[Federal Register Volume 73, Number 94 (Wednesday, May 14, 2008)]
[Notices]
[Pages 27847-27849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10417]


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DEPARTMENT OF JUSTICE

Antitrust Division


Federal Register Notice; Public Comment and Response on Proposed 
Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States v. Multiple 
Listing Service of Hilton Head Island, Inc., No. 9:07-CV-0343 5-SB, 
which was filed in the United States District Court for the District of 
South Carolina on March 4, 2008, together with the response of the 
United States to the comment.
    Copies of the comments and the response are available for 
inspection at the Department of Justice, Antitrust Division; 450 Fifth 
Street, NW.; Suite 1010; Washington, DC 20530 (telephone (202) 514-
2481); and at the Office of the Clerk of the United States District 
Court for the District of South Carolina, Matthew J. Perry Jr. 
Courthouse, 901 Richland Street, Columbia, South Carolina 29201 
(telephone (803) 765-5816). Copies of any of these materials may be 
obtained upon request and payment of a copying fee.

J. Robert Kramer II,
Director of Operations, Antitrust Division.

United States District Court for the District of South Carolina, 
Beaufort Division

United States of America, Plaintiff v. Multiple Listing Service of 
Hilton Head Island, Inc., Defendant

Civil Action No. 9:07-C V-3435-Sb

Response of the United States to Public Comment on the Proposed Final 
Judgment

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby responds to the one public comment received during 
the public comment period regarding the proposed Final Judgment in this 
case. After careful consideration of the comment, the United States 
continues to believe that the proposed Final Judgment will provide an 
effective and appropriate remedy for the antitrust violation alleged in 
the Complaint. The United States will move the Court for entry of the 
proposed Final Judgment after the public comment and this Response have 
been published in the Federal Register, pursuant to 15 U.S.C. 16(d).

[[Page 27848]]

I. Procedural History

    On October 18, 2007, the United States filed the Complaint in this 
matter alleging that the defendant, the Multiple Listing Service of 
Hilton Head, Inc. (``HHMLS''), enforced certain rules that restrained 
competition among real estate brokers in Hilton Head, South Carolina. 
The United States filed a proposed Final Judgment and a Stipulation 
signed by the United States and the defendant consenting to the entry 
of the proposed Final Judgement after compliance with the requirements 
of the APPA. Pursuant to those requirements, a Competitive Impact 
Statement (``CIS'') was filed in this Court on October 16, 2007; the 
Proposed Final Judgment and CIS were published in the Federal Register 
on November 27, 2007; and a summary of the terms of the proposed Final 
Judgment and CIS, together with directions for the submission of 
written comments relating to the proposed Final Judgment, were 
published for seven days on November 28, 2007 through December 4, 2007. 
HHMLS filed the statement required by 15 U.S.C. 16(g) on February 22, 
2008.
    One comment, described below, was received during the 60-day period 
for public comments, which ended on February 2, 2008.

II. Summary of the Complaint's Allegations

    HHMLS is a joint venture of over one hundred competing licensed 
residential real estate brokerages and other licensed real estate 
professionals in the Hilton Head, South Carolina area. HHMLS provides a 
variety of services to its members, including maintaining a database of 
current and past listings of properties for sale in the Hilton Head 
area. Brokers who seek to provide brokerage services in the Hilton Head 
area regard membership in the MLS as critical to their ability to 
compete.
    The Complaint alleges that HHMLS, through a variety of rules and 
practices: (1) Denied membership to brokers who would likely compete 
aggressively on price or through innovative business models; (2) 
stabilized prices and restricted consumer choice by prohibiting member 
brokers from allowing their customers to choose which brokerage 
services they wish to purchase; and (3) authorized its Board of 
Trustees to adopt rules that would regulate commissions and impose 
discriminatory requirements on Internet-based brokers. By adopting and 
enforcing these rules and practices, the Complaint alleges that HHMLS 
restrained competition, reduced consumer choice and stabilized prices 
for real estate brokerage.

III. Summary of Relief To Be Obtained Under the Proposed Final Judgment

    The proposed Final Judgment is designed to restore competition in 
the Hilton Head real estate brokerage market by eliminating rules that 
make it difficult for new brokers to enter the market and by 
eliminating rules that restrict competition among incumbent brokers. 
More specifically, the proposed Final Judgment will prevent HHMLS from 
adopting rules or engaging in practices that: (1) Exclude active, 
licensed real estate professionals from participation in the MLS; (2) 
deprive some members of services it furnishes to other members; (3) 
discriminate against members based on factors such as office location 
or scope/method of service (such as a fee-for service model or an 
Internet-based brokerage model); (4) require members to perform 
brokerage services in excess of those required by state law; (5) 
prescribe the terms of agreements between members and their customers 
or clients; (6) bar qualified listings from the MLS; (7) set 
compensation standards or guidelines; (8) charge fees for member 
changes in ownership; (9) require members to maintain an office or 
reside in any particular location; and (10) alter any of its three 
membership classes without prior approval of the United States.

IV. Standard of Review

    Upon the publication of the public comment and this Response, the 
United States will have fully complied with the Tunney Act and will 
move the Court for entry of the proposed Final Judgment as being ``in 
the public interest.'' 15 U.S.C. 16(e), as amended. In making the 
``public interest'' determination, the Court should apply a deferential 
standard and should withhold its approval only in very limited 
conditions. See, e.g., Mass. Sch. of Law at Andover, Inc. v. United 
States, 118 F.3d 776, 783 (D.C. Cir. 1997). Specifically, the Court 
should review the proposed Final Judgment in light of the violations 
charged in the complaint. Id. (quoting United States v. Microsoft 
Corp., 56 F.3d 1448, 1462 (D.C. Cir. 1995)).
    In making the public interest determination, the Tunney act states 
that the Court shall consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of 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).

    The United States described the court's application of the Tunney 
Act's public interests standard in the Competitive Impact statement 
filed with the Court on October 16, 2007.

V. Summary of Public Comment and the Response of the United States

    During the sixty-day comment period, the United States received one 
comment from Richard B. Saunders. Mr. Saunders is the broker/owner of 
RE/MAX Island Realty of Hilton Head Island, South Carolina and a member 
of HHMLS. His comment is attached in the accompanying Appendix. After 
reviewing the comment, the United States continues to believe that the 
proposed Final Judgment is in the public interest.
    Mr. Saunders expresses support for the intent of the proposed Final 
Judgment, but he has a concern about an HHMLS practice relating to the 
electronic data feed of MLS listings that HHMLS provides its members to 
enable them to advertise listings on an Internet Web site. Brokers use 
an electronic data feed to provide information over the Internet in two 
ways: (1) To advertise listings on a publically accessible Web site in 
order to attract prospective clients and (2) to provide brokerage 
services over the Internet to clients who have already entered into a 
``consumer-broker'' relationship. As an example of the latter, a broker 
whose business model includes an Internet brokerage component may 
create a Web site, often referred to as a Virtual Office Web site or 
VOW, that is accessible only to customers who have registered on the 
Web site and agreed to terms of use. Such a broker uses the electronic 
data feed to provide customers with the same type and quality of 
listings information that a traditional broker would provide to a 
client in his office.
    According to Mr. Saunders, HHMLS provides its members with a lesser 
data feed for advertising purposes than it provides to non-member, non-
brokers, such as Realtor.com (an advertising Web site sponsored by the 
National Association of Realtors), or to itself for

[[Page 27849]]

populating its own Web site. In a follow-up conversation with 
Department of Justice staff, Mr. Saunders explained that HHMLS has 
excluded certain data fields--including property address--from the 
electronic feed it provides to members for advertising. He claims this 
exclusion reduces the functionality of HHMLS members' public 
advertising Web sites. For example, without electronic access to the 
address field, a member cannot efficiently provide a mapping function 
on its publicly-accessible marketing Web site.
    Under the Tunney Act, a Court's public interest determination is 
limited to whether the government's proposed Final Judgment remedies 
the violations alleged in its Complaint. The Government alleged, among 
other things, that HHMLS's rules deterred the emergence of Internet-
based brokerage. As a consequence, the Proposed Final Judgment requires 
that HHMLS not discriminate against brokers based on the method by 
which they would provide listings data to their customers. Thus, HHMLS 
would have to provide to a broker whose business model contains an 
Internet brokerage component the same electronic data feed it provides 
to other brokers who service clients through traditional means. Mr. 
Saunders, however, is concerned about the availability of listings data 
for use in Internet advertising, not about restrictions on data used to 
provide brokerage services via a password-protected Internet site. 
Internet advertising was not a subject of the Government's 
investigation leading to the complaint in this matter and the Complaint 
contains no allegation that encompasses the practice about which Mr. 
Saunders complains. Accordingly, factoring Mr. Saunders' concern into 
the public interest assessment here would inappropriately construct a 
``hypothetical case and then evaluate the decree against that case,'' 
something the Tunney Act does not authorize. United States v. Microsoft 
Corp., 56 F.3d at I 459. In any event, the Proposed Final Judgment does 
not insulate the practice about which Mr. Saunders complains from 
antitrust scrutiny. The antitrust laws will continue to apply to HHMLS 
and would proscribe conduct by the Defendant that runs afoul of 
applicable legal standards.

VI. Conclusion

    After careful consideration of the public comment, the United 
States concludes that the entry of the proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust 
violations alleged in the Complaint and is therefore in the public 
interest. Accordingly, after publication in the Federal Register 
pursuant to 15 U.S.C. 16(b) and (d), the United States will move this 
Court to enter the Final Judgment.
    Respectfully Submitted,

KEVIN F. McDONALD,
Acting United States Attorney.

BY: /s/ Barbara M. Bowens.
Barbara M. Bowens (I.D. 4004),
Assistant United States Attorney, 1441 Main Street, Suite 500, 
Columbia, South Carolina 29201, ( 803) 929-3052.

Lisa Scanlon,
Attorney, Antitrust Division, 325 7th St., NW., Suite 300, Washington, 
DC 20530, (202) 616-5054.

April 9, 2008.

Certificate of Service

    I hereby certify that on April 9, 2008, 1 caused a copy of the 
foregoing Response to Public Comments to be served on counsel for 
Defendant via ECF in this matter in the manner set forth below:

    By: /s/ Barbara M. Bowens,
BARBARA M. BOWENS.

Jane W. Trinkley,
McNair Law Firm, P.A., P.O. Box 11390, Columbia, SC 29211, (via e-mail 
and first-class mail from Owen Kendler, Esq.).

Counsel for Defendant.

United States District Court for the District of South Carolina, 
Beaufort Division

United States of America, Plaintiff v. Multiple Listing Service of 
Hilton Head Island, Inc., Defendant

Civil Action No. 9:07-C V-3435-SB

Appendix: Public Comment on the Proposed Final Judgment

Comment Submitted by Richard B. Saunders

December 31, 2007.

John Reed,
Litigation III Section, Antitrust Division, US Department of Justice, 
Washington, DC 20530.

Subject: United States Department of Justice vs Hilton Head Island 
Multiple Listing Service

    Dear Mr. Reed, Assuming that comments are stilt welcome by the 
Department of Justice regarding the Proposed Final Judgment with the 
Multiple Listing Service of Hilton Head Island, SC, it is apparent to 
me that the intent of the document is an attempt to treat all parties 
relative to our MLS in an equal and unbiased manner, an effort we at 
RE/MAX Island Realty fully support.
    In our opinion what the document does not address is that in our 
opinion every MLS Member should be treated equal regarding information 
on real properties ultimately supplied to the consumer regardless of 
whom is supplying the information. Specifically, we believe that our 
MLS should supply the identical data feeds to all members of the Hilton 
Head MLS as are currently submitted to third party providers such as 
realtor.com and even used by the MLS itself on their own Web site that 
is being marketed in and outside the state of South Carolina. That is 
not the case today and that glaring deficiency should be addressed and 
corrected. Our member firms are being discriminated against by their 
own MLS! This situation should be corrected for that would benefit all 
members as well as the ultimate consumer.
    Should you have any questions or comments, please do not hesitate 
to contact me at your convenience. Thank you very much.

    Sincerely,

Richard B. Saunders, CRB, GRI, SRES
Broker/Owner, RE/MAX Island Realty.

Dick Saunders,
Broker/Owner, RE/MAX Island Realty, 99 Main Street, Hilton Head Island, 
South Carolina 29926, Office (843) 785-5252 3044, Fax: (843) 785-7188, 
Toll Free: (800) 343-6821 x3044, [email protected], http://www.remaxhiltonhead.com.

[FR Doc. E8-10417 Filed 5-13-08; 8:45 am]
BILLING CODE 4410-11-M