>Fair Trade Commission Disposal Directions (Policy Statements) on Real Estate Brokerage

Fair Trade Commission Disposal Directions (Policy Statements) on Real Estate Brokers Engaging Multiple Listing Services

Passed by the 580th Commissioners' Meeting on 19 December 2002
Promulgated by Order Kung Yi Tzu No. 0910012767 on 30 December 2002
Title Amendment by the 688th Commissioners' Meeting on 13 January 2005
Promulgated by Order Kung Fa Tzu No. 0940001278 on 24 February 2005
Amended by the 842nd Commissioners' Meeting on 27 December 2007
Promulgated by Order Kung Yi Tzu No. 0970000194 on 10 January 2008

Background Explanation
Under convenience of internet information usage, uniting information system into multiple listing services (MLS) information network by different real estate brokers（agents） , have become a new trade type. Real estate brokers upload their pioneered and not yet settled rental and sale cases onto the web for other brokers to understand, via the system, different broker's sales (rental) article products and to seek purchaser (tenant) to complete the trade, resulting in the broker that sourced or pioneered the cases (pioneer broker) and the broker that complete the settlement (selling broker) are of different real estate brokers.
Via MLS, consumer enjoys the advantage of entrusting one agent but receive services from numerous brokers. For seller (landlord), uploading the article product onto the web not only increase the chances of exposing and settling the article product and also shorten sale (rental) time, and reduce the cost of seeking different real estate broker or purchaser (tenant); for the purchaser (tenant), the ability to choose suitable product from numerous waiting-to-be-rent or waiting-to-be-sold article products on web via one broker's service also helps to reduce the cost of seeking suitable article product or broker; as for the real estate broker, not only can increase the chance of sell (rent) out its pioneered article products, but also increase it chances of selling (renting) out article products pioneered by other brokers, may reduce the loss of manpower and resources and at the same time decrease cost and increase operation efficiency. In order to increase the efficiency of the MLS, MLS information website operator should upload as much as possible article products, not restricting any particular type of contract, so as to allow consumer the opportunity to enjoy ample selections. However, if real estate broker, utilizes website information platform for MLS, proceed to mutually restrict competition activities on the horizontal competition level, or engage in boycott, differential treatments, restricted perpendicular trade etc and caused to restrict competition or hinder fair competition, or any other deceitful or obviously unfair act sufficient to influence trade order, would be deemed to have infringed Article 14, Article 19, or Article 24 related provisions. This Commission summarizes analysis on real estate brokers' acts on MLS that would possibly infringe the Fair Trade Act. This Policy Statements, in accord with the principles of free entry and exit, forbid mutual restriction, and transparency, provides guidance on business operators and set reference for future case dealings.
Definition
(1) Real Estate: A real estate means a fixed object on the land or a house and the right of transferring its ownership. A "house" refers to a readily available house or a presale house and the right of transferring its ownership.
(2) Real Estate Broker: A real estate broker refers to the company or incorporation or person dealing with real estate broking or sales. Whereas broking means acting as go-between or representative in the sale, exchange, tenancy of property. Sale means being commissioned by tenant-builders or the building industry to undertake the plan for the sale of property and assuming the representative position in the sale.
(3) Multiple Listing Services: Multiple listing services (‘MLS') is where real estate brokers utilize internet web sale, share information system and form MLS information network; upload pioneered waiting-to-be-rent and waiting-to-be-sold article products onto the web, allowing other real estate brokers to understand other brokers' article product information via the information platform, and jointly seek buyers (tenants), induce increase in settlement chances. Hence the broker that pioneered the article product and the broker that settled the article product may belong to different real estate broker.
(4) Appointed Agency: An appointed agency means principal shall not through itself or appoint any third party agent to sell or rent the entrusted real estate during the period the entrusted real estate is under appointed agency to a particular real estate broker.
Possible Economic Benefits and Competition Restriction Resulting from MLS Performed by the Real Estate Brokers
(1) Economic Benefits
MLS performed by the real estate brokers in effect is a information collection mechanism whereby individual purchaser (tenant) or seller (landlord) may extend to the whole market regions via a service provided by one single real estate broker (or agent) and are beneficial to both parties' settlement cost reduction. At the same time, business operators may unit purchaser (tenant) and seller (landlord) into a pool via MLS information network to increase matching efficiency and quantity.
Further the bigger the MLS information network system, the greater the chance of finding matching parties and reducing searching cost; consequently, seller (landlord) does not need to contract with numerous real estate brokers, purchaser (tenant) does not need to seek numerous real estate brokers, and the article product's exposure rate is increased. Hence the bigger scale of the MLS information network system, the greater the chance of matching parties to settlement.
In additional, usually information holding in the real estate market is dissymmetry, and real estate broker normally would be the only one that can control the overall status of the sales (rental) article product, and trade parties – seller, buyer (landlord, tenant) - are unable to understand or control real estate brokers' ability and their provided service quality, trade disputes thus result.
If the real estate brokers joined the MLS information network, should guarantee or establish goodwill through such MLS information network and thus effectively resolve possible controversies caused by dissymmetry of information holding.
(2) Result of restricted competition
Members of MLS information network, often adopt the excuses that in order to effectively promote MLS, to establish a trust base and to realize benefits of MLS information network, would require members to observe some trade provisions as conditions for joining the membership. Examples of trade provisions are: to unify the electronic specification of the uploaded article products for the convenience of information creation, request the disclosure of article product particulars (such as area size in the Certificate of Title, structure, and total price etc), agreed rights and obligations between the real estate broker that pioneered the article product and the real estate broke that sold the article product.
However, since the members are really resided in a horizontal competition relation, so mutual restriction on trade conditions would negatively impact on the rights of the trade parties – purchaser, seller, (tenant, landlord) - to free trade, and hinder fair competition on pioneering and sale of article products, and hence may be deemed to have infringed the forbidden concerted actions prescribed in the Fair Trade Act. Furthermore, if a MLS information network that has comparative position in the market, practices boycott, differential treatments, restricted perpendicular trade, or other exclusion acts, would likely to trigger competition restriction or hinder fair competition.
Merger
(1) Where an act by the real estate broker fits into the behavior described in Article 6(1) of the Fair Trade Act and the provisions in Article 11(1) of the same Act, and does not fall into the exceptions to Article 11(1), then the real estate broker should apply for filing to the Commission prior to merger and should not merge within 30 days of the Commission received complete filing information. Where a real estate brokerage possess or obtained more than 1/3 of voting share in the MLS information network business or other business, or falls into other merger behavior defined in Article 6(1) of the Fair Trade Act and if participation in the merger business fits into one of the situations in Article 11(1), and does not fall into one of the exceptions to Article 11-1, then the broker should apply to file with the Commission.
(2) With regards to an applied merger, this Commission shall weigh its detriments result from restriction of competition and its economic benefits to the overall real estate market. If after weighing, the overall economic benefits outweigh the detriments caused by restrictive competition, the Commission would not object.
Concerted Action
(1) In implementing MLS, should two or more real estate brokers of horizontal competition relations, by means of contract, agreement or any other form of mutual understanding, jointly determine the price of the services, or trading territory, or to limit the terms of trading counterparts, or to exclude or hinder third party competition, or jointly adopted behaviors that would confine others to participate in MLS, and the result is sufficient to influence the supply of the real estate market, then such act would be deemed to have infringed Article 14 of the Fair Trade Act.
MLS information network possess the nature of benefit in reducing the settlement costs for the trade parties – seller, purchaser (tenant, landlord) – and thus has become the general trend. If members of the MLS are required to list out all of the waiting-to-be-rent and waiting-to-be-sold article products, but only part of the members mutually agreed on the provisions for MLS operation and sales flow, whilst other members must execute individual membership contract, mutually restrict business activities, and the results are sufficient to influence supply in the real estate market, then such acts would be deemed to have violated Article 14 of the Fair Trade Act.
(2) Possible type of concerted action whilst implementing MSL:
1. Mutual restriction on the need for pioneer real estate to execute appointed sales (rental) agency agreement, limit business freedom to select the type of sales (rental) agency agreement, and to further limit the seller's (landlord's) freedom to select the type of sales (rental) agency agreement, and hence influence market trade order and consumer rights and supply in the real estate market, may be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
2. During the mutually restricted sales (rental) contractual period, appointed real estate broker may be de-motivated from bringing the parties together, seller (landlord) being confined by the contract becomes unable to appoint other real estate broker to sell (rent), resulting in appointed real estate broker unable to improve on efficiency and also damage consumer's rights, and should such act sufficient to influence supply in the real estate market, then such act would be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
3. Mutually restraint on pioneer real estate broker (party that obtained the article product) to have certain appointed agency period, causing other real estate broker that already found potential purchaser (tenant) be hindered by the appointed agency agreement for sale (rent) and unable to settle the trade and consequently, result in reduction in the circulation of article products, settlement chances, and furthermore to impact on consumer rights, and should such act sufficient to influence supply in the real estate market, then such act would be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
4. Mutually restraint on the check date for negotiation deposit, causing check dates on negotiation deposit overly consistent, and sufficient to influence the supply of the real estate market would thus be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
5. Mutually restraint commission share percentage between pioneer real estate broker (party that obtained the article product) and selling real estate broker (party that sold the article product), hinder competition on pioneering and selling article products, and proceed further to damage seller's (landlord's) rights. If sufficient to influence the supply of the real estate market would thus be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
6. Real estate brokers by means of contract, agreement or any other form of mutual understanding, jointly refuse other real estate brokers from joining MLS, upload article products onto the MLS information websites, or use information from MLS information website and sufficient to influence the supply of the real estate market would thus be deemed to have violated Article 14 of the Fair Trade Act on forbidden concerted action.
Restrict Competition or Hinder Fair Competition
(1) Article 19 of the Fair Trade Act reads: "No enterprise shall have any of the following acts which is likely to lessen competition or to impede fair competition: 1. causing another enterprise to discontinue supply, purchase or other business transactions with a particular enterprise for the purpose of injuring such particular enterprise; 2. treating another enterprise discriminatively without justification; 3. causing the trading counterpart(s) of its competitors to do business with itself by coercion, inducement with interest, or other improper means; 4. causing another enterprise to refrain from competing in price, or to take part in a merger or a concerted action by coercion, inducement with interest, or other improper means; 5. acquiring the secret of production and sales, information concerning trading counterparts or other technology related secret of any other enterprise by coercion, inducement with interest, or other improper means; or 6. limiting its trading counterparts' business activity improperly by means of the requirements of business engagement."
(2) Engagement in MLS by real estate brokerage may possibly encounter the following restrictive competition or hindering fair competition acts:
1. Boycott: real estate broker or operator of MLS information network should utilize comparatively beneficial price, quantity, quality, service, and other conditions, to achieve settlement opportunity, engage in fair competition act. If a real estate broker aims at damaging particular real estate broker causing MLS information website operator to refuse the participation of the later real estate broker or causing the later real estate broker's current MLS to reject the later real estate broker; or MLS information network operator aims to damage particular MLS information network operator, forbid its member from participating in other MLS or uploading any article products in other MLS information network, thus restrict competition and hinder fair competition, such act would be deemed to have violated Article 19 (i) of the Fair Trade Act.
2. Differentiated treatment: MLS information website operator should allow real estate brokers to freely decide whether to join or leave from the MLS, and allow other MLS information website operator to compete fairly. Should there be unreasonable refusal to particular real estate broker to join, or leave, or provided differentiated treatment; or in order to achieve suppression of competition from similar websites, provide preferential treatment to those members that only upload article products to its website and no other websites and thus restrict competition or hinder fair competition, then such act would be deemed to have violated Article 19 (ii) of the Fair Trade Act.
3. Limit to particular contract type only:
MLS information website operator should upload all members' article products to aid the flow of the MLS information and not limiting to particular contract type, so consumers enjoy greater selection choices. If uploaded article products are only appointed agency type and is a condition for becoming a member or uploading the article products, and cause restrictions to the competition or hinders fair competition, then such act would be deemed to have violated Article 19 (vi) of the Fair Trade Act.
4. Exclusive Trade: If a MLS website operator, in order to suppress competition from similar websites, as a precondition of becoming a member or uploading the article products, demand the member cannot become a member to its competitor, and thus restrict competition or hinder fair competition, then such act may be deemed to have violated Article 19 (vi) of the Fair Trade Act.
5. Other restricted perpendicular trade act: MLS website operator should allow fair competition amongst members. If as a precondition of becoming a member or allowing the upload of article products, require appointed sale (rental) period be restricted, the pioneered real estate broker enjoys appointed agency period, length of cheque date for purchaser's (tenant's) Negotiation Deposit, or commission sharing percentage between pioneered real estate broker and selling real estate broker, and other business activities, and consequentially restrict competition or hinder fair competition, then such act may be deemed to have violated Article 19 (vi) of the Fair Trade Act.
Other Deceitful or Obviously Unfair Act Sufficient to Influence Trading Order:
(1) Article 24 of the Fair Trade Act stipulates: "Except otherwise stipulates in this Act, business shall not engage in deceitful acts that is sufficient to affect trade order or obviously unfair acts." This provision is an additional provision collateral to the Fair Trade Act, and the emphasis is upon ‘deceitful act' that is ‘sufficient to influence trade order" or an "obviously unfair act".
(2) Should any article products posted on the MLS information web by the real estate broker intentionally deceives or passively non-disclose important trade information causing misleads, result in "deceitful act" in trade counterpart and the trade itself; or adopt obviously unfair act to engage in competition or business trades such as utilizing dissymmetry of information holding amongst trade counterparts or other comparatively weak bargaining position to engage in ‘obviously unfair act', and such act being sufficient to influence market order, then such act may be deemed as violation of Article 24 of the Fair Trade Act.
Penalty and Legal Responsibility of Infringing the Fair Trade Act and Related Regulations
(1) In accordance with Article 13, where any enterprise(s) proceeds with a merger in violation of Article 11(1) or Article 11(3) herein, or proceeds with a merger despite that the Commission decides upon the filing to prohibit such merger, or fails to perform the undertakings required as pursuant to Article 12 (2), the Commission may prohibit such merger, prescribe a period for such enterprise(s) to split, to dispose of all or a part of the shares, to transfer a part of the operations, or to remove certain persons from positions, or make any other necessary dispositions. For enterprise(s) violating the disposition made by the Commission pursuant to the preceding disposition, the Commission may order the dissolution of such enterprise(s), or the suspension or termination of their operations; and at the same time, in accordance with Article 40 order an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars. And for party violates exception in paragraph 2 of Article 11(5), would be penalized for an administrative penalty of not less than fifty thousand nor more than five hundred thousand New Taiwan Dollars.
(2) Infringing Article 14 of the Fair Trade Act, in accordance with Article 35 (1), pursuant to Article 41 of the same Act, to cease therefrom, rectify its conduct, or take necessary corrective action within the time prescribed in the order, and after the lapse of such period, shall such enterprise fail to cease therefrom, rectify such conduct, or take any necessary corrective action, or after its ceasing therefrom, shall such enterprise have the same or similar violation again, the actor shall be punished by imprisonment for not more than three (3) years or detention, or by a fine of not more than one hundred million New Taiwan Dollars.
(3) A party that violates Article 19, in accordance with Article 36 the Commission may pursuant to Article 41 it to cease therefrom, to rectify its conduct, or to take necessary corrective action within the time prescribed in the order, and after the lapse of such period, shall such party fail to cease therefrom, rectify such conduct, or take necessary corrective action, or after its ceasing therefrom, shall such enterprise have the same or similar violation again, the party shall be punished by imprisonment for not more than two years or detention, or by a fine of not more than fifty million New Taiwan Dollars, or by both.
(4) The Fair Trade Commission may, in accordance with Article 41 of the Fair Trade Act, order any enterprise that violates any of the provisions of the same Act to cease therefrom, rectify its conduct or take necessary corrective action within the time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than fifty thousand nor more than twenty-five million New Taiwan Dollars. Shall such enterprise fails to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the Fair Trade Commission may continue to order such enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess thereupon an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars until its ceasing therefrom, rectifying its conduct or taking the necessary corrective action.
(5) If any enterprise infringes the regulations of the Fair Trade Act, the enterprise, in additional to any criminal or administrative responsibilities, shall also be responsible for civil loss and damage in accordance with Chapter 5 provisions of the same Act.
This Policy Statements only demonstrates commonly encountered infringing conducts to the Fair Trade Act by real estate brokers and operators of MLS information websites, should there be any unattained issues, this Commission would add or amend at any time, and individual incidences should still be conducted on its own merits. Also, with respects to real estate trade, competition, and advertisement cases, this Commission has set "Fair Trade Commission Policy Statements on Real Estate Brokerage" and "Fair Trade Commission Guidelines on Cases of Real Estate in Advertising" and real estate brokers should note and observe the provisions.