September 28, 2004
Antitrust Modernization Commission
Attention: Public Comments
1001 Pennsylvania Ave., NW
Suite 800 South
Washington, DC 20004-2505
By email: comments@amc.gov
Gentlemen:
We are submitting the following recommendations on antitrust laws and
related issues that are appropriate for the Commission to study pursuant to
the Antitrust Modernization Commission Act of 2002, Pub. L. No. 107-273, §§
11051-60, 116 Stat. 1856. The Commission is charged by statute:
(1) to examine whether the need exists to modernize the antitrust laws and
to identify and study related issues;
(2) to solicit views of all parties concerned with the operation of the
antitrust laws;
(3) to evaluate the advisability of proposals and current arrangements with
respect to any issues so identified; and
(4) to prepare and submit to Congress and the President a report which is to
“contain[] a detailed statement of the findings and conclusions of the
Commission, together with recommendation for legislative or administrative
action the Commission considers to be appropriate.”
The American Homeowners Grassroots Alliance (AHGA) submits these comments on
behalf of the more than 70 million U.S. homeowners. AHGA is a national
consumer advocacy organization that focuses on real estate and other policy
that has significant impact on homeowners and home ownership. The Alliance
commends Congress for creating the Antitrust Modernization Commission and
wishes members of the Commission great success in this extremely important
endeavor.
There is clearly a need to modernize U.S. antitrust laws and to identify and
study other issues related to the purpose of antitrust laws, which are
intended to protect consumers. Much has changed since the last major
revision of U.S. antitrust laws. Electronic commerce has become a major
factor in our economy, societal values have changed, and antitrust laws
themselves have been refined by judicial interpretation.
One thing that has not changed, and should not change in the future, is the
intent of antitrust laws. The ultimate purpose of the nation’s antitrust
laws are to protect consumers, and AHGA believes that purpose should be the
focus of any revisions in antitrust laws and/or the creation of new
antitrust or consumer protection laws. Their purpose is unrelated to the
interests of any business or a category of businesses. Whether or not
revisions of existing antitrust laws or the creation of new antitrust or
consumer protection laws economically favor, disfavor, or are neutral to the
interests of some companies or groups of companies is not material. The
objective of the exercise is to protect consumers by increasing competition
and eliminating of barriers to competition, and some business models may
have to be modified to achieve that goal.
In that spirit AHGA makes the following recommendations to the Antitrust
Modernization Commission:
Electronic Commerce. The Commission should recommend the elimination of
numerous existing barriers to competition in electronic commerce. Electronic
Commerce is of rapidly growing importance to homeowners. The potential
efficiency is of particular benefit to families where both spouses work, as
is increasingly the case with homeowners. The majority of Americans now use
the Internet as a tool in buying and selling homes. Home buyers obviously
would like maximum information about homes on the market, including such
things as home addresses, so they can use that information as part of their
screening process. It is obviously in the interest of home sellers to
provide all relevant data on homes for sale to prospective buyers.
The majority of U.S. homes are still marketed through traditional real
estate channels. While detailed information is provided about homes for sale
on multiple listing forms, and is also provided about properties marketed on
“for sale by owner” (fsbo) websites, some of the desired information, such
as the home addresses, is unavailable on web sites of multiple listing
services. Real estate organizations whose members have a fiduciary duty to
sellers to provide market exposure often own and/or control those websites.
Those same real estate organizations often seek to limit the dissemination
of data on homes for sale by third parties, such as virtual office websites
(VOWs). AHGA believes that many of these practices are barriers to commerce.
The Alliance urges the Commission to review these practices, and to
recommend such changes in laws as needed to assure that home sellers and
buyers have full and complete access to all data relevant to real estate
transactions.
Regulatory Barriers to Competition: Many states have created barriers to
competition, and some of them are absolute barriers. For example most state
laws prohibit automobile dealers from selling new cars on the Internet, and
other products, such as wine and spirits, are prohibited from Internet sale
in some states. At the federal level homeowners and other consumers are
precluded from purchasing prescription drugs from pharmacies in other
countries by mail order or over the Internet. There appears to be no reason
that such purchases should not be allowed as long as some common sense
precautions applied to the practice. The Commission should investigate these
and other regulatory barriers and recommend modifications to existing laws,
or the creation of appropriate new laws to stop such anticompetitive and
anti-consumer practices.
Erosion of the Law of Real Estate Agency: Traditional real estate agency
relationships recognized the fiduciary responsibility of real estate brokers
and agents to their clients. As the practice of exclusive buyer brokerage
expanded in recent years, representatives of traditional real estate
organizations have set out at the state level to create laws legalizing
“dual agency”, that would allow a broker and agent to simultaneously
represent both home buyers and sellers. Among the fiduciary responsibilities
of a real estate broker and agent is to help negotiate for the best price
and terms for their clients. When the broker/agent simultaneously represents
a buyer and seller of the same property getting the best price and terms for
both clients is mutually exclusive. We urge the commission to examine this
issue and to recommend a federal law pre-empting state “dual agency” laws
should it conclude that consumers are being denied full benefit of real
estate broker and agent fiduciary responsibilities.
Tie-in arrangements between real estate trade associations and multiple
listing service (MLS) organizations would also appear to undermine real
estate agency. Those arrangements require membership in the local real
estate trade association as a precondition for the use of the MLS, which is
generally recognized as the most powerful real estate marketing tool. As in
the previous example organizations with a fiduciary responsibility to home
sellers are engaging in practices that serve to limit the use of the MLS to
the detriment of both buyers and sellers. There are pending lawsuits and
contradictory prior court decisions on this issue, and a bright line
prohibition of this practice would be timely.
Real Estate Financing: There are several potential antitrust issues related
to real estate financing. There appears to be insufficient competition in
title insurance reissue market. Consumers in many cases are charged the full
retail price or near the full retail price for reissued title insurances on
homes that are refinanced fairly soon after their purchase. It would seem
unnecessary to repeat the entire research process for the history of the
property in such cases, and relatively simple and inexpensive to determine
if any new threats to the marketability of the title had occurred in very
recent years.
As multiple factors, including consumer demand, are driving increased
overlap between real estate lending and real estate marketing, antitrust
laws should be adjusted to both protect consumer interests and encourage
greater competition. For example, real estate agents or brokers who arrange
home financing should be subject to all Truth-In-Lending-Act (TILA)
requirements. Similarly while antitrust laws should facilitate the ability
of banks to enter the real estate sales market, at the same time all
consumer protections and other appropriate laws and regulations should apply
to new entrants into the field of real estate marketing.
Illinois Brick: The Illinois Brick decision, which denied legal standing to
consumers suffering economic injury on the basis of their tier level in the
chain of commerce, is no longer appropriate. If a consumer is injured they
should have a right to seek redress even if the alleged injury occurred
above the level of the company from whom they purchased the product or
service.
Independent Advocacy: Congress should consider the creation of an
independent advocacy function within the Department of Justice and other
regulatory agencies. Like the office of the Chief Counsel for Advocacy
within the Small Business Administration, the role of those offices would be
to advocate on behalf of the best interests of the consumer on all matters,
including proposed federal laws and regulations, totally free of political
pressures from any incumbent Administration. Some of the aforementioned
recommendations beg for such independence and presume the engagement of
antitrust agencies in the legislative and regulatory process at the federal,
state and local levels.
On behalf of the nation’s 70 million homeowners we urge the Commission to
consider these issues and recommendations as part of its agenda. Please let
us know if there is any additional information we can supply.
Sincerely,
Bruce N. Hahn
Chairman
|