[Federal Register Volume 72, Number 244 (Thursday, December 20, 2007)]
[Notices]
[Pages 72359-72361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24686]


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FEDERAL TRADE COMMISSION

[File No. 061 0090]


Multiple Listing Service, Inc.; 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 January 14, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Multiple Listing Service, File No. 061 
0090,'' 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, D.C. 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 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 email messages 
directed to the following email 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 website, to the extent 
practicable, at 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 website. 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 (202) 326-2793, 
Bureau of Competition, Room NJ-6245, 600 Pennsylvania Avenue, NW, 
Washington, D.C. 20580.

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 December 12, 2007), on the World Wide Web, at http://www.ftc.gov/os/2007/12/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, N.W., Washington, 
D.C. 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 Multiple Listing Service, Inc. 
(``MLS, Inc.'' or ``Respondent''). Respondent operates a multiple 
listing service (``MLS'') that is designed to facilitate real estate 
transactions by sharing and publicizing information on properties for 
sale by customers of real estate brokers. The agreement settles charges 
that MLS, Inc. violated Section 5 of the Federal Trade Commission Act, 
15 U.S.C. Sec.  45, through particular acts

[[Page 72360]]

and practices of the MLS. The proposed consent order has been placed on 
the public record for thirty (30) days to receive comments from 
interested persons. Comments received during this period will become 
part of the public record. After thirty (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 consent order. This analysis does not constitute an official 
interpretation of the agreement and proposed order, and does not modify 
its terms in any way. Further, the proposed consent order has been 
entered into for settlement purposes only, and does not constitute an 
admission by proposed Respondent that it violated the law or that the 
facts alleged in the complaint against the Respondent (other than 
jurisdictional facts) are true.

I. The Respondent

    MLS, Inc. is a Wisconsin corporation that provides multiple listing 
services to each of the local associations of real estate professionals 
based in the Milwaukee metropolitan area and surrounding counties. It 
is owned by several realtor boards and associations, and has more than 
6500 members. Respondent serves the great majority of the residential 
real estate brokers in its service area, and is the sole MLS serving 
that area. MLS, Inc. also owns and operates a web site, wihomes.com, 
that provides listing information directly to consumers over the 
internet.

II. The Conduct Addressed by the Proposed Consent Order

    In general, the conduct at issue in this matter is largely the same 
as the conduct addressed by the Commission in six other consent orders 
involving MLS restrictions in the past year.\2\ A general discussion of 
industry background and the Commission's reasoning is contained in the 
Analysis to Aid Public Comment issued in connection with five of those 
consent orders in the ``real estate sweep'' announced in October 
2006.\3\
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    \2\Information and Real Estate Services, LLC, FTC File No. 061-
0087; Northern New England Real Estate Network, Inc., FTC File No. 
051-0065; Williamsburg Area Ass'n of Realtors, Inc., FTC File No. 
061-0268; Realtors Ass'n of Northeast Wisconsin, Inc., FTC File No. 
061-0267; Monmouth County Ass'n of Realtors, Inc., FTC File No. 051-
0217; Austin Bd. of Realtors, FTC File No. 051-0219.See generally 
http://www.ftc.gov/opa/2006/10/realestatesweep.shtm.
    \3\See http://www.ftc.gov/os/caselist/0610268/0610268consentanalysis.pdf.
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A. The Respondent Has Market Power

    MLS, Inc. serves residential real estate brokers in the Milwaukee 
metropolitan area and surrounding counties in Wisconsin. These 
professionals compete with one another to provide residential real 
estate brokerage services to consumers. Membership in MLS, Inc. is 
necessary for a broker to provide effective residential real estate 
brokerage services to sellers and buyers of real property in this 
area.\4\ By virtue of broad industry participation and control over a 
key input, MLS, Inc. has market power in the provision of residential 
real estate brokerage services to sellers and buyers of real property 
in southeast Wisconsin.
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    \4\ As noted, the MLS provides valuable services for a broker 
assisting a seller as a listing broker, by offering a means of 
publicizing the property to other brokers and the public. For a 
broker assisting a buyer, it also offers unique and valuable 
services, including detailed information that is not shown on public 
web sites, which can help with house showings and otherwise 
facilitate home selections.
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B. Respondent's Conduct

    The complaint accompanying the proposed consent order alleges that 
Respondent has violated the FTC Act by adopting rules and policies that 
limit the publication and marketing of certain sellers' properties, but 
not others, based solely on the terms of their respective listing 
contracts. Listing contracts are the agreements by which property 
sellers obtain services from their chosen real estate brokers. The 
restrictions challenged in the complaint accompanying the proposed 
order state that information about properties will not be made 
available on popular real estate web sites unless the listing contracts 
follow the traditional format approved by the MLS. When implemented, 
these restrictions prevent properties with non-traditional listing 
contracts from being displayed on a broad range of public web sites, 
including the ``Realtor.com'' web site operated by the National 
Association of Realtors, the local web site ``wihomes.com'' operated by 
MLS, Inc., and web sites operated by brokers or brokerage firms that 
are MLS members. The complaint alleges that the conduct was collusive 
and exclusionary, because in agreeing to keep non-traditional listings 
off the MLS and from public web sites, the brokers enacting the rules 
were, in effect, agreeing among themselves to limit the manner in which 
they compete with one another, and withholding valuable benefits of the 
MLS from real estate brokers who did not go along.
    As was the case with the other MLSs that agreed to consent orders 
with the Commission, the contract favored by Respondent here is known 
as an ``Exclusive Right to Sell Listing,'' and is the kind of listing 
agreement traditionally used by listing brokers to provide the full 
range of residential real estate brokerage services. Among the 
contracts disfavored by the Respondent is the kind known as an 
``Exclusive Agency Listing,'' which brokers can use to offer limited 
brokerage services to home sellers in exchange for set fees or reduced 
commissions.
    Respondent adopted the challenged rules and policies in May 2001. 
In October 2006, prior to agreeing to the proposed consent order and 
prior to the Commission's acceptance of the consent order and proposed 
complaint for public comment, the Board of Directors of MLS, Inc. voted 
to rescind the restriction. The members of the MLS affected by these 
rules were notified in November 2006 of the Board's intention to change 
its rules.

C. Competitive Effects of the Respondent's Rules and Policies

    MLS, Inc.'s rules and policies have discouraged its members from 
offering or accepting Exclusive Agency Listings. Thus, the restrictions 
impede the provision of unbundled brokerage services, and may make it 
more difficult and costly for home sellers to market their homes. 
Furthermore, the rules and policies have caused home sellers to switch 
away from Exclusive Agency Listings to other forms of listing 
agreements. By prohibiting Exclusive Agency Listings from being 
transmitted to popular real estate web sites, the MLS, Inc. 
restrictions have adverse effects on home sellers and home buyers. 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. In particular, the rules 
deny home sellers choices for marketing their homes and deny home 
buyers the chance to use the internet easily to 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

    The Respondent's rules at issue here advance no legitimate 
procompetitive purpose. As a theoretical matter, if buyers and sellers 
could avail themselves of an MLS system and carry out real estate 
transactions without compensating any of its broker members, an MLS 
might be concerned

[[Page 72361]]

that those buyers and sellers were free-riding on the investment that 
brokers have made in the MLS and adopt rules to address that free-
riding. But this theoretical concern does not justify the restrictions 
adopted by the Respondent here. Exclusive Agency Listings are not a 
credible means for home buyers or sellers to bypass the use of the 
brokerage services that the MLS was created to promote, because a 
listing broker is always involved in an Exclusive Agency Listing, and 
other provisions in MLS, Inc.'s rules ensure that a cooperating 
broker--a broker who finds a buyer for the property--is compensated for 
the brokerage service he or she provides.
    Under existing MLS rules that apply to any form of 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 the Respondent's existing rules that do not distinguish 
between forms of listing contracts, and does not justify the series of 
exclusionary rules and policies adopted by MLS, Inc. 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.

III. The Proposed Consent Order

    Despite the recent decision by Respondent's Board of Directors to 
remove the challenged restrictions, it is appropriate for the 
Commission to require the prospective relief in the proposed consent 
order. Such relief ensures that MLS, Inc. cannot revert to the old 
rules or policies, or engage in future variations of the challenged 
conduct. The conduct at issue in the current case is itself a variation 
of practices that have been the subject of past Commission orders; in 
the 1980s and 1990s, the Commission condemned the practices of several 
local MLS boards that had banned Exclusive Agency Listings entirely, 
and several consent orders were imposed.\5\
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    \5\ See, e.g., In the Matter of Port Washington Real Estate Bd., 
Inc., 120 F.T.C. 882 (1995); In the Matter of United Real Estate 
Brokers of Rockland, Ltd., 116 F.T.C. 972 (1993); In the Matter of 
Am. Indus. Real Estate Assoc., Docket No. C-3449, 1993 WL 1thirty 
(30)09648 (F.T.C. Jul. 6, 1993); In the Matter of Puget Sound 
Multiple Listing Serv., Docket No. C-3390 (F.T.C. Aug. 2, 1990); In 
the Matter of Bellingham-Whatcom County Multiple Listing Bureau, 
Docket No. C-3299 (F.T.C. Aug. 2, 1990); In the Matter of Metro MLS, 
Inc., Docket No. C-3286, 1990 WL 10012611 (F.T.C. Apr. 18, 1990); In 
the Matter of Multiple Listing Serv. of the Greater Michigan City 
Area, Inc., 106 F.T.C. 95 (1985); In the Matter of Orange County Bd. 
of Realtors, Inc., 106 F.T.C. 88 (1985).
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    The proposed order is designed to ensure that Respondent does not 
misuse its market power, while preserving the procompetitive incentives 
of members to contribute to the joint venture operated by MLS, Inc. The 
proposed order prohibits Respondent from adopting or enforcing any 
rules or policies that deny or limit the ability of MLS participants to 
enter into Exclusive Agency Listings, or any other lawful listing 
agreements, with sellers of properties. The proposed order includes 
examples of such practices, but the conduct it enjoins is not limited 
to those five enumerated examples. In addition, the proposed order 
states that, within thirty days after it becomes final, Respondent 
shall have conformed its rules to the substantive provisions of the 
order. MLS, Inc. is further required to notify its participants of the 
order through its usual business communications and its web site. The 
proposed order requires notification to the Commission of changes in 
the Respondent's structure, and periodic filings of written reports 
concerning compliance.
    The proposed order applies to Respondent and entities it owns or 
controls, including MetroMLS and any affiliated web site it operates. 
The order does not prohibit participants in the MLS, or other 
independent persons or entities that receive listing information from 
Respondent, from making independent decisions concerning the use or 
display of such listing information on participant or third-party web 
sites, consistent with any contractual obligations to Respondent.
    The proposed order will expire in 10 years.
    By direction of the Commission.

Donald S. Clark
Secretary
[FR Doc. E7-24686 Filed 12-19-07: 8:45 am]
[Billing Code: 6750-01-S]