[Federal Register: August 5, 2005 (Volume 70, Number 150)]
[Notices]
[Page 45424-45432]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au05-83]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Kentucky Real Estate Commission; Proposed
Amendment Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b) through (h), that a proposed Amended
Final Judgment, Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the Western
District of Kentucky in United States of America v. Kentucky Real
Estate Commission, Civil Action No. 3:05-cv-188-S.
On March 31, 2005, the United States filed a Complaint alleging
that the Commission and others violated section 1 of the Sherman Act,
15 U.S.C 1, when they entered into and engaged in a combination and
conspiracy to restrict competition among real estate brokers through
the Commission's promulgation and enforcement of regulations banning
rebates and inducements. The proposed Amended Final Judgment, filed on
July 15, 2005: (i) Enjoins the Commission from enforcing any
regulations that prohibit licensed real estate brokers in Kentucky from
offering non-misleading rebates or inducements; (ii) requires the
Commission to notify brokers that they can offer rebates and
inducements to attract clients; (iii) permits any broker, whose license
is currently suspended or revoked on account of offering a rebate or
inducement, to request to have his or her license reinstated; (iv)
requires the Commission to cease any current investigations or
disciplinary actions relating to the offering of rebates and
inducements; and (v) provides that any disciplinary action against
rebates and inducements is null and void.
Copies of the Complaint, Stipulation and Order, proposed Amended
Final Judgment, and Competitive Impact Statement are available for
inspection at the Department of Justice, Antitrust Division, Room 200,
325 Seventh Street, NW., Washington, DC 20530, on the Department of
Justice's Web site at http://www.usdoj.gov/atr/, and at the Office of
the Clerk of the United States District Court for the Western District
of Kentucky in Louisville, Kentucky.
Public comment is invited within 60 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 Read, Chief, Litigation III Section, Antitrust Division,
Department of Justice, 325 7th Street, NW., Suite 300, Washington, DC
20530 (telephone: (202) 616-5935).
Dorothy B. Fountain,
Deputy Director of Operations.
Competitive Impact Statement
The United States, pursuant to section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b), files this
Competitive Impact Statement relating to the Proposed Amended Final
Judgment submitted for entry in this civil antitrust proceeding.
On March 31, 2005, the United States filed a civil antitrust
Complaint pursuant to section 4 of the Sherman Act, as amended, 15
U.S.C. 4, against Defendant, the Kentucky Real Estate Commission (the
``Commission''). The Complaint alleges that the Commission and others
entered into and engaged in a combination and conspiracy to restrict
competition among real estate brokers through the Commission's
promulgation and enforcement of regulations banning rebates and
inducements (the ``Rebate
[[Page 45425]]
Ban''). The Complaint further alleges that this combination and
conspiracy is an unreasonable restraint of interstate trade that is
illegal under section 1 of the Sherman Act, 15 U.S.C. 1. The Complaint
seeks an order to terminate the Defendant's Rebate Ban, to enjoin
future conduct in furtherance of any such Rebate Ban, and to obtain
such other equitable relief necessary to restore competition for the
benefit of consumers in Kentucky.
The United States filed on July 13, 2005, a Stipulation and
Proposed Order, and on July 15, 2005, a Proposed Amended Final
Judgment, which constitute the parties' settlement.
This proposed Amended Final Judgment, as explained more fully
below, (i) enjoins the Commission from enforcing any regulations that
prohibit licensed real estate brokers in Kentucky from offering non-
misleading rebates or inducements; (ii) requires the Commission to
notify brokers that they can offer rebates and inducements to attract
clients; (iii) permits any broker, whose license is currently suspended
or revoked on account of offering a rebate or inducement, to request to
have his or her license reinstated; (iv) requires the Commission to
cease any current investigations or disciplinary actions relating to
the offering of rebates and inducements; and (v) provides that any
disciplinary action against rebates and inducements are null and void.
The Stipulation and Proposed Order require the Commission to take
actions required under the Proposed Amended Final Judgment. The United
States and the Commission have also stipulated that the Proposed
Amended Final Judgment may be entered after compliance with the APPA,
unless the United States withdraws its consent. Entry of the Proposed
Amended Final Judgment would terminate this action, except that this
Court would retain jurisdiction to construe, modify, and enforce the
Proposed Amended Final Judgment and to punish violations thereof.
I. Description of the Events Giving Rise to the Alleged Violation of
the Antitrust Laws
A. Defendant
In creating the Commission, the Commonwealth of Kentucky empowered
it to regulate the licensing and education of brokers and to safeguard
and protect the public interest. The Commission consists of five
Commissioners, four of which, by statute, must be active real estate
brokers before and during their term on the Commission. When there is a
broker-Commissioner vacancy, the Kentucky Association of Realtors, a
private industry trade group for brokers, creates a list of not less
than three nominees from which the Governor of Kentucky must appoint
the new Commissioner. The Governor may reappoint a particular broker-
Commissioner only if the trade association chooses to resubmit the
broker-Commissioner's name on its new list of nominees.
The Commission is the sole licensing authority for real estate
brokers in Kentucky. It is unlawful for any person to provide, or to
offer to provide, real estate brokerage services in Kentucky unless he
or she holds a current license issued by the Commission. The Commission
also promulgates and enforces regulations, including the regulations
that prohibit rebates and inducements to customers.
B. The Benefits of Rebates and Inducements
The predominant form of payment for real estate brokerage services
remains the ``commission,'' a percentage of the price paid for the
property. Brokers may compete by offering their services at different
commission levels. To compete against one another, brokers in other
States also frequently offer customers rebates and inducements.
Examples of rebates and inducements include cash (whereby the buyer's
broker offers some percentage or amount of his or her commission to the
buyer), free products and services (such as televisions or home
inspections), discounts or vouchers for other products and services
(such as home moving services or home improvement stores), and
donations to charities on the customer's behalf.
Rebates and inducements benefit home buyers and sellers. Under the
traditional structure of a real estate contract, the seller and
seller's broker determine the amount of the commission, and how it is
allocated between the seller's and buyer's broker. If the seller's
broker also finds the buyer, then that broker keeps the full
commission. If, instead, different brokers represent the seller and
buyer, the seller's broker pays the commission of the buyer's broker,
and the size of that payment is not controlled by the buyer. Being able
to offer rebates and inducements allows brokers to compete for the
buyer's business by reducing the compensation they receive for
representing a buyer. For example, the broker can offer prospective
home buyers $1,000 (payable from the broker's commission) at the time
of closing, if the buyers agree to have that broker as their agent.\1\
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\1\ Although home sellers in Kentucky are permitted to offer
inducements directly to the buyer, this does not mitigate the
anticompetitive effects of the Commission's Rebate Ban. Such a
discount is attached to a particular house (and not the broker's
services). Thus, it is not a factor when a buyer chooses the broker
who should represent the buyer in finding and purchasing a home.
Brokers in Kentucky have been prohibited from competing to become
the buyer's agent by lowering their prices through rebates and
inducements.
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Rebates also benefit sellers. Rebates, for example, could be
selectively offered to more price-sensitive home sellers. Thus, a
broker could keep his or her commission fixed (for example at six
percent), but discount to certain sellers through a rebate or
inducement.
Buyers and sellers may also benefit from inducements, such as free
or reduced-price non-real estate brokerage services, for which a broker
may be able to contract at lower prices than would normally be
available to buyers and sellers.
More generally, a more competitive and more efficiently-operating
marketplace will tend to generate greater benefits for both home
sellers and home buyers. All buyers and sellers benefit if the process
of selling homes is less expensive. Consequently, allowing non-
misleading rebates and inducements is procompetitive and represents an
important component of price competition. Such price competition is
permitted in most States. National discount brokers, for example,
advertise rebates and inducements in the many States where they are
permitted. Customers in these States then ask for rebates and
inducements.
C. The Rebate Ban
The Kentucky Legislature enacted statutes that authorize the
Commission to regulate the licensing and education of brokers.
Kentucky, however, expressly forbids the Commission from promulgating
any regulation that fixes prices, establishes fees, or sets the rate at
which brokers are compensated. See Ky. Rev. Stat. Sec. 324.282. This
statute confirms that Kentucky intended that consumers of real estate
brokerage services enjoy the benefits of price competition among
brokers. Despite this statute, in 1991, the Commission promulgated
administrative regulations that banned rebates and inducements. See 201
Ky. Admin. Reg. 11:011, Section 1(5); 201 Ky. Admin. Reg. 11:121,
Section 1(2). Specifically, the Commission's regulations forbid a
broker ``[t]o offer, either through advertising, direct contact or by
others, to the general public, any prize, money, free gift, rebate, or
any other thing of
[[Page 45426]]
value as an inducement.'' 201 Ky. Admin. Reg. 11:121, Section 1(2).
The Commission warned brokers that they could not compete by
offering rebates or inducements. Nor could brokers, prior to closing,
even compete by taking clients our to dinner, donating money to a
charity of the customer's choice, or offering a free photo. The
Commission announced that, even after the closing of a real estate
transaction, brokers could not give their clients anything more than a
gift worth up to $100 in value.
To prevent brokers from offering rebates or other inducements, the
Commission took several steps, including:
Teaching brokers in licensing courses to refrain from
offering rebates and inducements;
Asking brokers to inform the Commission when one or more
competing brokers offer rebates or other inducements;
Bringing disciplinary actions against brokers for offering
rebates or other inducements; and
Sanctioning brokers for offering rebates or other
inducements.
D. The Agreement To Ban Rebates and Inducements Is an Unreasonable
Restraint of Trade That Is Per Se Illegal
As alleged in the Complaint, the Commission's promulgation and
enforcement of the Rebate Ban is the product of an agreement,
combination, or conspiracy among Broker-Commissioners and others that
has restricted the ability of brokers to compete on the basis of price.
``In construing and applying the Sherman Act's ban against contracts,
conspiracies, and combinations in restraint of trade, the [Supreme
Court] has held that certain agreements or practices are so `plainly
anticompetitive' and so often `lack * * * any redeeming virtue,' that
they are conclusively presumed illegal without further examination
under the rule of reason.'' Catalano v. Target Sales, Inc., 446 U.S.
643, 646 (1980) (conspiracy to eliminate short-term credit to retailers
per se illegal) (citations omitted); see also United States v. Socony-
Vacuum Oil Co., 310 U.S. 150, 221 (1940) (any combination which tampers
with price structures is unlawful); TFWS, Inc. v. Schaefer, 242 F.3d
198, 210 (4th Cir. 2001) (volume discount ban per se illegal). The
agreement among the Broker-Commissioners and others to ban rebates and
inducements through the promulgation and enforcement of the Rebate Ban
is a per se violation of Section One of the Sherman Act. Given its
pernicious effect on competition and lack of any redeeming virtue, the
agreement is conclusively presumed to be unreasonable without the need
for an elaborate inquiry into the precise harm that is caused or the
potential business justification for its use. Northern Pacific Ry. Co.
v. United States, 356 U.S. 1, 5 (1958).
II. Explanation of the Proposed Amended Final Judgment
The effect of the Proposed Amended Final Judgment would be to
restore competition that the agreement among the Broker-Commissioners
and others had eliminated, and to prevent the broker-controlled
Commission from engaging in similar conduct in the future. The Proposed
Amended Final Judgment would enjoin the Commission from enforcing its
Rebate Ban. The Commission must also take certain measures for those
brokers, who were, or are being, disciplined for offering rebates and
inducements. First, it must discontinue any investigations or
disciplinary actions to the extent they relate to the offering of any
rebates or inducements. Second, it must permit any broker, who
currently is on probation or whose license is currently suspended or
revoked for having offered a rebate or inducement, to have his or her
license reinstated to the extent that the broker otherwise meets the
contemporary licensing requirements under the Kentucky Revised
Statutes. Third, the Commission must treat any past disciplinary
actions for offering rebates or inducements as null and void.
III. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in Federal district court to recover
three times the damages the person has suffered, as well as the costs
of bringing a lawsuit and reasonable attorneys' fees. Entry of the
Proposed Amended Final Judgment will neither impair nor assist the
bringing of any private antitrust damage action. Under the provisions
of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the Proposed
Amended Final Judgment has no effect at prima facie evidence in any
subsequent private lawsuit that may be brought against the Defendant.
IV. Procedures Available for Modification of the Proposed Amended Final
Judgment
The parties have stipulated that the Proposed Amended Final
Judgment may be entered by this Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry of the decree upon
this Court's determination that the Proposed Amended Final Judgment is
in the public interest.
The APPA provides a period of at least 60 days preceding the
effective date of the Proposed Amended Final Judgment within which any
person may submit to the United States written comments regarding the
Proposed Amended Final Judgment. Any person who wishes to comments
should do so within 60 days of the date of publication of this
Competitive Impact Statement in the Federal Register. The United States
will evaluate and respond to the comments. All comments will be given
due consideration by the Department of Justice, which remains free to
withdraw its consent to the Proposed Amended Final Judgment at any time
prior to entry. The comments are the response of the United States will
be filed with this Court and be published in the Federal Register
(unless upon application by the United States, the Court, for good
cause, authorizes an alternative method of public dissemination).
Written comments should be submitted to: John Read, Chief, Litigation
III Section, Antitrust Division, United States Department of Justice,
325 Seventh St, NW., Suite 300, Washington, DC 20530.
The Proposed Amended Final Judgment provides that this Court
retains jurisdiction over this action, and the parties may apply to
this Court for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Amended Final Judgment.
V. Alternatives to the Proposed Amended Final Judgment
The United States considered, as an alternative to the Proposed
Amended Final Judgment, a full trial on the merits against the
Defendant. Given the inherent delays of a full trial and the appeals
process, the United States is satisfied that the relief contained in
the Proposed Amended Final Judgment, will quickly establish, preserve,
and ensure competition for real estate brokerage services in Kentucky.
VI. Standard of Review Under the APPA for Proposed Amended Final
Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a 60-day comment
period, after which the court shall determine whether entry of the
Proposed Amended Final Judgment ``is in the public interest.'' 15
[[Page 45427]]
U.S.C. 16(e)(1). In making that determination, the court shall
consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). As the United States Court of Appeals
for the District of Columbia Circuit has held, the APPA permits a court
to consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See United States v. Microsoft Corp., 56
F.3d 1448, 1458-62 (D.C. Cir. 1995).
``Nothing in this section shall be construed to require the court
to conduct an evidentiary hearing or to require the court to permit
anyone to intervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this
inquiry, ``[t]he Court is nowhere compelled to go to trial or to engage
in extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' \2\ Rather:
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\2\ 119 Cong. Rec. 24,598 (1973) (statement of Senator Tunney).
See United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass
1975) (recognizing it was not the court's duty to settle; rather,
the court must only answer ``whether the settlement achieved [was]
within the reaches of the public interest''). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed by the Department of
Justice pursuant to the APPA. Although the APPA authorizes the use
of additional procedures, 15 U.S.C. 16(f), those procedures are
discretionary. A court need not invoke any of them unless it
believes that the comments have raised significant issues and that
further proceedings would aid the court in resolving those issues.
See H.F. Rep. No. 93-1463, 93rd Cong., 2d Sess. 8-9 (1974),
reprinted in 1974 U.S.C.C.A.N. 6535, 6538-39.
[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
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circumstances.\3\
\3\ United States v. Mid-America Dairymen, Inc., Civ. Action No.
73 cv 681-W-1, 1977-1 Trade Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo.
May 17, 1977).
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Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' \4\ Courts have held that:
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\4\ United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir.
1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666
(9th Cir. 1981)); see also Microsoft, 56 F.3d at 1458.
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance to the discretion of the Attorney General. The court's role
in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
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effectiveness of antitrust enforcement by consent decree.\5\
\5\ Bechtel, 648 F.2d at 666 (emphasis added) (citations
omitted); Cf.BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''). See generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest' ''
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The Proposed Amended Final Judgment, therefore, should not be
reviewed under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard required for a finding of liability. A
``proposed decree must be approved even if it falls short of the remedy
the court would impose on its own, as long as it falls within the range
of acceptability or is `within the reaches of public interest' '' \6\
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\6\ United States v. Microsoft Corp., 231 F. Supp. 2d 144, 153
(D.D.C. 2002) (quoting United States v. American Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted), aff'd sub
nom. Maryland v. United States, 460 U.S. 1001 (1983)); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D.
Ky. 1985) (standard is not whether decree is one that will best
serve society, but whether it is within the reaches of the public
interest).
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Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint; the APPA does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Since the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that the court ``is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States might have but did
not pursue. Id. at 1459-60.
VII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the Proposed Amended Final Judgment.
Dated: July 26, 2005.
Respectfully submitted.
Andrew C. Finch,
Counsel to the Assistant Attorney General.
Maurice E. Stucke,
Owen M. Kendler,
Mary Beth McGee and
Mark A. Merva.
Attorneys for the United States; U.S. Department of Justice,
Antirust Division, Litigation III Section, 325 7th Street, NW.,
Suite 300, Washington, DC 20530. Telephone: (202) 305-1489.
Facsimile: (202) 514-7308. E-mail: Maurice.Stucke@usdoj.gov.
Certificate of Service
I hereby certify that on July 26, 2005, I electronically filed the
foregoing with the clerk of the court by using the CM/ECF system, which
will send a notice of electronic filing to the following: John S. Reed,
David J. Hale, Reed Weitkamp Schell & Vice PLLC; 500 West Jefferson
Street, Suit 2400, Louiseville, KY 40202-2812, Counsel for Defendant.
Owen M. Kendler,
U.S. Department of Justice, Antitrust Division, Litigation III
Section, 325 7th Street, NW., Suite 300, Washington, DC 20530. (202)
305-8376 (telephone). (202) 514-7308 (facsimile).
Owen.Kendler@usdoj.gov.
Amended Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
on March 31, 2005, and Plaintiff and Defendant, by their respective
attorneys, have consented to the entry of this Final Judgment, as
amended on July 15, 2005 (the ``Amended final Judgment''), without
trial or adjudication of any issue of fact or law, and this Amended
Final Judgment shall not be evidence against or an admission by any
party regarding any issue of fact or law;
And whereas, Defendant agrees to be bound by the provisions of this
[[Page 45428]]
Amended Final Judgment pending its approval by the Court.
And whereas, Plaintiff required Defendant to take certain actions
for the purpose of remedying the loss of competition alleged in the
Complaint;
And whereas, Defendant has represented to the United States that
the actions required below can and will be made and that Defendant will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged, and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendant under section 1 of the Sherman
Act, as amended, 15 U.S.C. 1.
II. Definitions
As used herein, the term:
A. ``Defendant'' means the Kentucky Real Estate Commission, its
successors and assigns, and its commissioners, directors, officers,
managers, committees, agents, and employees.
B. ``Disciplinary Action'' means:
1. The Defendant's revocation or suspension of, or refusal to
grant, a license to provide Real Estate Brokerage Services in Kentucky;
2. The Defendant's imposition of a reprimand, fine, probation, or
other penalty or condition; or
3. The initiation, by the Defendant or at its request, of an
administrative, criminal, or civil proceeding.
C. ``Enforcing'' a Regulation means any manner--formal or
informal--in which Defendant requires compliance with any Regulation,
including, but not limited to, investigations or hearings of purported
violations of the Regulation, and any Disciplinary Actions for any
violation of the Regulation.
D. ``Inducement'' means money, a free gift, a prize, or any other
thing of value that a Licensee would offer a potential client or
customer.
E. ``Licensee'' means any person who is licensed by Defendant under
chapter 324 of the Kentucky Revised Statutes or any future
recodification thereof and legally can perform acts of real estate
brokerage, and any person who legally can perform acts of real estate
brokerage while acting under the supervision of a licensed broker.
F. ``Licensee Price'' means any commission, fee, or charge that the
Licensee offers to charge, or does charge, for its Real Estate
Brokerage Services, and includes any discounts.
G. ``Price Advertising'' means advertising information about the
Licensee Price or any discount, Rebate, or Inducement.
H. ``Real Estate'' means real property, and includes timeshares,
options, leaseholds, and other interests less than leaseholds.
I. ``Real Estate Brokerage Services'' means any service that only a
Licensee is authorized to provide pursuant to applicable Kentucky
statutes and regulations.
J. ``Rebate'' means a payment of monies or anything of value by, or
on behalf of, a Licensee to a client or customer (or to a third party
authorized by the client or customer to receive the payment) that is in
connection with the provision of Real Estate Brokerage Services.
Examples of Rebates directed to third parties include, but are not
limited to, payments to charities, home inspectors, and moving
services. A Rebate does not include compensation paid for Real Estate
Brokerage Services to any third party who is not licensed in Kentucky
to perform such services; this Amended Final Judgment does not
authorize a client or customer to permit or direct such payments to an
unlicensed third party for performing such services.
K. ``Rebate Ban'' means any Regulation, including, but not limited
to, the Defendant's Regulation at 201 Ky. Admin. Reg. 11:011, Section
1(5) and 201 Ky. Admin. Reg. 11:121, Section 1(2), that might prevent
Licensees from offering or using any Licensee Price, discounts,
Rebates, or Inducements, or using any Price Advertising to notify
consumers of any Licensee Price, discounts, Rebates, or Inducements.
L. ``Regulation'' means any Kentucky administrative regulation, and
includes any formal or informal policy, restriction, rule or legal
interpretation adopted or applied by Defendant.
III. Applicability
This Amended Final Judgment applies to the Kentucky Real Estate
Commission, as defined above, and all other persons in active concert
or participation with it who receive actual notice of this Amended
Final Judgment by personal service or otherwise.
IV. Prohibited Conduct
Defendant is enjoined from, directly or indirectly, or through any
Regulation, Disciplinary Action or other conduct:
A. Entering into, continuing, maintaining, or renewing any
agreement, contract, or Regulation to fix, establish, raise, stabilize,
suppress, eliminate, regulate, or maintain the level of commissions,
discounts, Rebates, Inducements, or the Licensee Price;
B. Prohibiting, restricting, impeding, or discouraging any Licensee
from Price Advertising or from offering any Licensee Price, discounts,
Rebates, or Inducements;
C. Investigating any Licensee for Price Advertising or for offering
any Licensee Price, discounts, Rebates, or Inducements;
D. Threatening or taking any Disciplinary Action against any
Licensee for Price Advertising or for offering any Licensee Price,
discounts, Rebates, or Inducements;
E. Enforcing the Rebate Ban; or
F. Inducing, urging, encouraging, or assisting any person or
organization to take any of the actions prohibited by this Section of
the Amended Final Judgment.
V. Other Actions
A. Until the Rebate Ban is repealed and eliminated, Defendant shall
treat the Rebate Ban as preempted by the federal antitrust laws and
null and void.
B. Defendant shall address the substance of this Amended Final
Judgment--including that Licensees are free to compete by offering any
Licensee Price, discounts, Rebates, or Inducements--in the training or
educational materials that Defendant prepares, reviews, or approves for
the following courses (including any course in the future, which may
have a different name, but covers substantially the same topics): the
Kentucky Core course, the Brokerage Management course, and a pre-
licensing course.
C. All Disciplinary Actions--to the extent they related to the
offering of any discounts, Rebates, or Inducements--shall be null and
void. Any records in the Defendant's possession, custody, or control
relating to a Licensee subject to such Disciplinary Action shall
reflect the same.
VI. Notifications
A. Within thirty (30) days from July 13, 2005, Defendant shall
notify in writing:
1. Each Licensee who--as of July 13, 2005--is on probation or whose
license is suspended or revoked for offering a discount, Rebate, or
Inducement, that the license may be reinstated, at the Licensee's
request, to the extent that the Licensee otherwise meets the
contemporary licensing requirements under the Kentucky Revised
Statutes.
2. Each Licensee, who--as of July 13, 2005--is being investigated
or subject to a Disciplinary Action for offering a
[[Page 45429]]
discount, Rebate, or Inducement, that such investigation or action--to
the extent it relates to the offering of discounts, Rebates, or
Inducements--has ceased with no further Disciplinary Action taken. Any
records in the Defendant's possession, custody, or control relating to
the affected Licensee shall reflect the same.
B. Within one-hundred-and-twenty (120) days from July 13, 2005,
Defendant shall display prominently on the first page of its newsletter
the following language:
On July 13, 2005, under the terms of a settlement with the U.S.
Department of Justice Antitrust Division, the Kentucky Real Estate
Commission agreed to stop enforcing regulations that restricted the
use and advertisement of rebates, inducements or discounts by KREC
licensees. The proposed Amended Final Judgment effecting the
settlement and a letter of explanation were mailed to each KREC
licensee. Any licensee who did not receive this mailing may request
another copy. Links to the proposed Amended Final Judgment and the
explanatory letter can also be found on the ``Real Estate Licensing
Laws in Kentucky'' and ``Legal Information'' pages of KREC's Web
site, http://www.krec.ky.gov/.
C. Within thirty (30) days from July 13, 2005, Defendant shall mail
or deliver a copy of the proposed Amended Final Judgment, under cover
of the letter attached hereto as ``Appendix A,'' to each Licensee.
D. For a period of three (3) years from July 13, 2005, Defendant
shall mail or deliver a copy of the proposed Amended Final Judgment,
under cover of the letter attached hereto as ``Appendix A,'' to each
new Licensee of Defendant within forty-five (45) days of each such
person's acceptance by Defendant as a Licensee.
E. Within thirty (30) days from July 13, 2005, and for a period of
sixty (60) days thereafter,
1. Defendant shall prominently publish the proposed Amended Final
Judgment and the letter attached hereto as ``Appendix A'' on the home
page of its Web site, http://www.krec.ky.gov/.
2. After such sixty (60) day period, and for a following period of
three (3) years, Defendant shall maintain a link from its ``Real Estate
Licensing Laws in Kentucky'' and ``Legal Information'' web pages, or
their equivalent, to the Amended Final Judgment and the letter attached
hereto as ``Appendix A'' in a manner that provides reasonable notice to
interested parties.
F. Defendant shall notify Plaintiff at least thirty (30) days prior
to any proposed change to its Regulations that may affect Defendant's
compliance obligations arising out of the Amended Final Judgment.
G. As soon as Defendant is aware of any proposed change to any
statute or executive order that may affect its compliance obligations
arising out of the Amended Final Judgment, Defendant shall immediately
notify Plaintiff.
VII. Limiting Conditions
A. With the exception of such actions that are prohibited elsewhere
in this Amended Final Judgment, nothing shall alter the Defendant's
general authority to adopt and enforce reasonable Regulations, or to
take Disciplinary or other action designed to prevent violations of the
Kentucky Revised Statutes. Such authority includes the right to
prohibit:
1. Advertising that is fraudulent, false, deceptive, or misleading
within the meaning of Kentucky Revised Statutes, Chapter 324, Section
160(4)(1);
2. Any promise, assertion, representation, or statement of fact
that is false, deceptive, or misleading; or constitutes under Kentucky
law an otherwise illegal lottery scheme, whereby there is the payment
of valuable consideration for the chance to receive a prize; or
3. For the protection of the client or customer, failure by
Licensees to disclose in writing to their clients or customers the
terms of any offered Rebates or Inducements.
VIII. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Amended Final Judgment, or of determining whether the Amended Final
Judgment should be modified or vacated, and subject to any legally
recognized privilege, from time to time duly authorized representatives
of the United States Department of Justice, including consultants and
other persons retained by the United States, shall, upon written
request of a duly authorized representative of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to Defendant, be permitted:
1. Access during Defendant's office hours to inspect and copy, or
at Plaintiff's option, to require Defendant to provide copies of, all
books, ledgers, accounts, records and documents in the Defendant's
possession, custody, or control, relating to any matters contained in
this Amended Final Judgment; and
2. To interview, either informally or on the record, Defendant's
commissioners, officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee and
without restraint or interference by Defendant.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
Defendant shall submit written reports or interrogatory responses,
under oath if requested, relating to any of the matters contained in
this Amended Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Amended Final Judgment, or as
otherwise required by law.
IX. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Amended
Final Judgment to apply to this Court at any time for further orders
and directions as may be necessary or appropriate to carry out or
construe this Amended Final Judgment, to modify any of its provisions,
to extend the duration of the Amended Final Judgment, to enforce
compliance, and to punish violations of its provisions.
X. Expiration of Final Judgment
This Amended Final Judgment will expire ten (10) years from the
date of its entry, but only if the Rebate Ban has been repealed and
eliminated.
XI. Notice
For purposes of this Amended Final Judgment, any notice or other
communication shall be given to the person at the address set forth
below (or such other addresses as the recipient may specify in
writing):
For the United States: Chief, Litigation III Section, U.S.
Department of Justice, Antitrust Division, 325 Seventh Street, NW.,
Suite 300, Washington, DC 20530.
For the Defendant: Lee B. Harris, General Counsel, Kentucky Real
Estate Commission, 10200 Linn Station Road, Suite 201, Louisville, KY
40223; With a copy to: John S. Reed, David J. Hale, Reed Weitkamp
Schell & Vice PLLC, 500 West Jefferson Street, Suite 2400, Louisville,
KY 40202-2812.
XII. Public Interest Determination
Entry of this Amended Final Judgment is in the public interest.
Date:------------------------------------------------------------------
[[Page 45430]]
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Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16
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United States District Judge.
Appendix A
(Letterhead of the Kentucky Real Estate Commission)
Dear Licensee: The Kentucky Real Estate Commission, under the
terms of a settlement with the U.S. Department of Justice, has
agreed to stop enforcing regulations that restricted the use and
advertisement of rebates, inducements, or discounts by you or any
other licensee. A copy of the proposed Amended Final Judgment is
enclosed.
In order that you may readily understand the terms of the
proposed Amended Final Judgment, we describe below its essential
provisions, although you must realize that the proposed Amended
Final Judgment itself is controlling, rather than the following
explanation of its provisions:
(1) The Commission must allow you or any other licensee to offer
customers rebates, discounts, or other inducements. The Commission
must also allow you or any other licensee to use truthful and non-
misleading advertisements to notify consumers of rebates,
inducements, or other discounts, which you may choose to offer.
(2) The Commission will no longer enforce any ban against
rebates, discounts, or other inducements. Specifically, the
Commission will not enforce the regulation at 201 Ky. Admin. Reg.
11:011, Section 1(5) and 201 Ky. Admin. Reg. 11:121, Section 1(2),
that, in the absence of the proposed Amended Final Judgment, had
prevented you from offering rebates, discounts, or other
inducements.
(3) You and any other licensee are now free to compete by
offering consumers rebates, discounts, and other inducements.
(4) If you were disciplined for offering a rebate, discount, or
other inducement, then that disciplinary action shall be deemed null
and void, and the Commission will note that in its records.
Please note that the proposed Amended Final Judgment does not
alter the Commission's authority to enforce its regulations
generally and to prohibit advertising or other conduct that is
fraudulent, false, deceptive, or misleading. Moreover, licensees
still cannot offer illegal lottery schemes. Also enclosed are the
relevant portions of a new Kentucky Administrative Regulation filed
July --, 2005. This regulation requires licensees to disclose in
writing to their clients and customers the terms of all rebates and
inducements.
Sincerely yours,
[appropriate Commissioner or officer]
(Enclosures.)
Complaint
The United States of America, by its attorneys acting under the
direction of the Attorney General of the United States, brings this
antitrust action against the Kentucky Real Estate Commission (``the
Commission'') for violation of Section 1 of the Sherman Act, 15 U.S.C.
1. The Commission promulgated and enforces administrative regulations
that ban real estate brokers and sales associates in Kentucky
(collectively ``Brokers'') from competing with each other by offering
consumers cash rebates or other inducements (the ``Rebate Ban''). The
Commission's promulgation, adoption, maintenance, and enforcement of
these regulations is a result of agreements, combinations, or
conspiracies among the Commissioners and others that unreasonably
restrain competition. For example, the Rebate Ban prevents buyer
Brokers from competing on price by offering cash rebates when they
enter into agreements with clients.
Nature of the Action
1. By this action, the United States challenges regulations
promulgated by the Commission that prohibit Brokers from competing with
each other by offering rebates or inducements to consumers of real
estate brokerage services.
2. The Commonwealth of Kentucky (``Kentucky'') created the
commission and empowered it to regulate the licensing and education of
Brokers and to safeguard and protect the public interest.
3. In creating the Commission, the Kentucky legislature sought to
preserve price competition in real estate brokerage services for the
good of its citizens. Toward that end, Kentucky specifically prohibits
the Commission, which consists almost entirely of practicing Brokers,
from ``promulgat[ing] any administrative regulation which in any way
fixes prices, establishes fees, or sets the rate at which [Brokers] are
compensated.'' Ky. Rev. Stat. Sec. 324.282.
4. In conflict with Kentucky's policy and statutory prohibition,
the commissioners, through their promulgation and enforcement of the
Rebate Ban (see Ky. Admin. Reg. 11:011, Section 1(5); 201 Ky. Admin.
Reg. 11:121, Section 1(2)), have enabled Brokers to raise, fix, peg, or
stabilize the prices and rates at which Brokers are compensated. The
Rebate Ban is the result of agreements, combinations, or conspiracies
among its Commissioners and others, and it unreasonably restrains
competition to the detriment of consumers.
5. The Rebate Ban deprives consumers of the benefits of price
competition among Brokers in the provision of real estate brokerage
services in Kentucky. The Rebate Ban makes it more difficult for
consumers of real estate brokerage services to obtain lower prices for
these services.
6. Brokers have substantially resisted attempts to eliminate the
Rebate Ban. In a Commission survey, many Brokers conceded that
repealing or modifying the Rebate Ban would generate a bidding war and
lead to lower prices for consumers:
a. ``If we give rebates and inducements, it would get out of
control and all clients would be wanting something. The present law
keeps it under control.''
b. ``This would turn into a bidding war, lessen our profits and
cheapen our `so-called' profession.''
c. ``I am for the law as it stands now. If inducements were
allowed, they could lead to competitive behavior, which would make us
look unprofessional in the eyes of the public.''
d. ``I think this would just take money right out of our pocket.''
e. ``We work to hard to give it away.''
7. A few Brokers, who supported eliminating the Rebate Ban, cited
some of the procompetitive benefits that repeal would foster:
a. ``Rebates and inducements will increase competition and give
consumers more choices in service.''
b. ``Current law inhibits free trade. Most all other states allow
inducement and rebates. Disclosure is all the police we need.''
c. ``Commissions and sales awards are common in other industries.
The bigger wrong being committed by agents and broker is the informal
unspoken price fixing that occurs.''
d. ``Buyer's brokers need to be able to offer a commission based on
negotiation for buyer broker services. An agency contract should not be
dependent on what the listing company offers. All commissions are
negotiable. Also, let the public decide what offer they want to take on
inducements.''
8. The United States seeks to terminate this illegal restraint on
competition and to obtain other equitable relief necessary to restore
competition for the benefit of consumers of real estate brokerage
services in Kentucky.
The Defendant
9. The Commission is organized, exists, and transacts its business
under and by virtue of the laws of Kentucky, with its principal place
of business in Louisville, Kentucky.
10. The Commission is the sole licensing authority for Brokers. It
is unlawful for a person to provide, or to offer to provide, real
estate brokerage services in Kentucky unless he or she
[[Page 45431]]
holds a current license issued by the Commission.
11. The Commission consists of five Commissioners. By stature, four
of the Commissioners must be active Brokers (``the Broker-
Commissioners'') before and during their term on the Commission. The
fifth Commissioner, a citizen-at-large, may not be associated with or
financially interested in the brokerage industry.
12. When there is a Broker-Commissioner vacancy, the Kentucky
Association of Realtors (``the Association''), a private industry trade
group for Brokers, selects a list of not less than three nominees from
which the Governor of Kentucky must appoint the new Commissioner. The
Governor may reappoint a particular Broker-Commissioner only if the
Association chooses to resubmit the Broker-Commissioner's name on its
new list of nominees.
13. The Commission promulgates and enforces regulations, including
the regulations at issue in this Complaint.
14. The Association actively participates in the Commission's
rulemaking activities. Often, when the Commission has considered
changing its regulations, it has formed a joint task force with the
Association consisting of Commission and Association representatives.
Such joint task forces have prepared draft regulatory text for the
Commission's consideration,
15. Kentucky law authorizes the Commission to take disciplinary
action against any Broker who violates Kentucky real estate statutes or
any of the Commission's regulations.
16. Neither the legislative nor the executive branch of Kentucky,
however, oversee the Commission's regulations or enforcement actions,
including the Commission's enforcement actions regarding alleged
violations of the Rebate Ban.
17. Although the Commission has inhibited competition by banning
rebates, neither the Commission nor the executive or legislative
branches of Kentucky oversee the competitiveness or reasonableness of
the pricing by Brokers for their services. Moreover, the Commission
does not maintain or collect information concerning the level of real
estate brokerage commissions.
Jurisdiction and Venue
18. This complaint is filed under Section 4 of the Sherman Act, as
amended 15 U.S.C. 4, in order to prevent and restrain the violation, as
herein alleged, of Section 1 of the Sherman Act, 15 U.S.C. 1.
19. This Court has subject matter jurisdiction under Section 4 of
the Sherman Act, as amended 15 U.S.C. 4, and under 28 U.S.C. 1331,
1337(a), and 1345.
20. Venue is proper in this judicial district under 28 U.S.C.
1391(b) because the Commission was created by Kentucky statute, it
transacts business throughout Kentucky, and it maintains its principal
place of business in Louisville, Kentucky.
Trade and Commerce
21. The Commission's Rebate Ban and other activities substantially
affect interstate commerce. Billions of dollars worth of real property
is exchanged each year in Kentucky with the assistance of Brokers.
Brokers assist in-state and out-of-state clients to buy, sell, lease,
or manage real property. Interstate mortgage financing is affected by
this exchange of property.
Background of the Offense
22. The predominant form of payment for real estate brokerage
services remains the ``commission,'' a percentage of the price paid for
the property. In a typical transaction, the seller pays the commission
to his or her real estate broker. In Kentucky, the seller and his or
her Broker negotiate the Broker's commission, but the Broker is
prohibited from including any rebate or price-cutting inducement in
their agreement. If the seller's Broker also funds the buyer, then that
Broker keeps the full commission. In most cases, however, a second
Broker represents the buyer. If the transaction is completed, then the
buyer's and seller's Brokers each receive a portion of the commission.
The seller's Broker or the seller typically sets the commission level
and its allocation between Brokers.
23. As a result of the Rebate Ban, the buyer's Broker is prohibited
from offering his or her buyer client any rebate or price-cutting
inducement or discount off the commission set by the seller or the
seller's Broker.
Relevant Markets
24. The Commission's Rebate Ban has had, and will continue to have,
anticompetitive effects in Kentucky's local real estate brokerage
service markets.
25. The relevant service markets are no broader than the provision
of real estate brokerage services to sellers of real property and the
provision of real estate brokerage services to buyers of real property.
26. The real estate brokerage business is local in nature. Most
sellers want to work with a Broker who is familiar with local market
conditions and who maintains an office within a reasonable distance to
the property. Likewise, most buyers want to purchase property in a
particular city, community, or neighborhood, and they typically want a
Broker who has knowledge of the area in which they have an interest.
27. Except to the extent that competition has been restrained as
alleged herein, and depending on their geographic location, Brokers
compete with each other and with the Broker-Commissioners.
28. The Rebate Ban applies to all Brokers and consequently affects
competition for real estate brokerage services throughout Kentucky.
Conduct
29. The Kentucky Legislature enacted statutes that authorize the
Commission to regulate the licensing and education of Brokers.
Kentucky, however, forbids the Commission from promulgating any
regulation that in any way fixes prices, establishes fees, or sets the
rate at which Brokers are compensated.
30. In 1991, the Commission promulgated an administrative
regulation that prohibits Brokers from offering to the general public
any item or thing of value, including rebates that reduce fees, to
induce clients to retain their services. (See 201 Ky. Admin. Reg.
11:011, Section 1(5); 201 Ky. Admin. Reg. 11:121, Section 1(2).)
Specifically, the Commission forbids a Broker ``[t]o offer, either
through advertising, direct contact or by others, to the general
public, any prize, money, free gift, rebate, or any other thing of
value as an inducement.'' 201 Ky. Admin. Reg. 11:121, Section 1(2).
31. In interpreting its regulations, the Commission has warned
Brokers that they cannot compete by offering cash rebates, refunds, or
a free home inspection. Nor can Brokers, prior to closing, compete by
taking clients out to dinner, donating money to a charity of the
customer's choice, or even offering a free photo with Santa Claus. The
Commission has announced that, even after the closing of a real estate
transaction, Brokers cannot give their clients anything more than a
gift worth up to $100 in value.
32. The Commission's promulgation and enforcement of the Rebate Ban
is the product of agreements, combinations, or conspiracies among its
Broker-Commissioners and others that has restricted the ability of all
Brokers to compete on the basis of price.
33. The Commission has engaged, and continues to engage, in acts in
furtherance of these agreements, combinations, or conspiracies,
including among other things:
[[Page 45432]]
a. Prohibiting Brokers from offering consumers any type of rebate
or inducement, including but not limited to, cash rebates, free
products and services such as televisions or home inspections,
discounts or vouchers for products and services such as home moving
services or home improvement stores, and donations to charities on the
customer's behalf, on the basis that such conduct violates the
Commission's administrative regulations;
b. Prohibiting rebates or other inducements in private contracts
that involve Brokers; and
c. Preventing Brokers from offering rebates or other inducements by
among other things:
i. Investigating alleged violations of the Rebate Ban;
ii. Asking Brokers to inform the Commission when one or more
competing Brokers offers rebates or other inducements;
iii. Instructing Brokers to cease offering rebates or other
inducements;
iv. Threatening to bring disciplinary actions against Brokers
unless they cease offering rebates or other inducements;
v. Bringing disciplinary actions against Brokers for offering
rebates or other inducements; and
vi. Sanctioning Brokers the Commission has found to have offered
rebates or other inducements by one or more of the following:
suspending licenses, revoking licenses, imposing monetary fines,
issuing reprimands, and requiring completion of additional academic
credit hours.
34. The Rebate Ban also enables sellers and/or seller Brokers to
fix the commission at which the buyer's Broker is to be compensated in
a particular real estate transaction, thereby insulating the Brokers
from competing among themselves on the basis of price when they enter
into agreements with buyers.
35. As a result of the Rebate Ban, Brokers cannot--and thus need
not--compete with one another by offering rebates or other valuable
inducements.
36. The Commission has worked closely with Brokers and Brokers'
associations, including the Association, in its continued enforcement
of the Rebate Ban. Among other things, the Commission has rejected
proposals to eliminate the Rebate Ban as recently as 2004 after
receiving substantial opposition from Brokers.
Anticompetitive Effects
37. The Rebate Ban has injured, and continues to injure, buyers and
sellers of real property throughout Kentucky. The Rebate Ban restricts
competition and deprives the property-buying and property-selling
public of a myriad of price and non-price discounts, including, but not
limited to, cash rebates, vouchers or coupons, and discounted or free
services related to buying and selling property such as home
inspections, title services, or moving services. These rebates and
inducements benefit consumers. Real estate brokers and sales associates
operating in states without a similar ban offer rebates, inducements,
and many of the discounts set forth above to buyers and sellers as they
compete to offer their services to buyers and sellers. Such rebates,
for example, may amount to several thousand dollars in a single
transaction.
38. The agreements, combinations, or conspiracies alleged herein
have had, and will continue to have, anticompetitive effects,
including:
a. A suppression of price competition in the provision of real
estate brokerage services;
b. The limitation of products and services available to buyers and
sellers of property; and
c. The creation of barriers to entry into the provision of real
estate brokerage services by companies that offer rebates, discounts,
and reduced commissions as part of their business model.
Violation Alleged
39. The allegations of paragraphs 1 through 38 of this Complaint
are re-alleged and incorporated by reference herein with the same force
and effect as though set forth in full.
40. Defendant's promulgation, adoption, maintenance, and
enforcement of regulations 201 Ky. Admin. Reg. 11:011, Section 1(5) and
201 Ky. Admin. Reg. 11:121, Section 1(2) arise from and result in
agreements, combinations, or conspiracies that restrain competition in
numerous Kentucky real estate brokerage service markets in violation of
Section 1 of the Sherman Act, 15 U.S.C. 1.
Request for Relief
Wherefore, the United States prays that final judgment be entered
against Defendant declaring, ordering, and adjudicating that:
a. The agreements, combinations, or conspiracies alleged herein
restrain trade and are illegal under Section 1 of the Sherman Act, 15
U.S.C. 1;
b. Defendant be restrained and enjoined from, either directly or
indirectly, prohibiting Brokers from advertising or offering rebates or
inducements;
c. Defendant's regulations 201 Ky. Admin. Reg. 11:011, Section 1(5)
and 201 Ky. Admin. Reg. 11:121, Section 1(2) are preempted by the
federal antitrust laws and are null and void;
d. Defendant shall mail a copy of the Complaint, order, and
explanatory notice to:
i. Each Commissioner, director, representative, agent, and employee
of Defendant Kentucky Real Estate Commission; and
ii. Each person licensed to provide real estate brokerage in
Kentucky;
e. Defendant publish in its Newsletter the explanatory notice and
an article stating that the regulations prohibiting rebates and
inducements have been eliminated;
f. The United States recover its costs in this action; and
g. Such other relief as the United States may request and that the
Court deems just and proper.
Dated: March 30, 2005.
Respectfully submitted:
For Plaintiff United States of America.
R. Hewitt Pate,
Assistant Attorney General.
Thomas O. Barnett,
Deputy Assistant Attorney General.
Dorothy B. Fountain,
Deputy Director of Operations.
John R. Read,
Chief, Litigation III.
Nina Hale,
Assistant Chief, Litigation III.
Owen M. Kendler,
Mary Beth McGee,
Mark A. Merva,
Maurice E. Stucke,
Attorneys.
United States Department of Justice, Antitrust Division, Litigation
III; 325 7th Street, NW., Suite 300, Washington, DC 20530. (202)
616-5935.
[FR Doc. 05-15489 Filed 8-4-05; 8:45 am]
BILLING CODE 4410-11-M