[Federal Register Volume 70, Number 173 (Thursday, September 8, 2005)]
[Notices]
[Pages 53362-53364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17855]
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FEDERAL TRADE COMMISSION
Public Workshop: Competition Policy and the Real Estate Industry
AGENCIES: Federal Trade Commission (FTC) and Department of Justice
(DOJ).
ACTION: Joint notice of workshop and opportunity for comment.
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SUMMARY: The FTC and DOJ are planning to host a public workshop,
``Competition Policy and the Real Estate Industry.'' The workshop will
focus on issues related to the competitiveness of the residential real
estate industry, and will cover topics such as multiple listing
services (``MLSs''), online ``virtual office Web sites'' (``VOWs''),
discount brokers and limited-service brokers, and minimum-service
requirements.
The event is open to the public and there is no fee for attendance.
For admittance to the conference center, all attendees will be required
to show a valid form of photo identification, such as a driver's
license.
The FTC will accept pre-registration for this workshop. Pre-
registration is not necessary to attend, but is encouraged so that we
may better plan this event. To pre-register, please e-mail your name
and affiliation to the e-mail box for the workshop, at
[email protected]. When you pre-register, we collect
your name, affiliation, and your e-mail address. This information will
be used to estimate how many people will attend and better understand
the likely audience for the workshop. We may use your email address to
contact you with information about the workshop. Under the Freedom of
Information Act (FOIA) or other laws, we may be required to disclose
the information you provide us to outside organizations. For additional
information, including routine uses permitted by the Privacy Act, see
the Commission's Privacy Policy at www.ftc.gov/ftc/privacy.htm. The FTC
Act and other laws the Commission administers permit the collection of
this contact information to consider and use for the above purposes.
Additional information about the workshop will be posted on the FTC
and DOJ Web sites at http://www.ftc.gov/opp/workshops/comprealestate/index.htm and www.usdoj.gov/atr/public/workshops/reworkshop.htm.
DATES: The workshop will be held on Tuesday, October 25, 2005 at the
FTC's Satellite Building Conference Center located at 601 New Jersey
Avenue, NW., Washington, DC. Requests to participate must be received
on or before September 25, 2005.
Requests to Participate as a Panelist: Persons filing requests to
participate as a panelist will be notified on or before October 11,
2005, if they have been selected. For further instructions, please see
the ``Requests to Participate as a Panelist at the Workshop'' section
below.
Written and Electronic Comments: Any person may submit written or
electronic comments on the topics to be discussed by the panelists.
Such comments must be received on or before November 28, 2005. For
further instructions on submitting comments, please see the ADDRESSES
section below. To read our policy on how we handle the information you
submit, please visit www.ftc.gov/ftc/privacy.htm or www.usdoj.gov/privacy-file.htm.
ADDRESSES: Comments should refer to ``Competition and Real Estate
Workshop--Comment, Project No. V050015'' to facilitate the organization
of comments and requests to participate. A comment filed in paper form
should include this reference both in the text and on the envelope, and
the original and two complete copies should be mailed or delivered to
the following two addresses: Federal Trade Commission/Office of the
Secretary, Room 135-H (Annex F ), 600 Pennsylvania Avenue, NW,
Washington, DC 20580; and Antitrust Division, U.S. Department of
Justice, Liberty Place Suite 300, Attention: Lee Quinn, 325 7th Street
NW, Washington, DC 20530.
Because paper mail in the Washington area and at the Agencies is
subject to delay, please consider submitting your comment in electronic
form, as prescribed below. Comments and requests to participate
containing any material for which confidential treatment is requested,
must be filed in paper (rather than electronic) form, and the first
page of the document must be
[[Page 53363]]
clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c).\1\
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\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
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Comments filed in electronic form (except comments containing any
confidential material) must be submitted to both the FTC and the DOJ.
Parties can submit electronic comments to the FTC by clicking on the
following Web link: https://secure.commentworks.com/FTC-realestatecompetition and following the instructions on the Web-based
form. Parties also should email electronic comments to the DOJ at
[email protected]. DOJ requests that attachments to
electronic comments include a comparable text version, such as Word or
Word Perfect. You also may visit http://www.regulations.gov to read
this request for public comment and may file an electronic comment
through that Web site. The FTC and the DOJ will consider all comments
that regulations.gov forwards to them.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the FTC and the DOJ,
and, to the extent practicable, made available on both the FTC and DOJ
Web sites (http://www.ftc.gov and http://www.usdoj.gov/atr/index.html,
respectively). As a matter of discretion, the FTC and the DOJ make
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routing uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at www.ftc.gov/ftc/privacy.htm and the DOJ Privacy Policy at www.usdoj.gov/privacy-file.htm.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be addressed to James Cooper, Federal Trade Commission, Office
of Policy Planning, 600 Pennsylvania Avenue, NW., Washington, DC 20580
(Telephone: 202-326-3367), or Lee Quinn, Antitrust Division, U.S.
Department of Justice, Liberty Place Suite 300, 325 7th Street NW.,
Washington, DC 20530 (Telephone: 202-307-1028).
Additional information on the workshop will be posted at the
following Web sites: http://www.ftc.gov/opp/workshops/comprealestate/index.htm and www.usdoj.gov/atr/public/workshops/reworkshop.htm.
SUPPLEMENTARY INFORMATION:
Background and Workshop Goals
Background: In 2004, Americans spent over $60 billion on real
estate brokerage services.\2\ The vast majority of residential real
estate sales involve real estate brokers, who help both home buyers and
home sellers.
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\2\ John R. Wilke & James R. Hagerty, U.S. Plans Antitrust Suit
Over Real Estate Listings, Wall Street Journal A1 (May 9, 2005).
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Traditionally, real estate professionals, such as brokers and their
affiliated agents, have performed virtually all services relating to
the sale of a home, including marketing a home, negotiating with
potential buyers, and helping to coordinate the closing of the
transaction. In most areas, brokers have established and run multiple
listings services (MLSs) as joint ventures through which agents share
information on homes for sale. Marketing includes listing the property
in the local MLS, placing advertisements in local media and on the
Internet, and conducting open houses. A seller's agent may also provide
advice on pricing, home inspections, or other contractual terms.
Buyers' agents help prospective home buyers find a suitable home from
properties listed in the MLS and, like sellers' agents, typically
assist in negotiating and helping to arrange closing the transaction. A
seller's agent typically is compensated by a commission based on a
percentage of the sales price of the home. He or she in turn
compensates the buyer's agent, often but not always, by splitting the
commission evenly between them.
Several related developments are presenting challenges to this
traditional brokerage model. First, in response to perceived consumer
demand, some real estate professionals are offering to provide only
those services a home seller wants. In so-called ``fee-for-service'' or
``limited-service'' brokerage models, a home seller might, for example,
choose to pay a broker only for the service of listing the home in the
local MLS and placing advertisements, and choose to handle negotiations
and paperwork himself or herself.
Second, real estate professionals are increasingly incorporating
the Internet into their business models in a variety of ways. In
general, these models use the Internet to allow someone else to perform
a task traditionally done by the broker or agent. Some brokers, for
example, offer potential buyers the option of viewing full, detailed
listing information online, allowing them to delay contacting a real
estate professional until they are ready to buy. When the transaction
closes, these brokers may rebate a portion of their commission to the
customer. Other firms use websites to gather ``lead'' information on
customers who seek real estate services and sell those leads to real
estate professionals, usually for a fee based on the commission that
the professional earns in the transaction. Still other business models
exist that use the Internet to match home buyers and sellers.
Actions by individual firms of real estate professionals, by groups
of professionals acting through MLSs, by industry trade associations,
and by state regulatory and legislative bodies have all spawned recent
lawsuits or controversies. Some of the controversies concern how
existing industry members and institutions have responded to real
estate professionals that offer novel business models. There have been
private lawsuits among brokerage firms alleging illegal anticompetitive
activity by individual brokerages, and by groups of brokerages, in
offering low commission ``splits'' to rival discount or minimum-service
brokerages. The DOJ has acknowledged that it is investigating the
potential competitive impact of certain rules involving the display of
residential real estate data over the Internet.
Several states have considered or passed laws or regulations that
would effectively curtail fee-for-service brokerage. Further, some
states have either passed new laws or regulations, or interpreted
existing laws or regulations, to prevent brokers from passing a
proportion of their commissions along to consumers.
The FTC and the DOJ have been actively involved in analyzing
potential restrictions on competition in the real estate brokerage
industry. In July, the DOJ announced a settlement of a civil antitrust
suit that it had filed earlier in the year against the Kentucky Real
Estate Commission.\3\ Under the settlement, which must be approved by
the court, the Kentucky Real Estate Commission agrees to stop enforcing
a regulation that prohibits Kentucky real estate brokers and sales
associates from offering rebates and other inducements
[[Page 53364]]
to attract customers.\4\ Recently, the FTC and the DOJ also have
jointly advocated against the passage of regulations proposed by the
Texas Real Estate Commission that would have effectively limited
consumers' ability to purchase a more limited, less expensive, set of
real estate services.\5\ In May 2005, the FTC and the DOJ also sent a
letter urging the Alabama Senate not to pass a bill that would also
have restricted consumer choice in real estate service levels.\6\
Likewise, the two agencies also jointly issued a letter to the Governor
of Missouri informing him of the competitive effects of a bill that
similarly would have restricted the ability of Missouri real estate
professionals to offer customized real estate services.\7\
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\3\ See Proposed Amended Final Judgment, United States v.
Kentucky Real Estate Comm'n, Civ. Act. No. 3:05CV188-H (filed July
15, 2005), at www.usdoj.gov/atr/cases/f210100/210142.htm.
\4\ See Complaint, United States v. Kentucky Real Estate Comm'n,
Civ. Act. No. 3:05CV188-H (filed Mar. 31, 2005), at http://www.usdoj.gov/atr/cases/f208300/208393.htm.
\5\ Letter from the FTC and the Justice Department to Loretta R.
DeHay, Gen. Counsel, Texas Real Estate Comm'n. (Apr. 20, 2005), at
http://www.ftc.gov/os/2005/04/050420ftcdojtexasletter.pdf.
\6\ Letter from the FTC and the Justice Department to Alabama
Senate (May 12, 2005), at http://www.ftc.gov/os/2005/05/050512ltralabamarealtors.pdf.
\7\ Letter from the FTC and the Justice Department to Governor
Matt Blunt (May 23, 2005) at http://www.ftc.gov/opa/2005/05/mrealestate.htm.
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Because of the substantial changes in the real estate brokerage
marketplace, and consumers' interest in a competitive real estate
brokerage industry, the FTC and the DOJ will hold a workshop on
Tuesday, October 25, 2005 in Washington, DC to provide a forum to
discuss current issues affecting the competitiveness of real estate
brokerage. In particular, discussion will center around the following
topics:
1. The Real Estate Transaction: including the details of the real
estate transaction from both the buyer's and seller's side; how broker
efforts affect property sale price and how long a property remains on
the market; and the economics of buyer and seller brokerage agreements
and alternatives to the traditional arrangements.
2. The Multiple Listing Service: including how the MLS works and
its efficiencies compared to alternative models; the legal and economic
issues raised by the MLS; intellectual property rights in MLS listings;
and MLS' online listing policies.
3. Private and State Actions that Inhibit Competition among
Sellers' Brokers: including minimum-service requirements; state
licensing and other requirements for for-sale-by-owner Web sites; local
MLS rules that affect fee-for-service brokers and discount full-service
brokers; and how any of the above restrictions may help protect
consumers or otherwise provide benefits to consumers.
4. Private and State Actions that Inhibit Competition among Buyers'
Brokers: including state anti-rebate provisions; state rules that
define online display of listings as advertising; minimum-service
requirements applied to buyers' brokers; discrimination in compensation
against discount buyers' brokers; and how any of the above restrictions
may help protect consumers or otherwise provide benefits to consumers.
Requests To Participate as a Panelist in the Workshop
Parties seeking to participate as panelists in the workshop must
notify both the FTC and the DOJ in writing on or before September 25,
2005. Requests to participate as a panelist should be submitted
electronically by e-mail to [email protected] and
[email protected] or, if mailed, should be submitted in the
manner detailed in the ADDRESSES section, and should be captioned
``Competition Policy in the Real Estate Industry--Request to
Participate, Project No. V050015.'' Parties are asked to include in
their requests a statement setting forth their experience in or
knowledge of the issues on which the workshop will focus and their
contact information, including telephone number, facsimile number, and
e-mail address (if available), to enable the FTC and the DOJ to provide
parties with notice if selected. For requests filed in paper form, an
original and two copies of each document should be submitted. Panelists
will be notified on or before October 11, 2005 if they have been
selected.
Using the following criteria, FTC and DOJ staff will select a
limited number of panelists to participate in the workshop:
1. The party has expertise in or knowledge of the issues that are
the focus of the workshop;
2. The party's participation would promote a balance of interests
being represented at the workshop; or
3. The party has been designated by one or more interested parties
(who timely file requests to participate) as a party who shares group
interests with the designator(s).
In addition, there will be time during the workshop for those not
serving as panelists to ask questions.
Form and Availability of Comments
The FTC and the DOJ request that interested parties submit written
comments on the above questions and other related issues to foster
greater understanding of these topics. Especially useful are any
studies, surveys, research, and empirical data. All comments should be
filed as prescribed in the ADDRESSES section above, and must be
received on or before November 28, 2005.
By direction of the Commission.
Donald S. Clark,
Secretary, Federal Trade Commission.
[FR Doc. 05-17855 Filed 9-7-05; 8:45 am]
BILLING CODE 6750-01-P