vigorously pursued competition advocacy efforts by commenting on the detrimental competitive effects of various legislative and regulatory proposals that limit competitive alternatives at the state level. I will discuss these efforts in greater detail later on.
In September 2005, the Division (I am recused from this matter) filed suit after NAR promulgated rules that would limit competition from real estate brokers who use the Internet to serve their customers. The lawsuit alleges that NAR's policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting
NAR has hundreds of affiliated Multiple Listing Services (
NAR's recent VOW policies include an "opt-out" provision that allows brokers to prevent Internet-based competitors from providing the same listing information over the Internet that other brokers can provide from their offices. The Division's lawsuit also challenges a NAR membership rule that denies access to
In November 2006, a U.S. District Court denied NAR's motion to dismiss. The lawsuit is proceeding.
Competition Advocacy
. . .
The Division, together with the FTC, also educates policymakers and the general public about the benefits of competition in a variety of markets. One market we have devoted substantial efforts to is the real estate market. The Division provides assistance and information to entities considering rules--such as rules that prohibit rebates to consumers or that undermine online brokerage models--that would inhibit some types of competition that can lower the cost of buying or selling a home.
During 2006, several states modified proposed or existing laws and regulations to enhance competition to the benefit of consumers.
The Division is also engaged in a broader effort to ensure that all American consumers will continue to benefit from competition in the real estate services industry. A well-attended workshop in October 2005, jointly sponsored by the Antitrust Division and the FTC, was a key part of that effort. Participants from brokerage firms, NAR, local realtor associations, fee-for-service and internet referral brokers, and buyers' brokers spotlighted the competitive issues facing this industry. The Division will continue to maintain its enforcement and advocacy efforts in this area to ensure that consumers enjoy the benefits of better service, increased choice, and lower prices resulting from competition.
Conclusion
I would emphasize in closing that none of what I have discussed could have been accomplished without the dedicated career staff of the Antitrust Division, and in fact it is because of their experience, talent, and dedication to the mission of protecting consumers that we have been able to achieve the successes we have--both in terms of quantity and quality.
Given the important role we assign to competition in our nation's economy, the Antitrust Division must be a vigorous, formidable, and effective enforcer of our laws. While I am pleased with all that we have accomplished thus far, I recognize that the hallmark of any successful organization is the continuing desire to improve. In that regard I look forward to working with this Subcommittee and its staff.
Mr. Chairman, that completes my prepared remarks. I would be pleased to respond to the Subcommittee's questions at this time.
A complete copy of Mr. Barnett’s prepared testimony is available on the DOJ’s website.
Thursday, February 15, 2007
FTC v. Realcomp - Parties' Status Report
Earlier this week the parties submitted their first joint status report to the Administrative Law Judge (ALJ) hearing this matter, The Honorable Stephen J. McGuire.
According to that report, the FTC (as of February 12, 2007) has taken 13 depositions and noticed 11 others, while Realcomp has taken five depositions and noticed six others. They have also exchanged written interrogatories and document requests. The parties anticipate that fact discovery will be complete by the previously established March 20, 2007 deadline. According to the Scheduling Order, the parties will then tackle the subject of expert witnesses.
Not unexpectedly, the parties state in the report that "[t]here have been no settlement discussions since the Scheduling Conference[,]" which was held late last year.
While earlier this month Realcomp agreed to withdraw a deposition subpoena served upon one of my clients, I have been in contact with one individual who was recently deposed by Realcomp. Both of these persons received subpoenas seeking various records before Realcomp later served each of them with deposition subpoenas.
It is presently my impression that Realcomp (perhaps with NAR's support) is intent on litigating this matter, notwithstanding NAR's previous statement on the subject of listings going to realtor.com. and its subsequent policy announcement that appears to be at odds with the Realcomp rule being challenged here by the FTC. Recall the political effort it launched last month on its website.
According to that report, the FTC (as of February 12, 2007) has taken 13 depositions and noticed 11 others, while Realcomp has taken five depositions and noticed six others. They have also exchanged written interrogatories and document requests. The parties anticipate that fact discovery will be complete by the previously established March 20, 2007 deadline. According to the Scheduling Order, the parties will then tackle the subject of expert witnesses.
Not unexpectedly, the parties state in the report that "[t]here have been no settlement discussions since the Scheduling Conference[,]" which was held late last year.
While earlier this month Realcomp agreed to withdraw a deposition subpoena served upon one of my clients, I have been in contact with one individual who was recently deposed by Realcomp. Both of these persons received subpoenas seeking various records before Realcomp later served each of them with deposition subpoenas.
It is presently my impression that Realcomp (perhaps with NAR's support) is intent on litigating this matter, notwithstanding NAR's previous statement on the subject of listings going to realtor.com. and its subsequent policy announcement that appears to be at odds with the Realcomp rule being challenged here by the FTC. Recall the political effort it launched last month on its website.
Thursday, February 8, 2007
USA v. National Association of Realtors status hearing
My partner John L. Leonard volunteered to sit in on yesterday's status hearing in the USA v. NAR suit pending here in the Northern District of Illinois. Here are his observations from the hearing:
In a somewhat unusual move, District Judge Filip held a status conference in his Courtroom today at which he presided jointly with Magistrate Judge Denlow, who has been presiding over discovery matters in the case. Normally, a District Judge and Magistrate Judge do not hear matters together.
Judge Fillip noted that Magistrate Judge Denlow had earlier set some deadline dates by which the parties were to identify fact and expert witnesses. He said that he wanted to conclude discovery within a reasonably short period of time, after which he anticipated a number of motions, and then, if the case survived the motions, it would go to trial.
Assistant U.S. Attorney Conrath told the Judges that on January 31, the Government disclosed 71 fact witnesses, whom he assumed the defendant would need to depose. In response, the defendant’s attorney Jack Bierig said that of these 71 witnesses, some of them are corporations, and he did not know who the actual individuals were who would testify on behalf of these corporations. He said that in attempting to get discovery from some of these witnesses, the defendant met with resistance, and in fact had to go before Magistrate Judge Denlow to compel discovery with respect to certain of these witnesses.
Mr. Bierig said that before the defendant could identify its witnesses, it would need to see who the Government’s experts witnesses are, and what reports they prepared. He said that those expert reports would raise additional factual questions, and until the defense saw them, they could not present a list of their witnesses to the Court or to the Government. Mr. Bierig noted that the Government had identified 36 separate markets where it claims that anti-competitive conduct and effect had occurred. He noted that the defense would not see a list of the Government’s experts until May 1, 2007.
Judge Filip said that he was not willing to extend discovery in this case such that the case would go on for years (he mentioned nine years, perhaps as an extreme example). He said that the way to make sure that this wouldn’t happen was to set deadline discovery dates as Magistrate Judge Denlow had been doing.
Magistrate Judge Denlow then asked the Government if the 71 witnesses already disclosed related to all of the 36 competition markets that the Government had identified. Mr. Conrath said that these are the 71 fact witnesses that the Government was relying upon to prove its case. In response to Mr. Bierig’s request for a delay in the defendant’s deadline to designate its witnesses, Mr. Conrath said that he was concerned that the defendant in effect wants the Government to wrap up its entire case before the defendant would begin getting to work on its own case. He reminded the Court that the Government had produced numerous documents over a year ago, and that the defendant is well aware what the case is about. He said that the Government wants to move the case to the trial stage.
Mr. Bierig responded that he agreed with Judge Filip, and that he and his client did not want the case to drag on for nine years. He said that even though the Government had produced documents, it still hasn’t produced anywhere near the documents that the defense needs. He also said that there should be some limit on the number of witnesses that the Government would produce. He noted that Federal Rules of Civil Procedure limits each side to ten depositions, and while he realized that this number was unreasonably low for this case, he thought that a limit should be set, perhaps thirty or so depositions per side.
He also suggested that since discovery had been completed with respect to the Government’s prime example of an anti-competitive market (a market where anti-competitive effects allegedly exist), namely, Emporia, Kansas, perhaps a mini-trial or some sort of alternative dispute resolution proceeding could be conducted, with Judge Filip and/or Magistrate Judge Denlow presiding. He said that he was confident that this would show that there is no anti-competitive effect as to this market, and, if the Government couldn’t prove its case in this instance, it would show that the whole case was lacking in merit. He admitted that although he had mentioned this proposal earlier in one of the hearings before Magistrate Judge Denlow, he hadn’t yet formally presented it to the Government.
Judge Filip was somewhat cool to Mr. Beirig’s proposal. He said that it was a creative and original idea, but that he couldn’t force it on the Government which has the right to present its case the way it wants to. He also said that there are different schools of thought among his fellow judges as to whether a trial judge should participate in a mini-trial. He then asked the Government’s lawyer if this was a jury case, and was told that it was not, that the Government was primarily seeking injunctive relief. Magistrate Judge Denlow, however, seemed more receptive to the idea. He asked that if the Emporia, Kansas market was typical, why couldn’t the case rise or fall on this one market alone?
Judge Filip then turned to Mr. Bierig’s request to limit the number of witnesses and/or depositions. He said that if there were 36 separate markets involved, he didn’t think that naming 71 witnesses was at all excessive. He speculated that all of these markets were different, and that there could be as many as 10 witnesses who would testify to conditions in the Chicago market alone.
Judge Filip and Magistrate Judge Denlow then left the bench for a few minutes to confer in private. When they returned, Judge Filip said that he would like the defense to go ahead and start deposing as many of the 71 Government witnesses as it could. He then set the case for another status report on March 28, 2007, at 11:00 a.m. He encouraged both sides, who, he said had been cooperating well, to try to come to some initial agreements about how the case can efficiently proceed.
Thank you, John, for sitting in on the hearing and sharing your observations with RERCLAW readers.
In a somewhat unusual move, District Judge Filip held a status conference in his Courtroom today at which he presided jointly with Magistrate Judge Denlow, who has been presiding over discovery matters in the case. Normally, a District Judge and Magistrate Judge do not hear matters together.
Judge Fillip noted that Magistrate Judge Denlow had earlier set some deadline dates by which the parties were to identify fact and expert witnesses. He said that he wanted to conclude discovery within a reasonably short period of time, after which he anticipated a number of motions, and then, if the case survived the motions, it would go to trial.
Assistant U.S. Attorney Conrath told the Judges that on January 31, the Government disclosed 71 fact witnesses, whom he assumed the defendant would need to depose. In response, the defendant’s attorney Jack Bierig said that of these 71 witnesses, some of them are corporations, and he did not know who the actual individuals were who would testify on behalf of these corporations. He said that in attempting to get discovery from some of these witnesses, the defendant met with resistance, and in fact had to go before Magistrate Judge Denlow to compel discovery with respect to certain of these witnesses.
Mr. Bierig said that before the defendant could identify its witnesses, it would need to see who the Government’s experts witnesses are, and what reports they prepared. He said that those expert reports would raise additional factual questions, and until the defense saw them, they could not present a list of their witnesses to the Court or to the Government. Mr. Bierig noted that the Government had identified 36 separate markets where it claims that anti-competitive conduct and effect had occurred. He noted that the defense would not see a list of the Government’s experts until May 1, 2007.
Judge Filip said that he was not willing to extend discovery in this case such that the case would go on for years (he mentioned nine years, perhaps as an extreme example). He said that the way to make sure that this wouldn’t happen was to set deadline discovery dates as Magistrate Judge Denlow had been doing.
Magistrate Judge Denlow then asked the Government if the 71 witnesses already disclosed related to all of the 36 competition markets that the Government had identified. Mr. Conrath said that these are the 71 fact witnesses that the Government was relying upon to prove its case. In response to Mr. Bierig’s request for a delay in the defendant’s deadline to designate its witnesses, Mr. Conrath said that he was concerned that the defendant in effect wants the Government to wrap up its entire case before the defendant would begin getting to work on its own case. He reminded the Court that the Government had produced numerous documents over a year ago, and that the defendant is well aware what the case is about. He said that the Government wants to move the case to the trial stage.
Mr. Bierig responded that he agreed with Judge Filip, and that he and his client did not want the case to drag on for nine years. He said that even though the Government had produced documents, it still hasn’t produced anywhere near the documents that the defense needs. He also said that there should be some limit on the number of witnesses that the Government would produce. He noted that Federal Rules of Civil Procedure limits each side to ten depositions, and while he realized that this number was unreasonably low for this case, he thought that a limit should be set, perhaps thirty or so depositions per side.
He also suggested that since discovery had been completed with respect to the Government’s prime example of an anti-competitive market (a market where anti-competitive effects allegedly exist), namely, Emporia, Kansas, perhaps a mini-trial or some sort of alternative dispute resolution proceeding could be conducted, with Judge Filip and/or Magistrate Judge Denlow presiding. He said that he was confident that this would show that there is no anti-competitive effect as to this market, and, if the Government couldn’t prove its case in this instance, it would show that the whole case was lacking in merit. He admitted that although he had mentioned this proposal earlier in one of the hearings before Magistrate Judge Denlow, he hadn’t yet formally presented it to the Government.
Judge Filip was somewhat cool to Mr. Beirig’s proposal. He said that it was a creative and original idea, but that he couldn’t force it on the Government which has the right to present its case the way it wants to. He also said that there are different schools of thought among his fellow judges as to whether a trial judge should participate in a mini-trial. He then asked the Government’s lawyer if this was a jury case, and was told that it was not, that the Government was primarily seeking injunctive relief. Magistrate Judge Denlow, however, seemed more receptive to the idea. He asked that if the Emporia, Kansas market was typical, why couldn’t the case rise or fall on this one market alone?
Judge Filip then turned to Mr. Bierig’s request to limit the number of witnesses and/or depositions. He said that if there were 36 separate markets involved, he didn’t think that naming 71 witnesses was at all excessive. He speculated that all of these markets were different, and that there could be as many as 10 witnesses who would testify to conditions in the Chicago market alone.
Judge Filip and Magistrate Judge Denlow then left the bench for a few minutes to confer in private. When they returned, Judge Filip said that he would like the defense to go ahead and start deposing as many of the 71 Government witnesses as it could. He then set the case for another status report on March 28, 2007, at 11:00 a.m. He encouraged both sides, who, he said had been cooperating well, to try to come to some initial agreements about how the case can efficiently proceed.
Thank you, John, for sitting in on the hearing and sharing your observations with RERCLAW readers.
Wednesday, February 7, 2007
Realcomp gets political
Realcomp recently issued a "Call to Action" on its website in connection with its public website policies that are under scrutiny by the Federal Trade Commission. An administrative complaint was filed by the agency last year against Realcomp challenging these rules, and the matter is set to go to trial this summer. As you may know, I wrote several posts about this case in December 2006.
The FTC, an independent agency charged with safeguarding competition and protecting consumers from unfair trade practices, maintains a docket of the case on its website. Notably, Realcomp is the only MLS that has refused to comply with the FTC's directives on this subject after the FTC filed a complaint, and is one of only two MLSs nationwide that have been named in administrative complaints by the FTC in connection with such policies. Meanwhile half a dozen other MLSs have already reached relatively timely settlements with the agency with respect to similar rules.
In its "Call to Action", Realcomp is looking for support in defending its rules that prohibit the transmission of exclusive agency listings to public websites. Exclusive agency listings are typically employed by innovative, non-traditional real estate brokers who desire to offer new choices and lower costs to consumers. Realcomp is encouraging its subscribers to contact the FTC and Michigan's U.S. Senate delegation to register their opinions, this while an adjudicative action is pending before an FTC administrative law judge.
Realcomp claims that "to [its] knowledge, the FTC has received only a few complaints against Realcomp regarding this specific policy." It also suggests that the FTC's enforcement action would force brokers to work for no compensation, and penalize them for being in such great demand. In its defense of its rule, which bars exclusive agency listings from being transmitted to public websites like realtor.com, Realcomp states that use of realtor.com "should be reserved specifically for the purpose of marketing properties represented by REALTORS®." This statement does not seem to hold water, given that Realcomp, per its challenged rules, has presumably been barring the exclusive agency listings of such brokers from being transmitted to realtor.com.
The FTC, an independent agency charged with safeguarding competition and protecting consumers from unfair trade practices, maintains a docket of the case on its website. Notably, Realcomp is the only MLS that has refused to comply with the FTC's directives on this subject after the FTC filed a complaint, and is one of only two MLSs nationwide that have been named in administrative complaints by the FTC in connection with such policies. Meanwhile half a dozen other MLSs have already reached relatively timely settlements with the agency with respect to similar rules.
In its "Call to Action", Realcomp is looking for support in defending its rules that prohibit the transmission of exclusive agency listings to public websites. Exclusive agency listings are typically employed by innovative, non-traditional real estate brokers who desire to offer new choices and lower costs to consumers. Realcomp is encouraging its subscribers to contact the FTC and Michigan's U.S. Senate delegation to register their opinions, this while an adjudicative action is pending before an FTC administrative law judge.
Realcomp claims that "to [its] knowledge, the FTC has received only a few complaints against Realcomp regarding this specific policy." It also suggests that the FTC's enforcement action would force brokers to work for no compensation, and penalize them for being in such great demand. In its defense of its rule, which bars exclusive agency listings from being transmitted to public websites like realtor.com, Realcomp states that use of realtor.com "should be reserved specifically for the purpose of marketing properties represented by REALTORS®." This statement does not seem to hold water, given that Realcomp, per its challenged rules, has presumably been barring the exclusive agency listings of such brokers from being transmitted to realtor.com.
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