[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