[Federal Register: July 11, 2005 (Volume 70, Number 131)]
[Notices]
[Page 39792-39796]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jy05-76]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Greater Pittsburgh Board of Realtors; Motion of
the United States for Modification of the Final Judgment
Notice is hereby given that a Motion for Modification of the Final
Judgment, proposed Final Judgment and proposed Order have been filed
with the United States District Court for the Western District of
Pennsylvania. United States of America v. Greater Pittsburgh Board of
Realtors, Civil Action No. 72-499. The Realtors Association of
Metropolitan Pittsburgh (``RAMP''), the successor to the Greater
Pittsburgh Broad of Realtors, is bound by a Final Judgment that settled
allegations defendants published, circulated, and adhered to agreed-
upon uniform rates of commissions and fees in violation of the Sherman
Act. The Final Judgment was entered on May 21, 1973 and prohibited the
defendants from agreeing on prices and from publishing any rate or
commission for the sale of real estate.
RAMP publishes Pittsburgh Homes Guide by Realtors, a real estate
listings magazine. Member real estate professionals purchase
advertising to describe the services they offer. At least one firm
offering real estate brokerage services has attempted to purchase
advertising that would contain information about discounted fees. RAMP
has informed that firm that it will not published the advertising
because the Final Judgment prohibits it. The modified consent decree
would strike that provision and add a provision making it clear that
RAMP can publish information about real estate commissions and fees set
by an individual broker. If approved by the Court, the new decree will
allow the public access to more information about different kinds of
fees charged by real estate professionals who help sell homes. The
decree will still serve its original purpose: to enjoin RAMP and its
member brokers from agreeing on prices. Copies of the Motion, proposed
Final Judgment and Order are available for inspection at the Department
of Justice in Washington, DC in Room 200, 325 Seventh Street, NW., on
the Internet at http://www.usdoj.gov/atr, and at the Office of the
Clerk of the United States District Court for the Western District of
Pennsylvania, 829 United States Courthouse, 7th and Grant Street,
Pittsburgh, PA 15219.
Public comment is invited within 30 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to John R. Read, Chief, Litigation III Section, Antitrust Division,
Department of Justice, 325 7th ST., NW., Suite 300, Washington, DC
20530, (telephone: (202) 616-5935).
J. Robert Kramer II,
Director of Operations, Antitrust Division.
United States District Court for the Western District of Pennsylvania
United States of America, Plaintiff, v. Greater Pittsburgh Board of
Realtors, East Suburban Multilist Real Estate Brokers, Inc., South
Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh
Multilist Council, Defendants.
Civil No. 72-499
Filed:
Entered:
The United States moves this Court to modify the Final Judgment
entered in this case.
I. Background
The Complaint, filed on June 21, 1972, alleged that the defendants
violated Section 1 of the Sherman Act by agreeing to fix commission
rates in connection with the sale of property in the Pittsburgh
metropolitan area. The complaint alleged, inter alia, that the
defendants published, circulated, and adhered to the agreed-upon
uniform rates of commissions and fees. On April 16, 1973, the United
States filed its proposed consent judgment. The Court entered the
judgment on May 21, 1973.
The Realtors Association of Metropolitan Pittsburgh (``RAMP'') is
the successor-in-interest to defendant Greater Pittsburgh Board of
Realtors, RAMP is a local real estate board which governs the
membership and professional responsibility of the Realtors who list and
show properties in the Pittsburgh metropolitan area. Pursuant to
section III of the Final Judgment, the consent decree is binding on
RAMP.
Traditionally, real estate agents have charged sellers of property
a commission based on a percentage of the sales price of the property
sold. The majority of real estate agents will price their services in
this manner. However, some real estate agents are now using alternative
business models and charging flat fees for their services. Typically,
these models offer property sellers savings vis a vis traditional
commission based services. At least one discount broker, Help-U-Sell
Dixie Realty (``HUS''), has entered the Pittsburgh market with an
alternative business model.
[[Page 39793]]
In order to educate consumers about the availability of
alternatively priced services, discount brokers need to advertise
information about their fees and service plans. RAMP currently
publishes Pittsburgh Homes Guide by Realtors (``Homes Guide''), a real
estate listings magazine. The magazine contains advertisements
purchased by member real estate professionals with information about
available homes for sale and the services they provide. Homes Guide is
the only real estate advertising publication covering all of the
Pittsburgh metropolitan area. Homes Guide is a popular vehicle for
Pittsburgh area real estate brokers to advertise their services to
consumers and is significantly less expensive than newspaper
advertising.
HUS has attempted to advertise fees and potential savings in Homes
Guide. RAMP has informed HUS that it will not publish advertising
containing commission rates or cost savings claims because the Final
Judgment prohibits such publication. Section IV(C) of the Final
Judgment enjoined the defendants from ``[a]dopting, suggesting,
publishing or distributing any rate or amount of commissions or other
fees for the sale, lease or management of real estate. * * *''
Section IV(C) of the Final Judgment served a useful purpose and was
entered to remedy the defendants' alleged price fixing which
artificially raised prices above their competitive level. The intent of
the decree was to eliminate collusive behavior and promote competitive
commissions among real estate brokers. With the growth of discount
brokerage services, however, the provision no longer serves competition
and has the effect of restricting legitimate advertising of competitive
rates. The United States, therefore, moves to eliminate the words
``publishing'' and ``distributing'' from section IV(C) of the judgment
so that RAMP is not prohibited from publishing competing commission
rates.
Because IV(C), due to changed circumstances, now serves principally
to inhibit competition, the United States moves to modify section IV(C)
to enjoin the defendants only from:
(C) Adopting or suggesting any rate or amount of commissions or
other fees for the sale, lease or management of real estate,
provided, however, that surveys and studies may be conducted,
published and distributed where not forbidden by Paragraph D of this
Section IV of the Modified Final Judgment.
To further clarify the decree, the United States moves to amend
paragraph IX, which begins, ``[n]othing in this final Judgment shall be
deemed to prohibit,'' to add the following language:
(C) The publication of advertisements that include the
commission rates of individual brokers, provided that the Defendants
shall not adopt or suggest rates as proscribed by Section IV(C).
To clarify that RAMP has not consented to the Modified Final
Judgment, the United States moves to amend the preamble paragraphs of
the Final Judgment. Specifically, the United States moves to replace
each instance of the phrase ``this Final Judgment'' with ``the original
Final Judgment.'' In addition, the United States seeks to add the
clause, ``and upon the United States' sole motion to modify the Final
Judgment.
II. The Legal Standards Applicable to Modification of an Antitrust
Judgment With the Consent of the Government
This Court has jurisdiction to modify the Final Judgment pursuant
to Paragraph XI of the Judgment, the Federal Rules of Civil Procedure,
Fed. R. Civ. P. 60(b)(5), and ``principles inherent in the jurisdiction
of the chancery.'' United States v. Swift & Co., 286 U.S. 106, 114
(1932); see also In re Grand Jury Procedures, 827 F. 2d 868, 873 (2d
Cir. 1987). Where, as here, the United States, as plaintiff,
unilaterally proposes a modification to a consent judgment and the
modification does not further restrict the defendants' rights or
actions, the Court should apply the same standard as when the United
States and defendants both consent to a modification. When the
government unilaterally seeks to modify a decree, the court evaluates
the modifications in light of both how the additional burdens imposed
by the proposed modifications affect the defendant's due process rights
and the public interest. Cf. Duran v. Elrod, 760 F. 2d 756, 759 (7th
Cir. 1985). However, where both the government and the defendant
consent to modifications, the court focuses solely on the public
interest aspects of the calculus. See, e.g., United States v. W. Elec.
Co., 993 F. 2d 1572, 1576 (D.C. Cir. 1993); United States v. W. Elec.
Co., 900 F. 2d 283, 305 (D.C. Cir. 1990); United States v. Loew's,
Inc., 783 F. Supp. 211, 213 (S.D.N.Y. 1992); United States v. Columbia
Artists Mgmt., Inc., 662 F. Supp. 865, 869-70 (S.D.N.Y. 1987) (citing
United States v. Swift & Co., 1975-1 Trade Cas. (CCH) ] 60.201, at
65.702-03 (N.D. III 1975)). Here, the proposed modifications do not
further impinge the defendant's rights, so the court need only evaluate
the proposed modifications in light of the public interest. Thus, the
issue before the Court is whether modifications is in the public
interest. This is the same standard that a district court applies in
reviewing an initial consent judgment in a government antitrust case.
The judiciary's role in determining whether the initial entry of a
consent decree is in the public interest, absent a showing of abuse of
discretion or a failure to discharge its duty on the part of the
government, is to ``inquire * * * into the purpose, meaning, and
efficacy of the decree.'' United States v. Microsoft, 56 F. 3d 1448,
1462 (D.C. Cir. 1995).
The purpose of the antitrust laws is to protect competition. See,
e.g., United States v. Penn-Olin Chem. Co., 378 U.S. 158, 170 (1964)
(antitrust laws reflect ``a national policy enunciated by the Congress
to preserve and promote a free competitive economy''). The relevant
question before the court therefore is whether modification of the
Judgment would serve the public interest in ``free and unfettered
competition as the rule of trade.'' N. Pac. Ry Co. v. United States,
356 U.S. 1, 4 (1958) see also United States v. W. Elec. Co., 900 F. 2d
at 308; United States v. Am Cyanamid, 719 F.2d 558, 565 (2d Cir. 1983),
cert denied, 405 U.S. 1101 (1984); United States v. Columbia Artists
Mgmt., 66 F. Sup. 865, 870 (S.D.N.Y. 1987). Here, the Court should
modify the decree as requested because it will remove a legal roadblock
to brokers who want to advertise lower commissions to the benefit of
home buyers and sellers.
Although the proposed modification is designed to allow RAMP more
freedom in choosing what it can publish in its magazine, RAMP has
declined to join the United States in its motion to modify the Final
Judgment and has failed to offer an explanation to the United States as
to why the public interest is served by the restriction.
III. The Proposed Modification Satisfies the Public Interest Standard
The purpose behind the consent decree's prohibition on advertising
stemmed from the publication of prices after the defendants had agreed
on commission rates among themselves. The primary concern with the
conduct that led to the decree was the agreement on prices, not the
publication of unilaterally determined prices. Modifying the consent
decree as the United States' proposes will permit RAMP to allow price
advertising but will still enjoin RAMP from ``adopting'' or
``suggesting'' fees for real estate services.
Further, ``[r]estriction on [truthful] advertising are a form of
output restriction in the production of
[[Page 39794]]
information useful to consumers.'' \1\ Modifying the consent decree as
the United States proposes will satisfy the public interest standard
because price competition will be enhanced by allowing consumers access
to more information about different prices charged by individual real
estate agents. Further, the public will benefit from access to
information about differing rate structures and fees charged by
different agents and such information will reduce search costs by
consumers seeking real estate services.
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\1\ Philip Areeda, Antitrust Law, ] 2023b1, 184, Volume XI (2nd
Ed.).
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IV. Public Comment Period
The United States does not believe that this modification is
subject to the Antitrust Procedures and Penalties Act (``Tunney Act''),
15 U.S.C. 16(b)-(h). However, in this case, the United States intends
to follow the comment procedures outlined in the attached Explanation
of Procedures.
It is the policy of the United States that an appropriate effort be
taken to notify potentially interested persons of the pendency of the
motion. In this case, the United States will publish a notice
announcing the motion to modify in the Federal Register and the
Pittsburgh Post Gazette, summarizing the motion and the proposed
modified final judgment, describing the procedures for obtaining copies
of the relevant papers and inviting the submission of comments within
30 days of publication. Within a reasonable time after the comment
period, the United States will file any comments it receives and its
responses with the Court. The United States requests that the Court not
rule upon the motion until the United States has filed any comments and
its responses or has notified the Court that no comments were received.
The procedure is designed to notify all potentially interested persons
that a motion to modify the Final Judgment is pending and provide them
adequate opportunity to comment thereon.
V. Conclusion
For the foregoing reasons, the United States requests that the
Court enter the proposed Order Modifying Judgment to enjoin, the
defendants from:
(C) Adopting or suggesting any rate or amount of commissions or
other fees for the sale, lease management of real estate; provided,
however, that surveys and studies may be conducted, published and
distributed where not forbidden by Paragraph D of this Section IV of
the Modified Final Judgment.
and to amend paragraph IX, which begins, ``[n]othing in this Final
Judgment shall be deemed to prohibit,'' to add the following language:
(C) The publication of advertisements that include the
commission rates of individual brokers, provided that the Defendants
shall not adopt or suggest rates as proscribed by Section IV(C).
and to amend the preamble paragraphs to state:
Plaintiff, United States of America, having filed its Complaint
herein on June 21, 1972, and Plaintiff and Defendants by their
respective attorneys, having consented to the making and entry of
the original Final Judgment, without admission by any party in
respect to any issue and without this Final Judgment constituting
evidence or an admission by any party hereto with respect to any
such issue;
NOW, THEREFORE, before any testimony has been taken herein,
without trial or adjudication of any issue of fact or law herein,
and upon the consent of the parties to the original Final Judgment,
and upon the United States' sole motion to modify the Final
Judgment, it is hereby ORDERED, ADJUDGED and DECREED as follows:
Dated this 28th day of June, 2005.
Respectfully Submitted,
For Plaintiff United States of America
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Leslie Peritz,
PA Bar No. 87539, Litigation II Section, Antitrust Division, U.S.
Department of Justice, 1401 H Street, NW., Ste. 3000, Washington, DC
20530, 202-514-9602.
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Erika L. Meyers,
Joan Hogan,
Litigation III Section, Antitrust Division, U.S. Department of
Justice, 325 7th St., NW., Ste. 300, Washington, DC 20530, 202-514-
8374.
United States District Court for the Western District of Pennsylvania
United States of America, Plaintiff, v. Greater Pittsburgh Board of
Realtors, East Suburban Multilist Real Estate Brokers, Inc., South
Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh
Multilist Council, Defendants.
Civil No. 72-499
Filed
Entered:
Modified Final Judgment
Plaintiff, United States of America, having filed its Complaint
herein on June 21, 1972, and Plaintiff and Defendants by their
respective attorneys, having consented to the making and entry of the
original Final Judgment, without admission by any party in respect to
any issue and without this Final Judgment constituting evidence or an
admission by any party hereto with respect to any such issue;
Now, therefore, before any testimony has been taken herein, without
trial or adjudication of any issue of fact or law herein, and upon the
consent of the parties to the original Final Judgment, and upon the
United States' sole motion to modify the Final Judgment, it is hereby
Ordered, adjudged and decreed as follows:
I
For the purposes of this case, this Court has jurisdiction over the
subject matter of this action and of the parties hereto. For purposes
of this case, the Complaint states claims upon which relief may be
granted against the Defendants under Section I of the Act of Congress
of July 2, 1890, as amended (15 U.S.C. 1), commonly known as the
Sherman Act.
II
As used in this Final Judgment:
(A) ``Multiple Listing Service'' shall mean any plan or program
operated by a Defendant for the circulation of real property listings
among members of such Defendant; and
(B) ``Person'' shall mean any individual, partnership, firm,
association, corporation, real estate agency, member of the Defendants
or other business or legal entity.
III
The provisions of this Final Judgment applicable to each of the
Defendants shall also apply to each of their respective subsidiaries,
successors and assigns; to each of their directors, officers, agents
and employees, when acting in such respective capacities; and, in
addition, to all persons in active concert or participation with any of
them who receive actual notice of this Final Judgment by personal
service or otherwise.
IV
Each of the Defendants, whether acting unilaterally or in concert
or agreement with any other person, is enjoined and restrained from:
(A) Fixing, establishing or maintaining any rate or amount of
commissions or other fees for the sale, lease or management of real
estate;
(B) Urging, recommending or suggesting that any of its members or
any other person adhere to any rate or amount of commissions or other
fees for the sale, lease or management of real estate;
(C) Adopting or suggesting any rate or amount of commissions or
other fees for the sale, lease or management of real estate; provided,
however, that surveys
[[Page 39795]]
and studies may be conducted, published and distributed where not
forbidden by Paragraph D of this Section IV of this Final Judgment;
(D) Conducting, publishing or distributing, for a period of ten
(10) years from the date of entry of this Final Judgment, any survey or
study relating to rates or amounts of commissions or other fees for the
sale, lease or management of real estate or ranges thereof; and
thereafter where the purpose or effect of any such survey or study
would be to fix, establish, stabilize or maintain any rate or amount or
ranges of commissions or other fees for the sale, lease or management
of real estate;
(E) Adopting, adhering to, maintaining, enforcing or claiming any
rights under any by-law, rule, regulation, plan or program which
restricts or limits the right of any of its members or any other real
estate dealer in accordance with his own business judgment to agree
with his client on any commissions or fees for the sale, lease or
management of real estate;
(F) Taking any punitive action against any of its members where
such action is based upon the member's failure or refusal to adhere to
any rate or amount of commissions or fees for the sale, lease or
management of real estate;
(G) Interfering with or limiting its members from maintaining part-
time salesmen in their employ, or interfering with the terms of the
relationship between its members and their salesmen where to do so
would be contrary to or inconsistent with any provision of this Final
Judgment;
(H) Fixing, maintaining, suggesting or enforcing any division or
split between a selling broker and listing broker of commissions or
other fees for the sale, lease or management of real estate;
(I) Refusing to receive, process or distribute a listing of any
real estate by any member in a Multiple Listing Service because of the
rate or amount of commissions or other fees for the sale, lease or
management of real estate thereon; and
(J)(1) Boycotting, agreeing to boycott, or threatening to boycott
any person; and/or (2) refusing to do business with any person where
such refusal would be contrary to or inconsistent with any provision of
this Final Judgment.
V
Each Defendant is ordered to eliminate from all rules, by-laws,
regulations, contracts and other forms, any schedule of rates or
amounts of commissions or other fees for the sale, lease or management
of real estate and any provision requiring or suggesting a fixed
division of such fees between a listing broker and a selling broker.
Each Defendant is also ordered to insert in all rules, by-laws,
regulations, contract and other forms a statement, prominently situated
in all capital letters, that rates of commissions or other fees for the
sale, lease or management of real estate shall be negotiable between a
broker and his client.
VI
(A) Defendant Greater Pittsburgh Board of Realtors shall, upon
application made, admit to membership any person duly licensed by the
appropriate governmental authority to sell real estate in Pennsylvania
as a real estate salesman or as a real estate broker and each of the
other Defendants shall, upon application made, admit to membership any
person duly licensed by the appropriate governmental authority to sell
real estate in Pennsylvania as a real estate broker; provided, however,
that the Defendants may adopt and maintain reasonable and
nondiscriminatory written requirements for membership, not otherwise
inconsistent with the provisions of this Final Judgment;
(B) Each of the Defendants is ordered and directed within ninety
(90) days from the date of entry of this Final Judgment to amend its
by-laws, rules and regulations by eliminating therefrom any provision
which is contrary to or inconsistent with any provision of this Final
Judgment; and
(C) Upon amendment of its by-laws, rules and regulations as
aforesaid, each Defendant is thereafter enjoined and restrained from
adopting, adhering to, enforcing or claiming any right under any by-
law, rule or regulation which is contrary to or inconsistent with any
of the provisions of this Final Judgment.
VII
Each of the Defendants is ordered and directed to mail within sixty
(60) days after the date of entry of this Final Judgment, a copy of
this Final Judgment to each of its members and to the persons listed in
Schedule (A) attached to this Final Judgment and within one hundred and
twenty (120) days from the aforesaid date of entry to file with Clerk
of this Court, an affidavit setting forth the fact and manner of the
compliance with this Section VII and Sections V and VI (B) above.
VIII
For a period of ten (10) years from the date of entry of this Final
Judgment, each Defendant is ordered to file with the Plaintiff on each
anniversary date of such entry, a report setting forth the steps which
it has taken during the prior year to advise the Defendants'
appropriate officers, directors, agents and employees to its and their
obligations under this Final Judgment.
IX
Nothing in this Final Judgment shall be deemed to prohibit:
(A) The publication or circulation by a Multiple Listing Service of
information, in connection with bona fide efforts to sell real estate,
concerning the commission which a broker has agreed upon with his
client, or the percentage division thereof which a listing broker has
agreed to pay a selling broker, arrived at in accordance with this
Final Judgment; or
(B) The adoption and enforcement by a Multiple Listing Service of
rules requiring (i) that neither the commission nor the percentage
division thereof, arrived at in accordance with this Final Judgment and
specified for a listing not to exceed a reasonable period, may be
altered without the consent of both the listing and the selling broker,
and (ii) that the recipient of any such commission promptly pay over to
the listing or selling broker, as appropriate, the percentage division
of the commission as specified or as otherwise agreed upon by the
listing and selling broker; or
(C) The publication of advertisements that include the commission
rates of individual brokers, provided that the Defendants shall not
adopt or suggest rates as proscribed in Section IV(C).
X
For the purpose of determining or securing compliance with this
Final Judgment:
Duly authorized representatives of the Department of Justice shall,
upon written request of the Attorney General or the Assistant Attorney
General in charge of the Antitrust division, and on reasonable notice
to a defendant made to its principal office, be permitted, subject to
any legally recognized privilege, and subject to the presence of
counsel if so desired:
(1) Access during its office hours to all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the
possession of or under the control of such defendant relating to any
matters contained in this Final Judgment; and
(2) Subject to the reasonable convenience of such defendant, and
without restraint or interference from it to interview officers or
employees of such defendant regarding any such matters.
[[Page 39796]]
Upon such written request, each defendant shall submit such reports
in writing, under oath if so requested, to the Department of Justice
with respect to any of the matters contained in this Final Judgment as
may from time to time be requested.
No information obtained by the means provided in this Section X
shall be divulged by any representative of the Department of Justice to
any person, other than a duly authorized representative of the
Executive Branch of plaintiff, except in the course of legal
proceedings to which the United States of America is a party for the
purpose of securing compliance with this Final Judgment or as otherwise
required by law.
XI
Jurisdiction is retained by this curt for the purpose of enabling
any of the parties to this Final Judgment to apply to this court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance therewith; and for the punishment of
violations thereof.
Dated:
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United States District Judge
[FR Doc. 05-13532 Filed 7-8-05; 8:45 am]
BILLING CODE 4410-11-M