[Federal Register Volume 71, Number 138 (Wednesday, July 19, 2006)]
[Notices]
[Pages 41023-41027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11389]


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FEDERAL TRADE COMMISSION

[File No. 051 0219]


Austin Board of Realtors; Analysis of Agreement Containing 
Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before August 11, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Austin Board of Realtors, File No. 051 
0219,'' to facilitate the organization of comments. A comment filed in 
paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room 135-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with Commission Rule 4.9(c). 
16 CFR 4.9(c) (2005).\1\ The

[[Page 41024]]

FTC is requesting that any comment filed in paper form be sent by 
courier or overnight service, if possible, because U.S. postal mail in 
the Washington area and at the Commission is subject to delay due to 
heightened security precautions. Comments that do not contain any 
nonpublic information may instead be filed in electronic form as part 
of or as an attachment to e-mail messages directed to the following e-
mail box: [email protected].
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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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    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 Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Patrick J. Roach, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2793.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for July 13, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/07/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted for public comment an 
Agreement Containing Consent Order with the Austin Board of Realtors 
(``ABOR'' or ``Respondent''), an association of real estate brokers in 
the Austin, Texas, metropolitan area. The Agreement settles charges 
that ABOR violated section 5 of the Federal Trade Commission Act, 15 
U.S.C. 45, by engaging in a concerted refusal to deal except on 
specified terms with respect to a key input for the provision of real 
estate services. The proposed consent order has been placed on the 
public record for 30 days to receive comments from interested persons. 
Comments received during this period will become part of the public 
record. After 30 days, the Commission will review the agreement and the 
comments received, and will decide whether it should withdraw from the 
agreement or make the proposed order final.
    The purpose of this analysis is to facilitate comment on the 
proposed order. The analysis does not constitute an official 
interpretation of the agreement and proposed order, and does not modify 
their terms in any way. Further, the proposed consent order has been 
entered into for settlement purposes only, and does not constitute an 
admission by Respondent that it violated the law or that the facts 
alleged in the complaint (other than jurisdictional facts) are true.

I. Industry Background

    A Multiple Listing Service, or ``MLS,'' is a cooperative venture by 
which real estate brokers serving a common local market area submit 
their listings to a central service, which in turn distributes the 
information, for the purpose of fostering cooperation among brokers and 
agents in real estate transactions. The MLS facilitates transactions by 
putting together a home seller, who contracts with a broker who is a 
member of the MLS, with prospective buyers, who may be working with 
other brokers who are also members of the MLS. Membership in the MLS is 
limited to member brokers who generally must possess a license to 
engage in real estate brokerage services and meet other criteria set by 
MLS rules.
    Prior to the late 1990s, the listings on an MLS were typically 
directly accessible only to real estate brokers who were members of a 
local MLS. The MLS listings typically were made available through books 
or dedicated computer terminals, and generally could only be accessed 
by the general public by physically visiting a broker's office or by 
receiving a fax or hand delivery of selected listings from a broker.
    Information from an MLS is now typically available to the general 
public not only through the offices of brokers who are MLS members, but 
also through three principal categories of internet Web sites. First, 
information concerning many MLS listings is available through 
Realtor.com, a national Web site run by the National Association of 
Realtors (``NAR''). Realtor.com contains listing information from many 
local MLS systems around the country and is the largest and most-used 
internet real estate Web site. Second, information concerning MLS 
listings is often made available through a local MLS-affiliated web 
site, such as Austinhomesearch.com. Third, information concerning MLS 
listings is often made available on the internet sites of various real 
estate brokers, who choose to provide these web sites as a way of 
promoting their brokerage services. Most of these various Web sites 
receive information from an MLS pursuant to a procedure known as 
Internet Data Exchange (``IDX''), which is typically governed by MLS 
policies. The IDX policies allow operators of approved Web sites to 
display MLS active listing information to the public.
    As a survey of home buyers and sellers conducted by the National 
Association of Realtors has shown, home buyers are increasingly relying 
upon the internet in their search for homes, and web sites of the kind 
affected by the Web Site Policy are the most popular internet sites for 
home buyers.\2\ According to the NAR survey, 74 percent of home buyers 
nationally used the internet to assist in their home search, with 53 
percent reporting frequent internet searches; 15 percent of respondents 
first learned about the home they selected from the internet; 69 
percent of home buyers found the internet to be a ``very useful'' 
source of information, and a total of 96 percent found the internet to 
be either ``very useful'' or ``somewhat useful.'' \3\ Moreover, the NAR 
Survey makes clear

[[Page 41025]]

that the overwhelming majority of Web sites used nationally in 
searching for homes contain listing information that is provided by 
local MLS systems.\4\
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    \2\ Paul C. Bishop, Thomas Beers and Shonda D. Hightower, the 
2004 National Association of Realtors Profile of Home Buyers and 
Sellers (``NAR Survey'') at 3-3, 3-4, 3-5, 3-6, 3-18.
    \3\ Id. See Home Buyer & Seller Survey Shows Rising Use of 
Internet, Reliance on Agents (January 17, 2006), available at http://www.realtor.org/PublicAffairsWeb.nsf/Pages/HmBuyerSellerSurvey06?OpenDocument.
    \4\ NAR Survey at 3-18.
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A. Types of Real Estate Brokerage Professionals

    A typical real estate transaction involves two real estate brokers: 
these are commonly known as a ``Listing Broker'' and a ``Selling 
Broker.'' The Listing Broker is hired by the seller of the property to 
locate an appropriate buyer. The seller and the Listing Broker agree 
upon compensation, which is determined by written agreement negotiated 
between the seller and the Listing Broker. In a common traditional 
listing agreement, the Listing Broker receives compensation in the form 
of a commission, which is typically a percentage of the sales price of 
the property, payable if and when the property is sold. In such a 
traditional listing agreement, the Listing Broker agrees to provide a 
package of real estate brokerage services, including promoting the 
listing through the MLS and on the internet, providing advice to the 
seller regarding pricing and presentation, fielding all calls and 
requests to show the property, supplying a lock-box so that potential 
buyers can see the house with their agents, running open houses to show 
the house to potential buyers, negotiating with buyers or their agents 
on offers, assisting with home inspections and other arrangements once 
a contract for sale is executed, and attending the closing of the 
transaction.
    The other broker involved in a typical transaction is commonly 
known as the Selling Broker. In a typical transaction, a prospective 
buyer will seek out a Selling Broker to identify properties that may be 
available. This Selling Broker will discuss the properties that may be 
of interest to the buyer, accompany the buyer to see various 
properties, try to arrange a transaction between buyer and seller, 
assist the buyer in negotiating the contract, and help in further steps 
necessary to close the transaction. In a traditional transaction, the 
Listing Broker offers the Selling Broker a fixed commission, to be paid 
from the Listing Broker's commission when and if the property is sold. 
Real estate brokers typically do not specialize as only Listing Brokers 
or Selling Brokers, but often function in either role depending on the 
particular transaction.

B. Types of Real Estate Listings

    The relationship between the Listing Broker and the seller of the 
property is established by agreement. The two most common types of 
agreements governing listings are Exclusive Right to Sell Listings and 
Exclusive Agency Listings. An Exclusive Right to Sell Listing is the 
traditional listing agreement, under which the property owner appoints 
a real estate broker as his or her exclusive agent for a designated 
period of time, to sell the property on the owner's stated terms, and 
agrees to pay the Listing Broker a commission if and when the property 
is sold, whether the buyer of the property is secured by the Listing 
Broker, the owner or another broker.
    An Exclusive Agency Listing is a listing agreement under which the 
Listing Broker acts as an exclusive agent of the property owner or 
principal in the sale of a property, but under which the property owner 
or principal reserves a right to sell the property without assistance 
of the Listing Broker, in which case the Listing Broker is paid a 
reduced or no commission when the property is sold.
    Some real estate brokers have attempted to offer services to home 
sellers on something other than the traditional full-service basis. 
Many of these brokers, often for a flat fee, will offer sellers access 
to the MLS's information-sharing function, as well as a promise that 
the listing will appear on the most popular real estate Web sites. 
Under such arrangements, the Listing Broker does not offer additional 
real estate brokerage services as part of the flat fee package, but 
allows sellers to purchase additional services if sellers so desire. 
These non-traditional arrangements often are structured using Exclusive 
Agency Listing contracts.
    There is a third type of real estate listing that does not involve 
a real estate broker, which is a ``For Sale By Owner'' or ``FSBO'' 
listing. With a FSBO listing, a home owner will attempt to sell a house 
without the involvement of any real estate broker and without paying 
any compensation to such a broker, by advertising the availability of 
the home through traditional advertising mechanisms (such as a 
newspaper) or FSBO-specific Web sites.
    There are two critical distinctions between an Exclusive Agency 
Listing and a FSBO for the purpose of this analysis. First, the 
Exclusive Agency Listing employs a Listing Broker for access to the MLS 
and Web sites open to the public; a FSBO listing does not. Second, an 
Exclusive Agency Listing sets terms of compensation to be paid to a 
Selling Broker, while a FSBO listing often does not.

II. The Complaint

    The Complaint alleges that ABOR, a Texas not-for-profit corporation 
operating for the benefit of its members, has violated section 5 of the 
FTC Act. Specifically, the proposed Complaint alleges that ABOR has 
unlawfully restrained competition among real estate brokers in central 
Texas by adopting a policy that constitutes a concerted refusal to deal 
except on specified terms.

A. ABOR Has Market Power

    ABOR has more than 5,000 real estate professionals, and the large 
majority of residential real estate brokerage professionals in the 
Austin, Texas, metropolitan area are members of ABOR. These 
professionals compete with one another to provide residential real 
estate brokerage services to consumers.
    The ABOR MLS is organized through the Austin/Central Texas Realty 
Information Service (``ACTRIS'') and ACTRIS is the only MLS that serves 
metropolitan Austin, Texas. Membership in ACTRIS is critical to a 
broker providing residential real estate brokerage services to sellers 
and buyers of real property in the ACTRIS service area. ABOR, through 
ACTRIS, controls key inputs needed for a Listing Broker to provide 
effective real estate brokerage services, including: (1) A means to 
publicize to all brokers the residential real estate listings in 
central Texas; and (2) a means to distribute listing information to Web 
sites for the general public. By virtue of industry-wide participation 
and control over a key input, ABOR and ACTRIS have market power in the 
provision of residential real estate brokerage services to sellers and 
buyers of real property in the Austin, Texas and/or the ACTRIS Service 
Area.

B. ABOR Conduct

    In February 2005, ABOR adopted a rule that prevented information on 
Exclusive Agency Listings provided to ACTRIS from being transmitted to 
real estate Web sites available to the general public (the ``Web Site 
Policy''). The Web Site Policy specifically prevents any information on 
listings other than traditional Exclusive Right to Sell Listings from 
being included in the IDX-formatted information that is available from 
ACTRIS to be used and published by publicly-accessible Web sites.\5\ 
The effect of this rule is to prevent such information from being 
available to be displayed on a broad range of Web sites, including the 
NAR-operated

[[Page 41026]]

``Realtor.com'' Web site; the ABOR-owned ``Austinhomesearch.com'' Web 
site; and ABOR member Web sites.
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    \5\ The ABOR rule states: ``Listing information downloaded and/
or otherwise displayed pursuant to IDX shall be limited to 
properties listed on an exclusive right to sell basis.'' ACTRIS 
Rules and Regulations at 18 (February 2006).
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    Exclusive Agency Listings are often used by members of ABOR acting 
as Listing Brokers to offer lower-cost real estate services to 
consumers. ABOR's Web Site Policy is joint action by a group of 
competitors to withhold distribution of listing information to publicly 
accessible Web sites from competitors who do not contract with their 
brokerage service customers in a way that the group wishes. This 
conduct represents a new variation of a type of conduct that the 
Commission condemned 20 years ago. In the 1980s and 1990s, several 
local MLS boards banned Exclusive Agency Listings from the MLS 
entirely. The Commission investigated and issued complaints against 
these exclusionary practices, obtaining several consent orders.\6\
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    \6\ In the Matter of United Real Estate Brokers of Rockland, 
Ltd., Docket No. C-3461, 116 F.T.C. 972 (1993); In the Matter of 
American Industrial Real Estate Association, Docket No. C-3449, 116 
F.T.C. 704 (1993); In the Matter of Puget Sound Multiple Listing 
Association, Docket No. C-3300 (F.T.C., August 2, 1990); In the 
Matter of Bellingham-Whatcom County Multiple Listing Bureau, Docket 
No. C-3299 (F.T.C., August 2, 1990); In the Matter of Metro MLS, 
Inc., Docket No. C-3286, 115 F.T.C. 305 (1990); In the Matter of 
Multiple Listing Service of the Greater Michigan City Area, Inc., 
Docket No. C-3163, 106 F.T.C. 95 (1985); In the Matter of Orange 
County Board of Realtors, Inc., Docket No. C-3162, 106 F.T.C. 88 
(1985).
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C. Competitive Effects of the Web Site Policy

    The Web Site Policy has the effect of discouraging members of ABOR 
and participants in ACTRIS from accepting Exclusive Agency Listings. 
Thus, the Web Site Policy strongly impedes one way of providing 
unbundled brokerage services, and may make it more difficult for home 
sellers to market their homes. The Web Site Policy has caused some home 
sellers to switch away from Exclusive Agency Listings to other forms of 
listing agreements. According to ACTRIS records, prior to the 
initiation of the Web Site Policy, about 1,500 of 8,500, or 18 percent, 
of the listings on ACTRIS were Exclusive Agency Listings. After the Web 
Site Policy was implemented, the number of Exclusive Agency Listings as 
shown on ACTRIS records dropped to about 250 out of 10,000, or 2.5 
percent.
    When home sellers switch to full service listing agreements from 
Exclusive Agency Listings that often offer lower-cost real estate 
services to consumers, the sellers may purchase services that they 
would not otherwise buy. This, in turn, may increase the commission 
costs to consumers of real estate brokerage services. By preventing 
Exclusive Agency Listings from being transmitted by ACTRIS to public-
access real estate Web sites, the Web Site Policy has adverse effects 
on home sellers and home buyers. In particular, the Web Site Policy 
denies home sellers choices for marketing their homes and denies home 
buyers the chance to use the internet to easily see all of the houses 
listed by real estate brokers in the area, making their search less 
efficient.

D. There Is No Competitive Efficiency Associated With the Web Site 
Policy

    There are no cognizable and plausible efficiency justifications for 
the Web Site Policy. An MLS in some circumstances might be concerned 
with the possibility that buyers and sellers of properties under an 
Exclusive Agency Listing could ``free-ride'' on the legitimate and 
valuable cooperative efforts that the MLS is intended to foster, by 
using the services of the MLS to carry out real estate transactions but 
bypassing the brokerage services that were one of the principal reasons 
why the MLS was created. However, this concern does not provide 
justification for the Web Site Policy as implemented by ABOR and 
ACTRIS. Exclusive Agency Listings are not a credible means for home 
buyers or sellers to bypass the use of the brokerage services that 
ACTRIS was created to promote, because a Listing Broker is always 
involved in an Exclusive Agency Listing, and the ABOR rules already 
include protections against such misuse.
    The ABOR Web Site Policy does not involve situations where 
brokerage services are bypassed entirely. The policy only operates 
where home sellers purchase services from a Listing Broker using an 
Exclusive Agency contract, not when home sellers are pursuing a FSBO 
sale and purchase no brokerage services at all. It is possible, of 
course, that a buyer of an Exclusive Agency Listing may make the 
purchase without using a Selling Broker, but this is true for 
traditional Exclusive Right to Sell Listings as well. Under existing 
ACTRIS rules that apply to any form of the listing agreement, the 
Listing Broker must ensure that the home seller pays compensation to 
the cooperating Selling Broker (if there is one), and the Listing 
Broker may be liable himself for a lost commission if the home seller 
fails to pay a Selling Broker who was the procuring cause of a 
completed property sale. The possibility of sellers or buyers using the 
MLS but bypassing brokerage services is already addressed effectively 
by ABOR's existing rules that do not distinguish between forms of 
listing contracts, and does not justify the Web Site Policy.

III. The Proposed Consent Order

    The proposed order is tailored to ensure that the MLS does not 
misuse its market power, but also takes care to ensure that the 
procompetitive incentives of joint ventures such as ABOR and ACTRIS 
remain intact. The proposed order enjoins ABOR from treating Exclusive 
Agency Listings, or any other lawful listing agreements with sellers of 
property, in a less advantageous manner than Exclusive Right to Sell 
Listings.
    More specifically, ABOR is enjoined from adopting or enforcing any 
policy to deny, restrict, or interfere with the ability of ABOR members 
or ACTRIS participants to enter into Exclusive Agency Listings or other 
lawful listing agreements with the sellers of properties. The proposed 
consent order prohibits ABOR from preventing its members or ACTRIS 
participants from: offering or accepting Exclusive Agency Listings or 
other lawful listing agreements; cooperating with Listing Brokers or 
agents that offer or accept Exclusive Agency Listings or other lawful 
listing agreements; or publishing Exclusive Agency Listings or other 
lawful listing agreements on web sites otherwise approved to use ACTRIS 
information. The proposed order also prohibits ABOR from denying or 
restricting the Services of the MLS \7\ to Exclusive Agency Listings or 
other lawful listings in any way that such Services of the MLS are not 
denied or restricted to Exclusive Right to Sell Listings; or treating 
Exclusive Agency Listings, or any other lawful listings, in a less 
advantageous manner than Exclusive Right to Sell Listings, including 
but not limited to, any policy, rule or practice pertaining to the 
transmission, downloading, or displaying of information pertaining to 
such listings.
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    \7\ ``Services of the MLS'' means the benefits and services 
provided by the MLS to assist ABOR members or ACTRIS Participants in 
selling, leasing and valuing property and/or brokering real estate 
transactions, including but not limited to: (1) Having the property 
included among the listings in the MLS in a manner so that 
information concerning the listing is easily accessible by 
cooperating brokers; and (2) having the property publicized through 
means available to the MLS, including, but not limited to, 
information concerning the listing being made available on 
Austinhomesearch.com, Realtor.com and IDX Web Sites.
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    The proposed order contains a general proviso that preserves to 
ABOR the ability to adopt or enforce any policy, rule, practice or 
agreement that it can show is reasonably ancillary to the legitimate 
and beneficial objectives of the MLS. This includes reasonable rules 
regarding membership requirements,

[[Page 41027]]

payment of dues, administrative matters, or other policies. The proviso 
is intended to preserve existing or future rules or regulations of 
ACTRIS that ABOR can demonstrate are reasonably related to the 
legitimate and pro-competitive purposes of the MLS.
    In addition, the proposed order requires ABOR, within thirty days 
after the Order becomes final, to conform its rules to the substantive 
provisions of the Order. ABOR is also required to notify ABOR members 
and participants in ACTRIS of the Order through e-mail communications 
and its Web site. The proposed order requires notification of changes 
in the structure of ABOR, and requires ABOR to file regular written 
reports of ABOR's compliance with the terms of the Order.
    The proposed Order applies to ABOR and entities that it owns or 
controls, including ACTRIS and Austinhomesearch.com. The Order by its 
terms does not prohibit ABOR members, or other persons or entities 
independent of ABOR that receive listing information from ABOR for use 
on their Web sites, from making independent decisions concerning their 
use or display of ACTRIS listing information that are consistent with 
their contractual obligations to ACTRIS.
    The proposed order will expire in 10 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E6-11389 Filed 7-18-06; 8:45 am]
BILLING CODE 6750-01-P