United States v. Greater Pittsburgh Board of Realtors; Motion of the United States for Modification of the Final Judgment, 39792-39796 [05-13532]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 70, Number 131 (Monday, July 11, 2005)]
[Notices]
[Pages 39792-39796]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-13532]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Greater Pittsburgh Board of Realtors; Motion of 
the United States for Modification of the Final Judgment

    Notice is hereby given that a Motion for Modification of the Final 
Judgment, proposed Final Judgment and proposed Order have been filed 
with the United States District Court for the Western District of 
Pennsylvania. United States of America v. Greater Pittsburgh Board of 
Realtors, Civil Action No. 72-499. The Realtors Association of 
Metropolitan Pittsburgh (``RAMP''), the successor to the Greater 
Pittsburgh Broad of Realtors, is bound by a Final Judgment that settled 
allegations defendants published, circulated, and adhered to agreed-
upon uniform rates of commissions and fees in violation of the Sherman 
Act. The Final Judgment was entered on May 21, 1973 and prohibited the 
defendants from agreeing on prices and from publishing any rate or 
commission for the sale of real estate.
    RAMP publishes Pittsburgh Homes Guide by Realtors, a real estate 
listings magazine. Member real estate professionals purchase 
advertising to describe the services they offer. At least one firm 
offering real estate brokerage services has attempted to purchase 
advertising that would contain information about discounted fees. RAMP 
has informed that firm that it will not published the advertising 
because the Final Judgment prohibits it. The modified consent decree 
would strike that provision and add a provision making it clear that 
RAMP can publish information about real estate commissions and fees set 
by an individual broker. If approved by the Court, the new decree will 
allow the public access to more information about different kinds of 
fees charged by real estate professionals who help sell homes. The 
decree will still serve its original purpose: to enjoin RAMP and its 
member brokers from agreeing on prices. Copies of the Motion, proposed 
Final Judgment and Order are available for inspection at the Department 
of Justice in Washington, DC in Room 200, 325 Seventh Street, NW., on 
the Internet at https://www.usdoj.gov/atr, and at the Office of the 
Clerk of the United States District Court for the Western District of 
Pennsylvania, 829 United States Courthouse, 7th and Grant Street, 
Pittsburgh, PA 15219.
    Public comment is invited within 30 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to John R. Read, Chief, Litigation III Section, Antitrust Division, 
Department of Justice, 325 7th ST., NW., Suite 300, Washington, DC 
20530, (telephone: (202) 616-5935).

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

United States District Court for the Western District of Pennsylvania

    United States of America, Plaintiff, v. Greater Pittsburgh Board of 
Realtors, East Suburban Multilist Real Estate Brokers, Inc., South 
Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh 
Multilist Council, Defendants.
    Civil No. 72-499
    Filed:
    Entered:
    The United States moves this Court to modify the Final Judgment 
entered in this case.

I. Background

    The Complaint, filed on June 21, 1972, alleged that the defendants 
violated Section 1 of the Sherman Act by agreeing to fix commission 
rates in connection with the sale of property in the Pittsburgh 
metropolitan area. The complaint alleged, inter alia, that the 
defendants published, circulated, and adhered to the agreed-upon 
uniform rates of commissions and fees. On April 16, 1973, the United 
States filed its proposed consent judgment. The Court entered the 
judgment on May 21, 1973.
    The Realtors Association of Metropolitan Pittsburgh (``RAMP'') is 
the successor-in-interest to defendant Greater Pittsburgh Board of 
Realtors, RAMP is a local real estate board which governs the 
membership and professional responsibility of the Realtors who list and 
show properties in the Pittsburgh metropolitan area. Pursuant to 
section III of the Final Judgment, the consent decree is binding on 
RAMP.
    Traditionally, real estate agents have charged sellers of property 
a commission based on a percentage of the sales price of the property 
sold. The majority of real estate agents will price their services in 
this manner. However, some real estate agents are now using alternative 
business models and charging flat fees for their services. Typically, 
these models offer property sellers savings vis a vis traditional 
commission based services. At least one discount broker, Help-U-Sell 
Dixie Realty (``HUS''), has entered the Pittsburgh market with an 
alternative business model.

[[Page 39793]]

    In order to educate consumers about the availability of 
alternatively priced services, discount brokers need to advertise 
information about their fees and service plans. RAMP currently 
publishes Pittsburgh Homes Guide by Realtors (``Homes Guide''), a real 
estate listings magazine. The magazine contains advertisements 
purchased by member real estate professionals with information about 
available homes for sale and the services they provide. Homes Guide is 
the only real estate advertising publication covering all of the 
Pittsburgh metropolitan area. Homes Guide is a popular vehicle for 
Pittsburgh area real estate brokers to advertise their services to 
consumers and is significantly less expensive than newspaper 
advertising.
    HUS has attempted to advertise fees and potential savings in Homes 
Guide. RAMP has informed HUS that it will not publish advertising 
containing commission rates or cost savings claims because the Final 
Judgment prohibits such publication. Section IV(C) of the Final 
Judgment enjoined the defendants from ``[a]dopting, suggesting, 
publishing or distributing any rate or amount of commissions or other 
fees for the sale, lease or management of real estate. * * *''
    Section IV(C) of the Final Judgment served a useful purpose and was 
entered to remedy the defendants' alleged price fixing which 
artificially raised prices above their competitive level. The intent of 
the decree was to eliminate collusive behavior and promote competitive 
commissions among real estate brokers. With the growth of discount 
brokerage services, however, the provision no longer serves competition 
and has the effect of restricting legitimate advertising of competitive 
rates. The United States, therefore, moves to eliminate the words 
``publishing'' and ``distributing'' from section IV(C) of the judgment 
so that RAMP is not prohibited from publishing competing commission 
rates.
    Because IV(C), due to changed circumstances, now serves principally 
to inhibit competition, the United States moves to modify section IV(C) 
to enjoin the defendants only from:

    (C) Adopting or suggesting any rate or amount of commissions or 
other fees for the sale, lease or management of real estate, 
provided, however, that surveys and studies may be conducted, 
published and distributed where not forbidden by Paragraph D of this 
Section IV of the Modified Final Judgment.

To further clarify the decree, the United States moves to amend 
paragraph IX, which begins, ``[n]othing in this final Judgment shall be 
deemed to prohibit,'' to add the following language:

    (C) The publication of advertisements that include the 
commission rates of individual brokers, provided that the Defendants 
shall not adopt or suggest rates as proscribed by Section IV(C).

    To clarify that RAMP has not consented to the Modified Final 
Judgment, the United States moves to amend the preamble paragraphs of 
the Final Judgment. Specifically, the United States moves to replace 
each instance of the phrase ``this Final Judgment'' with ``the original 
Final Judgment.'' In addition, the United States seeks to add the 
clause, ``and upon the United States' sole motion to modify the Final 
Judgment.

II. The Legal Standards Applicable to Modification of an Antitrust 
Judgment With the Consent of the Government

    This Court has jurisdiction to modify the Final Judgment pursuant 
to Paragraph XI of the Judgment, the Federal Rules of Civil Procedure, 
Fed. R. Civ. P. 60(b)(5), and ``principles inherent in the jurisdiction 
of the chancery.'' United States v. Swift & Co., 286 U.S. 106, 114 
(1932); see also In re Grand Jury Procedures, 827 F. 2d 868, 873 (2d 
Cir. 1987). Where, as here, the United States, as plaintiff, 
unilaterally proposes a modification to a consent judgment and the 
modification does not further restrict the defendants' rights or 
actions, the Court should apply the same standard as when the United 
States and defendants both consent to a modification. When the 
government unilaterally seeks to modify a decree, the court evaluates 
the modifications in light of both how the additional burdens imposed 
by the proposed modifications affect the defendant's due process rights 
and the public interest. Cf. Duran v. Elrod, 760 F. 2d 756, 759 (7th 
Cir. 1985). However, where both the government and the defendant 
consent to modifications, the court focuses solely on the public 
interest aspects of the calculus. See, e.g., United States v. W. Elec. 
Co., 993 F. 2d 1572, 1576 (D.C. Cir. 1993); United States v. W. Elec. 
Co., 900 F. 2d 283, 305 (D.C. Cir. 1990); United States v. Loew's, 
Inc., 783 F. Supp. 211, 213 (S.D.N.Y. 1992); United States v. Columbia 
Artists Mgmt., Inc., 662 F. Supp. 865, 869-70 (S.D.N.Y. 1987) (citing 
United States v. Swift & Co., 1975-1 Trade Cas. (CCH) ] 60.201, at 
65.702-03 (N.D. III 1975)). Here, the proposed modifications do not 
further impinge the defendant's rights, so the court need only evaluate 
the proposed modifications in light of the public interest. Thus, the 
issue before the Court is whether modifications is in the public 
interest. This is the same standard that a district court applies in 
reviewing an initial consent judgment in a government antitrust case. 
The judiciary's role in determining whether the initial entry of a 
consent decree is in the public interest, absent a showing of abuse of 
discretion or a failure to discharge its duty on the part of the 
government, is to ``inquire * * * into the purpose, meaning, and 
efficacy of the decree.'' United States v. Microsoft, 56 F. 3d 1448, 
1462 (D.C. Cir. 1995).
    The purpose of the antitrust laws is to protect competition. See, 
e.g., United States v.  Penn-Olin Chem. Co., 378 U.S. 158, 170 (1964) 
(antitrust laws reflect ``a national policy enunciated by the Congress 
to preserve and promote a free competitive economy''). The relevant 
question before the court therefore is whether modification of the 
Judgment would serve the public interest in ``free and unfettered 
competition as the rule of trade.'' N. Pac. Ry Co. v. United States, 
356 U.S. 1, 4 (1958) see also United States v. W. Elec. Co., 900 F. 2d 
at 308; United States v. Am Cyanamid, 719 F.2d 558, 565 (2d Cir. 1983), 
cert denied, 405 U.S. 1101 (1984); United States v. Columbia Artists 
Mgmt., 66 F. Sup. 865, 870 (S.D.N.Y. 1987). Here, the Court should 
modify the decree as requested because it will remove a legal roadblock 
to brokers who want to advertise lower commissions to the benefit of 
home buyers and sellers.
    Although the proposed modification is designed to allow RAMP more 
freedom in choosing what it can publish in its magazine, RAMP has 
declined to join the United States in its motion to modify the Final 
Judgment and has failed to offer an explanation to the United States as 
to why the public interest is served by the restriction.

III. The Proposed Modification Satisfies the Public Interest Standard

    The purpose behind the consent decree's prohibition on advertising 
stemmed from the publication of prices after the defendants had agreed 
on commission rates among themselves. The primary concern with the 
conduct that led to the decree was the agreement on prices, not the 
publication of unilaterally determined prices. Modifying the consent 
decree as the United States' proposes will permit RAMP to allow price 
advertising but will still enjoin RAMP from ``adopting'' or 
``suggesting'' fees for real estate services.
    Further, ``[r]estriction on [truthful] advertising are a form of 
output restriction in the production of

[[Page 39794]]

information useful to consumers.'' \1\ Modifying the consent decree as 
the United States proposes will satisfy the public interest standard 
because price competition will be enhanced by allowing consumers access 
to more information about different prices charged by individual real 
estate agents. Further, the public will benefit from access to 
information about differing rate structures and fees charged by 
different agents and such information will reduce search costs by 
consumers seeking real estate services.
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    \1\ Philip Areeda, Antitrust Law, ] 2023b1, 184, Volume XI (2nd 
Ed.).
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IV. Public Comment Period

    The United States does not believe that this modification is 
subject to the Antitrust Procedures and Penalties Act (``Tunney Act''), 
15 U.S.C. 16(b)-(h). However, in this case, the United States intends 
to follow the comment procedures outlined in the attached Explanation 
of Procedures.
    It is the policy of the United States that an appropriate effort be 
taken to notify potentially interested persons of the pendency of the 
motion. In this case, the United States will publish a notice 
announcing the motion to modify in the Federal Register and the 
Pittsburgh Post Gazette, summarizing the motion and the proposed 
modified final judgment, describing the procedures for obtaining copies 
of the relevant papers and inviting the submission of comments within 
30 days of publication. Within a reasonable time after the comment 
period, the United States will file any comments it receives and its 
responses with the Court. The United States requests that the Court not 
rule upon the motion until the United States has filed any comments and 
its responses or has notified the Court that no comments were received. 
The procedure is designed to notify all potentially interested persons 
that a motion to modify the Final Judgment is pending and provide them 
adequate opportunity to comment thereon.

V. Conclusion

    For the foregoing reasons, the United States requests that the 
Court enter the proposed Order Modifying Judgment to enjoin, the 
defendants from:

    (C) Adopting or suggesting any rate or amount of commissions or 
other fees for the sale, lease management of real estate; provided, 
however, that surveys and studies may be conducted, published and 
distributed where not forbidden by Paragraph D of this Section IV of 
the Modified Final Judgment.

and to amend paragraph IX, which begins, ``[n]othing in this Final 
Judgment shall be deemed to prohibit,'' to add the following language:

    (C) The publication of advertisements that include the 
commission rates of individual brokers, provided that the Defendants 
shall not adopt or suggest rates as proscribed by Section IV(C).

and to amend the preamble paragraphs to state:

    Plaintiff, United States of America, having filed its Complaint 
herein on June 21, 1972, and Plaintiff and Defendants by their 
respective attorneys, having consented to the making and entry of 
the original Final Judgment, without admission by any party in 
respect to any issue and without this Final Judgment constituting 
evidence or an admission by any party hereto with respect to any 
such issue;
    NOW, THEREFORE, before any testimony has been taken herein, 
without trial or adjudication of any issue of fact or law herein, 
and upon the consent of the parties to the original Final Judgment, 
and upon the United States' sole motion to modify the Final 
Judgment, it is hereby ORDERED, ADJUDGED and DECREED as follows:
    Dated this 28th day of June, 2005.
 Respectfully Submitted,

For Plaintiff United States of America

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Leslie Peritz,
PA Bar No. 87539, Litigation II Section, Antitrust Division, U.S. 
Department of Justice, 1401 H Street, NW., Ste. 3000, Washington, DC 
20530, 202-514-9602.

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Erika L. Meyers,
Joan Hogan,
Litigation III Section, Antitrust Division, U.S. Department of 
Justice, 325 7th St., NW., Ste. 300, Washington, DC 20530, 202-514-
8374.

United States District Court for the Western District of Pennsylvania

    United States of America, Plaintiff, v. Greater Pittsburgh Board of 
Realtors, East Suburban Multilist Real Estate Brokers, Inc., South 
Hills Multilist, Inc., North Suburban Multilist, and Greater Pittsburgh 
Multilist Council, Defendants.
Civil No. 72-499
Filed
Entered:

Modified Final Judgment

    Plaintiff, United States of America, having filed its Complaint 
herein on June 21, 1972, and Plaintiff and Defendants by their 
respective attorneys, having consented to the making and entry of the 
original Final Judgment, without admission by any party in respect to 
any issue and without this Final Judgment constituting evidence or an 
admission by any party hereto with respect to any such issue;
    Now, therefore, before any testimony has been taken herein, without 
trial or adjudication of any issue of fact or law herein, and upon the 
consent of the parties to the original Final Judgment, and upon the 
United States' sole motion to modify the Final Judgment, it is hereby
    Ordered, adjudged and decreed as follows:

I

    For the purposes of this case, this Court has jurisdiction over the 
subject matter of this action and of the parties hereto. For purposes 
of this case, the Complaint states claims upon which relief may be 
granted against the Defendants under Section I of the Act of Congress 
of July 2, 1890, as amended (15 U.S.C. 1), commonly known as the 
Sherman Act.

II

    As used in this Final Judgment:
    (A) ``Multiple Listing Service'' shall mean any plan or program 
operated by a Defendant for the circulation of real property listings 
among members of such Defendant; and
    (B) ``Person'' shall mean any individual, partnership, firm, 
association, corporation, real estate agency, member of the Defendants 
or other business or legal entity.

III

    The provisions of this Final Judgment applicable to each of the 
Defendants shall also apply to each of their respective subsidiaries, 
successors and assigns; to each of their directors, officers, agents 
and employees, when acting in such respective capacities; and, in 
addition, to all persons in active concert or participation with any of 
them who receive actual notice of this Final Judgment by personal 
service or otherwise.

IV

    Each of the Defendants, whether acting unilaterally or in concert 
or agreement with any other person, is enjoined and restrained from:
    (A) Fixing, establishing or maintaining any rate or amount of 
commissions or other fees for the sale, lease or management of real 
estate;
    (B) Urging, recommending or suggesting that any of its members or 
any other person adhere to any rate or amount of commissions or other 
fees for the sale, lease or management of real estate;
    (C) Adopting or suggesting any rate or amount of commissions or 
other fees for the sale, lease or management of real estate; provided, 
however, that surveys

[[Page 39795]]

and studies may be conducted, published and distributed where not 
forbidden by Paragraph D of this Section IV of this Final Judgment;
    (D) Conducting, publishing or distributing, for a period of ten 
(10) years from the date of entry of this Final Judgment, any survey or 
study relating to rates or amounts of commissions or other fees for the 
sale, lease or management of real estate or ranges thereof; and 
thereafter where the purpose or effect of any such survey or study 
would be to fix, establish, stabilize or maintain any rate or amount or 
ranges of commissions or other fees for the sale, lease or management 
of real estate;
    (E) Adopting, adhering to, maintaining, enforcing or claiming any 
rights under any by-law, rule, regulation, plan or program which 
restricts or limits the right of any of its members or any other real 
estate dealer in accordance with his own business judgment to agree 
with his client on any commissions or fees for the sale, lease or 
management of real estate;
    (F) Taking any punitive action against any of its members where 
such action is based upon the member's failure or refusal to adhere to 
any rate or amount of commissions or fees for the sale, lease or 
management of real estate;
    (G) Interfering with or limiting its members from maintaining part-
time salesmen in their employ, or interfering with the terms of the 
relationship between its members and their salesmen where to do so 
would be contrary to or inconsistent with any provision of this Final 
Judgment;
    (H) Fixing, maintaining, suggesting or enforcing any division or 
split between a selling broker and listing broker of commissions or 
other fees for the sale, lease or management of real estate;
    (I) Refusing to receive, process or distribute a listing of any 
real estate by any member in a Multiple Listing Service because of the 
rate or amount of commissions or other fees for the sale, lease or 
management of real estate thereon; and
    (J)(1) Boycotting, agreeing to boycott, or threatening to boycott 
any person; and/or (2) refusing to do business with any person where 
such refusal would be contrary to or inconsistent with any provision of 
this Final Judgment.

V

    Each Defendant is ordered to eliminate from all rules, by-laws, 
regulations, contracts and other forms, any schedule of rates or 
amounts of commissions or other fees for the sale, lease or management 
of real estate and any provision requiring or suggesting a fixed 
division of such fees between a listing broker and a selling broker. 
Each Defendant is also ordered to insert in all rules, by-laws, 
regulations, contract and other forms a statement, prominently situated 
in all capital letters, that rates of commissions or other fees for the 
sale, lease or management of real estate shall be negotiable between a 
broker and his client.

VI

    (A) Defendant Greater Pittsburgh Board of Realtors shall, upon 
application made, admit to membership any person duly licensed by the 
appropriate governmental authority to sell real estate in Pennsylvania 
as a real estate salesman or as a real estate broker and each of the 
other Defendants shall, upon application made, admit to membership any 
person duly licensed by the appropriate governmental authority to sell 
real estate in Pennsylvania as a real estate broker; provided, however, 
that the Defendants may adopt and maintain reasonable and 
nondiscriminatory written requirements for membership, not otherwise 
inconsistent with the provisions of this Final Judgment;
    (B) Each of the Defendants is ordered and directed within ninety 
(90) days from the date of entry of this Final Judgment to amend its 
by-laws, rules and regulations by eliminating therefrom any provision 
which is contrary to or inconsistent with any provision of this Final 
Judgment; and
    (C) Upon amendment of its by-laws, rules and regulations as 
aforesaid, each Defendant is thereafter enjoined and restrained from 
adopting, adhering to, enforcing or claiming any right under any by-
law, rule or regulation which is contrary to or inconsistent with any 
of the provisions of this Final Judgment.

VII

    Each of the Defendants is ordered and directed to mail within sixty 
(60) days after the date of entry of this Final Judgment, a copy of 
this Final Judgment to each of its members and to the persons listed in 
Schedule (A) attached to this Final Judgment and within one hundred and 
twenty (120) days from the aforesaid date of entry to file with Clerk 
of this Court, an affidavit setting forth the fact and manner of the 
compliance with this Section VII and Sections V and VI (B) above.

VIII

    For a period of ten (10) years from the date of entry of this Final 
Judgment, each Defendant is ordered to file with the Plaintiff on each 
anniversary date of such entry, a report setting forth the steps which 
it has taken during the prior year to advise the Defendants' 
appropriate officers, directors, agents and employees to its and their 
obligations under this Final Judgment.

IX

    Nothing in this Final Judgment shall be deemed to prohibit:
    (A) The publication or circulation by a Multiple Listing Service of 
information, in connection with bona fide efforts to sell real estate, 
concerning the commission which a broker has agreed upon with his 
client, or the percentage division thereof which a listing broker has 
agreed to pay a selling broker, arrived at in accordance with this 
Final Judgment; or
    (B) The adoption and enforcement by a Multiple Listing Service of 
rules requiring (i) that neither the commission nor the percentage 
division thereof, arrived at in accordance with this Final Judgment and 
specified for a listing not to exceed a reasonable period, may be 
altered without the consent of both the listing and the selling broker, 
and (ii) that the recipient of any such commission promptly pay over to 
the listing or selling broker, as appropriate, the percentage division 
of the commission as specified or as otherwise agreed upon by the 
listing and selling broker; or
    (C) The publication of advertisements that include the commission 
rates of individual brokers, provided that the Defendants shall not 
adopt or suggest rates as proscribed in Section IV(C).

X

    For the purpose of determining or securing compliance with this 
Final Judgment:
    Duly authorized representatives of the Department of Justice shall, 
upon written request of the Attorney General or the Assistant Attorney 
General in charge of the Antitrust division, and on reasonable notice 
to a defendant made to its principal office, be permitted, subject to 
any legally recognized privilege, and subject to the presence of 
counsel if so desired:
    (1) Access during its office hours to all books, ledgers, accounts, 
correspondence, memoranda, and other records and documents in the 
possession of or under the control of such defendant relating to any 
matters contained in this Final Judgment; and
    (2) Subject to the reasonable convenience of such defendant, and 
without restraint or interference from it to interview officers or 
employees of such defendant regarding any such matters.

[[Page 39796]]

    Upon such written request, each defendant shall submit such reports 
in writing, under oath if so requested, to the Department of Justice 
with respect to any of the matters contained in this Final Judgment as 
may from time to time be requested.
    No information obtained by the means provided in this Section X 
shall be divulged by any representative of the Department of Justice to 
any person, other than a duly authorized representative of the 
Executive Branch of plaintiff, except in the course of legal 
proceedings to which the United States of America is a party for the 
purpose of securing compliance with this Final Judgment or as otherwise 
required by law.

XI

    Jurisdiction is retained by this curt for the purpose of enabling 
any of the parties to this Final Judgment to apply to this court at any 
time for such further orders and directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance therewith; and for the punishment of 
violations thereof.

Dated:

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United States District Judge


[FR Doc. 05-13532 Filed 7-8-05; 8:45 am]
BILLING CODE 4410-11-M