Pacific Rehouse Co., Ltd., Chinatrust Real Estate Co., House Real Estate Co. Ltd., Sinyi Real Estate Inc. and Giga House

Case:

Key Words:

real estate agencies, concerted action, joint sale

Reference:

Fair Trade Commission Decision of August 2, 2007 (the 821st Commissioners' Meeting); Letter (96) Kung Yi Tzu No. 0960006824 on August 9, 2007

Industry:

Real Estate Agencies (6812)

Relevant Laws:

Article 6(1), 11(1),14 and 21 of the Fair Trade Law

Summary:

1. The case was originated from a complaint filed by Yungching and the complaint stated briefly as follows: Four real estates agencies, Pacific Rehouse Co., Ltd. (hereinafter called "Pacific Rehouse"), Chinatrust Real Estate Co. (hereinafter called "Chinatrust"), House Real Estate Co. Ltd. (hereinafter called "House") and Sinyi Real Estate Inc. (hereinafter called "Sinyi"), and Giga House (hereinafter called "Giga") jointly manufactured the DM Handbooks on "House Information" and published the advertisements on sales of real estates. They allegedly violated the provisions of the Fair Trade Law.
2. Findings of FTC after investigation: Giga was established on December 14, 2000. Before Fair Trade Commission Interpretation Kung-Yen-Hse-Tzu No. 012 (the joint investment act which is done by more than two existing enterprises to establish a new business is not within the scope of Article 6(1) of the Fair Trade Law.) ceased to apply, it would be difficult to find that the establishment of Giga constituted a violation of Article 11(1) of the Fair Trade Law. In addition, Giga was established by Sinyi, Pacific Rehouse and Chinatrust through joint investment, and its business was the electronic information service, which integrated the real estate information online for real estate agencies' and general consumers' search and utilization – the service was to allow the circulation of the information of transactions between consumers and real estate agencies and supply and demand matching, and there was no mechanism that the members must report back the quantity of the success cases. Furthermore, the members did not need to pay other fees other than monthly charges. Nonetheless, "House Information" was the written circulation platform, and the information on houses was provided by the members of the territorial fellowship of Sinyi, Pacific Rehouse, Chinatrust and House. Both Giga and "House Information" were the channels for Pacific Rehouse and three other real estate agencies to provide the diverse services on exchange of information, so as to advance the efficiency or speed of selling real estates.
3. Due to the following reasons, the Commission found that the aforesaid cooperation did not restrain the competition on service remunerations amongst Pacific Rehouse and three other real estate agencies (or other franchise stores), nor eliminating the competition effects of other competitors that did not take part in the cooperation.
   (1)After the investigation, it was found that Pacific Rehouse and three other real estate agencies did not jointly decide the amounts of service remunerations. In accordance with the content of the Membership Agreement of Taiwan's Real Estate Portal concluded between Giga and the members, these real estate agencies did not jointly decide the standard of collection of service remuneration. In the same way, the service which was supplied by Giga in this case was to integrate the information on sales of real estate of Pacific Rehouse and three other real estate agencies (or other franchise stores) through the online platform, allow real estate brokers and general consumers to search information on transactions and supply and demand matching – there was no mechanism that the members must report back the quantity of the success cases. It would be difficult to find that their brokers intended to make profits through the online platform provided by Giga, mutually supervising the quantities of success cases or exchanging competitively sensitive information. Besides, the Membership Agreement of Taiwan's Real Estate Portal did not stipulate clauses to regulate the means of allocation and ratio of service remunerations when such service remunerations were derived from the joint sale of a real estate from different agencies. Hence, it would be difficult to find that Pacific and three other real estate agencies restrained the competition on service remuneration through jointly contracting the means of allocation and ratio of service remunerations. In addition, the service remuneration collected by Pacific Rehouse and three other real estate agencies (or other franchise stores) was all conformed to the standard stipulated by the Department of Land Administration, Ministry of Interior. Sinyi collected 1% and 4% service charges from the buyer and seller respectively; Pacific Rehouse, Chinatrust and House respectively collected 2% and 4 % of a concluded price at maximum as the service remuneration from the buyer and seller, and the rates charged by Sinyi were different from the rates charged by Pacific Rehouse, Chinatrust and House respectively. In conclusion, there was still no concrete evidence sufficient to find that Pacific Rehouse and three other real estate agencies involved in contracting to jointly determine service remunerations, or restraining the competition on service remuneration through exchanging competitively sensitive information or other forms of alliances.
   (2) It was further found that the three real estate agencies, Pacific Rehouse, Sinyi and Chinatrust established Giga through joint investment. House subsequently became Giga's member. The four said real estate agencies (or other franchise stores) published the information related to the sales of real estates under commission. However, the internet is an open information platform, setting up a website does not require a high standard of technique, or huge capital contribution, hence it is not difficult to enter the market. In the same way, there are many websites which provide information on real estates in the market and they compete each other, such as "Yungching," "House OL," "HouseWeb," "Real Estate Network" and "Qhouse." As there are many market participants and there is no substantial market entry barrier, it would be difficult to find that the act of cooperation amongst Pacific Rehouse and three other real estate agencies was sufficient to obstruct or eliminate other competitors who did not join the cooperation from participating in competition.
4. Furthermore, as for the part, "One agency under commission and multiple listing in four real estate agencies," as claimed in the advertisement, it was found that the services provided by Giga were to integrate the messages on many real estate agencies' sales of real estates under commission and allow supply and demand matching, so as to allow consumers to search and utilize. In fact, Giga indeed possessed the characteristics, convergence of joint sale messages and circulation. Therefore, on the basis of the perceptions of the trading counterparts and the element which the FTC based its finding, determining whether there was an indication of joint sale on the basis of the ordinary attention paid by the general public of ordinary knowledge and experiences, it was indeed difficult to find that there were differences between the aforesaid representation or symbol and the facts and hence it was difficult for a considerable number of the general public to accept such misrepresentation or symbol. The content of the service provided by Giga was not meant that a consumer was only required to entrust one of the four real estate agencies, and he would receive services from the other three agencies to sell the real estate. In terms of the degree, this fact was indeed different from the meaning of "joint sale service" as defined in the "Explanation of Joint Sale Administered by Real Estate Agencies." Nevertheless, the purpose of the aforesaid explanation is to regulate the real estate agencies that form an alliance or merger through the practice of joint sale and such formation results in the anti-competition effect, restraining market competition. Therefore, the joint sale service in the Explanation is to limit to the transaction types, a number of real estate agencies jointly search buyers, and the agent who looks for clients and the agent who sells houses may be from different agencies; nevertheless, it does not exhaust all transaction types. In addition, as the term, "joint sale," still includes many reasonable interpretations, the FTC could not find that the representation or symbol at issue was false, untrue and misleading, on the basis of the difference between the contents of the services provided by Giga and the term, "joint sale," defined in the aforesaid Explanation. Nevertheless, in order to avoid future occurrence of similar competition or trade disputes, the Commission issued a letter to request Giga to notify its members that the members should avoid using any representations or symbols which will likely mislead consumers into believing that entrusting one real estate agency to sell a real estate will get four real estate agencies to sell it under the same commission.

Appendix:
Yungching's Uniform Invoice Number: 22760834

Summarized by Hsu, Hsiu-feng; supervised by Liao, Hsien-chou