Port Washington Real Estate Board, Inc.; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 901-0094]

Port Washington Real Estate Board, Inc.; Proposed Consent

Agreement With Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, a New York-based brokerage service from

restricting the use of exclusive agency listings, fixing commission

splits between listing and selling brokers, restricting or prohibiting

members from holding open houses or using ``For Sale'' signs,

restricting brokers from advertising free services to property owners,

and excluding from membership brokers who do not operate a full-time

office in the territory served by the Board's multiple listing service.

DATES: Comments must be received on or before September 11, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Michael Bloom or Alan Loughnan, New

York Regional Office, Federal Trade Commission, 150 William Street,

13th Floor, New York, N.Y. 10038. (212) 264-1207.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the following 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 sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying at its principal office in

accordance with Section 4.9(b)(6)(ii) of

[[Page 35908]]

the Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii).

In the matter of Port Washington Real Estate Board, Inc., a

corporation. File No. 9010094.

Agreement Containing Consent Order to Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Port Washington Real Estate Board, Inc.,

a corporation, and it now appearing that Port Washington Real Estate

Board, Inc., hereinafter sometimes referred to as proposed respondent

or ``PWREB'', is willing to enter into an agreement containing an order

to cease and desist from the acts and practices being investigated,

It is hereby agreed by and between PWREB, by its duly authorized

officer and its attorney, and counsel for the Federal Trade Commission

that:

(1) Proposed respondent PWREB is a corporation organized, existing

and doing business under and by virtue of the laws of the State of New

York, with its office and principal place of business located at the

following address: Port Washington Real Estate Board, Inc., care of

Charles Walker, President of Charles E. Hyde Agency, 277 Main Street,

Port Washington, New York 11050.

(2) Proposed respondent admits all the jurisdictional facts set

forth in the draft complaint.

(3) Proposed respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) Any claim under the Equal Access to Justice Act.

(4) This agreement shall not become part of the public record of

the proceeding unless and until it is accepted by the Commission. If

this agreement is accepted by the Commission, it, together with the

draft complaint contemplated thereby, will be placed on the public

record for a period of sixty (60) days and information with respect

thereto publicly released. The Commission thereafter may either

withdraw its acceptance of this agreement and so notify the proposed

respondent, in which event it will take such action as it may consider

appropriate, or issue and serve its complaint (in such form as the

circumstances may require) and decision, in disposition of the

proceeding.

(5) This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft complaint, or that the facts as

alleged in the draft complaint, other than jurisdictional facts, are

true.

(6) This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft complaint and its decision containing the following

order to cease and desist in disposition of the proceeding and (2) make

information public with respect thereto. When so entered, the order to

cease and desist shall have the same force and effect and may be

altered, modified, or set aside in the same manner and within the same

time provided by statute for other orders. The order shall become final

upon service. Delivery by the U.S. Postal Service of the complaint and

decision containing the agreed-to order to proposed respondent's

address as stated in this agreement shall constitute service. Proposed

respondent waives any right it may have to any other manner of service.

The complaint may be used in construing the terms of the order, and no

agreement, understanding, representation, or interpretation not

contained in the order or the agreement may be used to vary or

contradict the terms of the order.

(7) Proposed respondent has read the proposed complaint and order

contemplated hereby. It understands that once the order has been

issued, it will be required to file one or more compliance reports

showing that it has fully complied with the order. Proposed respondent

further understands that it may be liable for civil penalties in the

amount provided by law for each violation of the order after it becomes

final.

Order

I

It is ordered that, for the purposes of this order, the following

definitions shall apply:

(1) ``PWREB'' means the Port Washington Real Estate Board, Inc., or

any affiliated or successor organization comprised of real estate

brokers doing business in PWREB's service area which operates a

multiple listing service.

(2) ``Multiple listing service'' means a clearinghouse through

which member real estate brokerage firms exchange information on

listings of real estate properties and share commissions with other

members.

(3) ``PWREB's service area'' means the territory within which PWREB

provides its multiple listing service.

(4) ``Broker'' means any person, firm, or corporation that, for

another and for a fee or commission, lists for sale, sells, exchanges,

or offers or attempts to negotiate a sale, exchange, or purchase of an

estate or interest in real estate.

(5) ``Member'' means any real estate broker that is entitled to

participate in a multiple listing service offered by PWREB.

(6) ``Applicant'' means any owner or co-owner of a real estate

brokerage firm who is duly licensed as a real estate broker by the

State of New York, and who has applied individually or on behalf of his

or her firm for membership in PWREB's multiple listing service.

(7) ``Listing broker'' means any broker who lists a real estate

property with a multiple listing service pursuant to a listing

agreement with the property owner.

(8) ``Listing agreement'' means any agreement between a real estate

broker and a property owner for the provision of real estate brokerage

services.

(9) ``Selling broker'' means any broker, other than the listing

broker, who locates the purchaser for a listed property.

(10) ``Exclusive agency listing'' means any listing under which a

property owner appoints a broker as exclusive agent for the sale or

lease of the property at an agreed commission, but reserves the right

to sell the property personally to a direct purchaser (one not procured

in any way through the efforts of any broker) at an agreed reduction in

the commission or with no commission owed to the agent broker.

(11) ``Exclusive right to sell listing'' means any listing under

which a property owner contracts to pay the broker an agreed commission

if the property is sold, whether the purchaser is procured by the

broker or any other person, including the property owner.

(12) ``Open house'' means making a particular property available at

a designated time for view by the public, potential buyers, or real

estate brokers, without prior arrangement or appointment.

II

It is further ordered that respondent PWREB, its successors and

assigns, and its directors, officers, committees, agents,

representatives, and employees, directly or indirectly, or through any

corporation, subsidiary, division, or other device, in connection with

the

[[Page 35909]]

operation of a multiple listing service in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, shall

forthwith cease and desist from adopting, maintaining, or enforcing any

rule, policy, or practice, or taking any other action that has the

purpose or effect of:

(A) restricting or interfering with (1) any broker's offering or

accepting any exclusive agency listing; or (2) the publication on a

PWREB multiple listing service of any exclusive agency listing

submitted by a member; provided, however, that nothing contained in

this subpart shall preclude respondent from (a) including a simple

designation, such as a code or symbol, that a published listing is an

exclusive agency listing; or (b) applying reasonable terms and

conditions equally applicable to the publication of any listing,

whether an exclusive agency listing or an exclusive right to sell

listing.

(B) suggesting or fixing any rate, range, or amount of any division

or split of commission or other fees between any listing broker and any

selling broker, or restricting any property owner's participation in

the determination of the division or split of commission or other fees

between any listing broker and any selling broker.

(C) restricting or interfering with the ability of member brokers

or homeowners to hold open houses or to place signs on any property;

provided, however, that nothing contained in this subpart shall

preclude PWREB from requiring its members to comply with local

ordinances governing open houses or use of signs.

(D) restricting or interfering with the ability of its member

brokers to advertise free services to property owners.

(E) conditioning membership in or use of a multiple listing service

operated by PWREB on any applicant or member operating or maintaining a

full-time office, or on such applicant or member operating or

maintaining an office in PWREB's service area; provided, however, that

nothing contained in this subpart shall prohibit respondent from

adopting or enforcing any reasonable and nondiscriminatory policy to

assure that its members are actively engaged in real estate brokerage

and that listings published on respondent's multiple listing service

are adequately serviced.

III

It is further ordered that respondent PWREB shall:

(A) Within thirty (30) days after this order becomes final, furnish

an announcement in the form shown in Appendix A to each member of PWREB

or a multiple listing service operated by PWREB.

(B) Within sixty (60) days after this order becomes final, amend

its by-laws, rules and regulations, and other of its materials to

conform to the provisions of this order and provide each member of

PWREB or a multiple listing service operated by PWREB with a copy of

the amended by-laws, rules and regulations, and other materials.

(C) For a period of three (3) years after this order becomes final,

furnish an announcement in the form shown in Appendix A to any new

member, applicant, or any person who inquires about possible membership

in PWREB or its multiple listing service, within thirty (30) days after

such person's initial application or inquiry.

IV

It is further ordered that respondent PWREB shall:

(A) Within ninety (90) days after this order becomes final, submit

a verified written report to the Federal Trade Commission setting forth

in detail the manner and form in which respondent has complied and is

complying with this order.

(B) In addition to the report required by Paragraph IV(A), annually

for a period of three (3) years on or before the anniversary date on

which this order becomes final, and at such other times as the Federal

Trade Commission or its staff may by written notice to respondent

require, file a verified written report with the Federal Trade

Commission setting forth in detail the manner and form in which

respondent has complied and is complying with this order.

(C) For a period of five (5) years after this order becomes final,

maintain and make available to the Commission staff for inspection and

copying, upon reasonable notice, all documents that relate to the

manner and form in which respondent has complied with this order.

(D) Notify the Federal Trade Commission at least thirty (30) days

prior to any proposed change in respondent, such as dissolution,

assignment, or sale resulting in the emergence of a successor

corporation, the creation or dissolution of subsidiaries, or any other

change in respondent that may affect compliance obligations arising out

of this order.

V

It is further ordered that this Order shall terminate on [insert

date twenty years from the date of issuance].

Appendix A

[Date]

[Respondent's Letterhead]

The Federal Trade Commission has conducted an investigation into

certain rules and practices of the multiple listing service (``MLS'')

operated by the Port Washington Real Estate Board (``PWREB'') that have

been alleged to be unlawful restraints of trade. To avoid litigation,

PWREB has entered into a consent agreement. The agreement is not an

admission that PWREB or any of its members has violated any law. For

your information, PWREB is prohibited from the following practices in

connection with the operation of an MLS:

1. Restricting of interfering with any broker's offering or

accepting an exclusive agency listing, or limiting the publication on

the MLS of any exclusive agency listing entered into by an MLS member.

2. Requiring or fixing the rate, range or amount of any split or

division of a commission or other fees between a listing broker and a

selling broker, or restricting any property owner's participation in

the determination of the split or division of any commission or other

fees between the listing and selling brokers.

3. Restricting or interfering with the ability of member brokers or

homeowners to conduct open houses or to place signs on property.

4. Restricting or interfering with the ability of member brokers to

advertise free services to homeowners.

5. Requiring as a condition of membership in its MLS that a member

or applicant for membership operate an office full-time or engage in

real estate brokerage full-time in PWREB's service area.

----------------------------------------------------------------------

President

Port Washington Real

Estate Board, Inc.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from the Port Washington Real Estate Board,

Inc., which operates a multiple listing service serving the area

surrounding Port Washington, a community in Nassau County (Long

Island), New York.

The proposed consent order has been placed on the pubic record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

[[Page 35910]]

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

The complaint alleges that the Port Washington Real Estate Board,

Inc. (``PWREB''), in combination with its member brokers, has through

its multiple listing service adopted certain rules and policies and

engaged in certain practices that have restrained trade in the

provision of residential real estate brokerage services in PWREB's

service area. The complaint alleges that this conduct violates Section

5 of the Federal Trade Commission Act.

PWREB has signed a consent agreement to the proposed consent order

that prohibits it from restricting or interfering with any member

broker's offering or accepting exclusive agency listings, or

restricting the publication on its multiple listing service of

exclusive agency listings submitted by a member. An exclusive agency

listing is defined as a listing under which a property owner appoints a

broker as exclusive agent for the sale or lease of the property at an

agreed commission, but reserves the right to sell the property to a

direct purchaser (one not procured through the efforts of a broker) at

an agreed reduction in the commission or with no commission owed to the

agent broker.

The proposed order also prohibits PWREB from suggesting or fixing

the range or amount of any division or split of commissions between a

listing broker and a selling broker, or restricting a property owner's

participation in the determination of the commission split between the

brokers. A selling broker is defined as any broker, other than the

broker with whom the property is listed, who locates the purchaser for

a listed property.

The proposed consent order further prohibits PWREB from restricting

or interfering with the ability of member brokers or homeowners to hold

open houses or place signs on a property (provided, however, that PWREB

may require members to comply with any local ordinances covering open

houses or signs). The order also prohibits PWREB from restricting or

interfering with the ability of member brokers to advertise free

services to property owners.

Finally, the proposed order prohibits PWREB from conditioning

membership in or use of a PWREB multiple listing service on a broker

operating a full-time office, or operating an office in the territory

served by PWREB. The order provides, however, that PWREB may adopt a

reasonable and nondiscriminatory policy to assure that members are

actively engaged in real estate brokerage and that listings published

on the multiple listing service are adequately serviced.

The proposed order requires PWREB to mail a letter to its members

(and for three years, to all new members, applicants, or persons who

inquire about possible membership) summarizing the provisions of the

proposed order. The order also requires PWREB to modify its by-laws,

rules, and regulations to conform to the provisions of the proposed

order, and to provide members with copies.

The proposed order provides that the order shall terminate 20 years

after the date of its issuance by the Commission.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 95-17058 Filed 7-11-95; 8:45 am]

BILLING CODE 6750-01-M