Three Real Estate Brokers, Sinyi Realty Co., Pacific Rehouse Co., and Chinatrust Real Estate Co., alleged to have violated the Fair Trade Law by implementing a multiple listing service in the Hsinchu area
Case:
Three Real Estate Brokers, Sinyi Realty Co., Pacific Rehouse Co., and Chinatrust Real Estate Co., alleged to have violated the Fair Trade Law by implementing a multiple listing service in the Hsinchu area
Key Words:
real estate industry, multiple listing service, boycott
Reference:
Fair Trade Commission Decision on March 21, 2002 (the 541st Commissioners' Meeting); Letter Kung Yi Tzu No. 0910003307
Industry:
Real Estate Brokers (6612)
Relevant Laws:
Summary:
1. In this case the three respondents, namely Sinyi Realty Co. (Sinyi), Pacific Rehouse Co. (Pacific), and Chinatrust Real Estate Co. (Chinatrust), reached an agreement to try out a Multiple Listing Services (MLS) in the Hsinchu area. Under the MLS, sales agents of the three respondents could show their clients houses up for sale through any of the respondents. Once a deal was concluded, the three respondents could collect service fees pursuant to the agreement among them. After the three respondents worked out the MLS system, their agents in the Hsinchu area used this system to appeal customers, and the three respondents jointly published this news in the newspaper. They excluded other real estate agencies without asking them in advance whether they were willing to join the MLS. The three respondents were thus suspected of violating the Fair Trade Law. 2. Real estate agencies are entitled to freely decide with their trading counterparts the type, price, payment methods, and other trading terms of contracts. If two or more horizontally competing real estate agencies enter into a contract, agreement, or other form of mutual understanding and jointly devise guidelines such as MLS operational guidelines or circulation and marketing guidelines, and the others sign up individually with MLS web site operators to become members and thereby to restrict each other's business activities, their actions would impede competition and restrict home owners' or purchasers' rights to freely choose their own trading terms. Such actions, if sufficient to adversely affect market supply and demand functions in the real estate brokerage service industry, would likely constitute a violation of Article 14 of the Fair Trade Law that prohibits concerted action. 3. After investigation, it is the finding of the Fair Trade Commission (FTC) that in December 2000, Sinyi, Pacific, and Chinatrust jointly contributed capital to incorporate the company T-MLS Co., Ltd. (aka "Gigahouse"), and constructed a transaction platform to circulate information on property for sale. The platform was named the Taiwan MLS Real Estate Trading Center (T-MLS) and formally began operation on 27 February 2001. Member companies can upload data on property for sale to the platform, for subsequent circulation and joint sale. Gigahouse currently comprises five real estate agency members: Sinyi, Pacific, Chinatrust, Chu Shang Industries Co., Ltd. (Chu Shang), and CTC Rehouse Co., Ltd. (CTC). For the MLS system to be successfully implemented, T-MLS members are required to observe the T-MLS Circulation Operational Standards including T-MLS Operational Principles, Circulation and Sale Standards, and Penalty Standards. Such standards or principles involving matters such as the requirements for property to be posted on-line and allocation of the rewards for completed sales. For instance, for property to be sold, an exclusive commission contract is required with a term of not less than one month. This contract stipulates, among other things, that the broker introducing the case enjoys a 15-day period of exclusive sales rights and the check issued by the purchaser as a payment of the "mediation fee" may not be postdated by more than three days. It also specifies the respective percentage of the service fees to be allocated to the firm that brings the case in and the firm that sells the property. Granted, in form, the aforesaid clauses constitute concerted action and the concerned real estate enterprises require that any on-line posting of property for circulation or joint sale be subject to the clauses. However, in the current initial launching phase of the MLS system, the clauses are not significantly binding upon enterprises in the real estate industry. Moreover, the emerging MLS information network transaction model is aimed at meeting buyers' demands for information and shortening sellers' time to sell their property. Consumers commissioning one agency are able to benefit from the services of many others. The MLS system also helps increase agents' business development and sales opportunities, thereby reducing costs while enhancing operating efficiency. It is by no means aimed at impeding competition. The associated acts, although disputable, are not malevolent and do not call for sanctions. The FTC therefore resolved to implement administrative guidance to improve trading order. 4. As for the allegation that Gigahouse and Sinyi boycotted the entry of other real estate brokers into the MLS, the FTC found that the complainant did not formally express to Gigahouse and Sinyi its wish to join the MLS. The FTC considered the issue and determined that it is quite often for real estate agents to switch among different real estate agency companies and a former employee of Sinyi would not be confined to entering CTC in order to stay in the real estate brokerage business. Furthermore, early in the initial launching of the MLS information platform, CTC, Rebar Real Estate, and Yung Ching Real Estate Co., Ltd. also joined in discussions of relevant matters. Therefore, it could not be concluded that Gigahouse or Sinyi boycotted other real estate brokers or agents in violation of Article 19(i) of the Fair Trade Law. Note: The Multiple Listing Service, abbreviated as "MLS," is a joint sales network that real estate agencies establish by utilizing the characteristics of Internet marketing channels to share information. Through this network, agencies upload fully developed properties for sale to an information platform on the Internet, allowing the agencies to share each other's information about such properties. Agencies also jointly search for buyers in order to increase their chances for concluding deals. Therefore, the agent that introduces a given case and the agent that closes the case may be affiliated with different brokerages.Appendix:
Sinyi Realty Co.'s Uniform Invoice Number: 22354940 Pacific Rehouse Co.'s Uniform Invoice Number: 21244538 Chinatrust Real Estate Co.'s Uniform Invoice Number: 01187263 T-MLS Co. ("Gigahouse")'s Uniform Invoice Number: 12673348 Summarized by Hung, Hsuan; Supervised by Horng, Der-Chang