Lawyers Title Corp.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 971-0115]

Lawyers Title Corp.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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

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 that accompanies the consent agreement 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 May 4, 1998.

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:

Patrick Roach, FTC/S-2627, 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 and Sec. 2.34 of the

Commission's 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 the accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) 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 February 24, 1998), on the World Wide Web, at ``http://

www.ftc.gov/os/actions/htm.'' A paper copy can be obtained from the FTC

Public Reference Room, Room H-130, Sixth Street and Pennsylvania

Avenue, NW., Washington, DC 20580, either in person or by calling (202)

326-3627. 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 Sec. 4.9(b)(6)(ii)

of the Commission's rules of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement containing a proposed

[[Page 10626]]

Consent Order from Lawyers Title Corporation (``LTC''), which is

designed to remedy the anticompetitive effects arising from LTC's

acquisition of the title insurance operations of Reliance Group

Holdings, Inc. (``Reliance Group''), including Reliance Group's

indirect subsidiaries Commonwealth Land Title Insurance Company and

Transnation Title Insurance Company (collectively ``Commonwealth'').

Under the terms of the agreement LTC will be required to divest certain

assets known as ``title plants'' in twelve counties or local

jurisdictions in various parts of the United States. Title plants are

privately owned collections of records and/or indices that are used by

abstractors, title insurers, title insurance agents, and others to

determine ownership of an interests in real property in connection with

the underwriting and issuance of title insurance policies and for other

purposes.

The proposed Consent Order has been placed on the public record for

60 days so that the Commission may receive comments from interested

persons. Comments received during this period will become part of the

public record. After 60 days, the Commission will again review the

agreement and the comments received, and will decide whether it should

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

order.

On August 20, 1997, LTC entered into an agreement to acquire the

title insurance operations of Reliance Group in exchange for

consideration to Reliance Group valued at approximately $456 million,

consisting of cash, a minority voting interest in LTC, and additional

non-voting convertible preferred shares of LTC. The proposed Complaint

alleges that the acquisition, if consummated, would constitute a

violation of section 7 of the Clayton Act, as amended, 15 U.S.C. 18,

and section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. 45, in local markets for title plant services in the following

counties or local jurisdictions in the United States: Washington, DC.;

Brevard County, Florida; Broward County, Florida; Clay County, Florida;

Indian River County, Florida; Pasco County, Florida; St. Johns County,

Florida; St. Lucie County, Florida; Ingham County, Michigan; Oakland

County, Michigan; Wayne County, Michigan; and St. Louis City & County,

Missouri.

Title plants are privately-owned collections of title information

obtained from public records that can be used to conduct title searches

or otherwise ascertain information concerning ownership of or interests

in real property. Title plants typically contain summaries or copies of

public records or documents (often in a format that is comparatively

easily to store and readily retrievable) as well as indices to

facilitate locating relevant records that pertain to a particular

property. Title plants permit users to obtain real property ownership

information with significantly greater speed and efficiency than by

consulting the original public records, which may be located in a

number of separate public offices (e.g. offices of the county recorder,

tax authorities, and state and federal courts), may be stored in an

inconvenient form, and may be indexed in a fashion that makes it

difficult to readily research a particular property. Because of the

county-specific way in which title information is generated and

collected and the highly local character of the real estate markets in

which the title plant services are used, geographic markets for title

plant services are highly localized, consisting of the county or local

jurisdiction embraced by the real property information contained in the

title plant.

In each of the local jurisdictions named in the Complaint, the

market for title plant services is highly concentrated and LTC and

Reliance Group are direct competitors in the sale or provision of title

plant services. In each of the local jurisdictions named, there are no

commercially reasonable substitutes for title plant services. For a

number of reasons, including the relatively large fixed costs

associated with building and maintaining title plants, entry into the

market for title plant services in each of the local jurisdictions

named is difficult or unlikely to occur at a sufficient scale to deter

or counteract the effect of the acquisition. For these reasons, the

Complaint alleges that in each of the named local jurisdictions the

effect of the acquisition may be substantially to lessen competition

by, among other things, eliminating direct actual competition between

LTC and Reliance Group in title plant services, increasing the

likelihood that LTC will unilaterally exercise market power in title

plant services, and increasing the likelihood of collusion among

competing providers of title plant services.

The Consent Order requires LTC to divest the pre-acquisition title

plant interests of either LTC or Reliance Group in each of the

identified local jurisdictions to a buyer or buyers approved by the

Commission. The divestitures are required to be completed within six

months after the respondent signs the Consent Order agreement. In

addition to the title plant assets themselves, the respondent also is

required to divest all user or access agreements pertaining to the

divested title plants. The respondent is further required for up to

three years to continue to provide the buyers of the title plants with

computer and other services previously provided for each divested title

plant, and to assist the purchaser in transferring such services to

another provider. In the period prior to divestiture, the respondent is

required to maintain the viability and marketability of the properties,

including updating the title plants in the same fashion as before the

acquisition and maintaining in effect all user contracts and

relationships.

The Consent Order includes a provision permitting the Commission to

appoint a trustee to accomplish the divestiture of required plant

interests if the divestitures are not accomplished by the respondent

within the six-month period. The Consent Order also includes a

requirement that for ten years the respondent provide the Commission

with prior notice of future title plant acquisitions by the respondent

in the counties where divestitures are required, if at the time of the

acquisition the respondent continues to have an interest in a title

plant serving the county. A prior notice provision is appropriate in

this matter because the small transaction size of most individual title

plant acquisitions is below the threshold of reportability under the

Hart-Scott-Rodino Act (Clayton Act section 7A, 15 U.S.C. 18a, as

amended) and because there is a creditable risk that the respondent

will, but for an order to the contrary, engage in otherwise

unreportable anticompetitive mergers.\1\

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

\1\ See Statement of FTC Policy Concerning Prior Approval and

Prior Notice Provisions (June 21, 1995).

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

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

proposed Consent Order, and it is not intended to constitute an

official interpretation of the agreement and proposed Consent Order or

to modify in any way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 98-5533 Filed 3-3-98; 8:45 am]

BILLING CODE 6750-01-M