The administrative hearing is underway for a Michigan multiple listing service accused by the U.S. Federal Trade Commission of setting restrictions on a type of property-listing agreement in violation of antitrust law, and early witnesses called to testify include a broker for a flat-fee listing company and a publisher for a real estate information company.

The trial-like hearing process, which began Tuesday, is expected to last about two weeks, with the FTC’s Chief Administrative Law Judge Stephen J.

The administrative hearing is underway for a Michigan multiple listing service accused by the U.S. Federal Trade Commission of setting restrictions on a type of property-listing agreement in violation of antitrust law, and early witnesses called to testify include a broker for a flat-fee listing company and a publisher for a real estate information company.

The trial-like hearing process, which began Tuesday, is expected to last about two weeks, with the FTC’s Chief Administrative Law Judge Stephen J. McGuire presiding. Administrative law judges are employed by federal government agencies to consider complaints filed by those agencies.

Realcomp II Ltd., which has about 15,000 members and is the largest Realtor-owned MLS in Michigan, is receiving financial assistance in the case from the National Association of Realtors trade group, which approved a maximum $175,000 contribution.

The FTC charged in its October 2006 complaint that Realcomp II has adopted rules that prevent the MLS’s distribution of information for a category of for-sale properties on Web sites such as National Association of Realtors-affiliated Realtor.com, Realcomp II’s MoveinMichigan.com site, and Realcomp members’ Web sites.

Realcomp II and broker-owned MiRealSource MLS in Michigan are also facing a federal antitrust lawsuit brought by a company that formerly offered low-cost real estate brokerage services.

The MLS rules place restrictions on a type of agreement known as an exclusive agency listing, which allows property owners to sell the property themselves while paying a discounted commission or no commission to the listing agent. These types of listings “are a means by which listing brokers can offer lower-cost, unbundled real estate services to consumers,” the FTC complaint states.

“The policies limit the publication of information about such properties on popular Internet real estate Web sites, and make it more difficult for brokers to search for such listings on the Realcomp MLS,” the complaint states. “These policies discriminate against certain kinds of lawful contracts between listing real estate brokers and their customers, and lack any pro-competitive justification.”

The more common exclusive right to sell listing agreement, which provides that owners agree to pay the agent no matter how the property is sold, is not subject to the MLS restrictions

“Many of our broker and agent customers have communicated with the FTC expressing their support for Realcomp,” said Karen S. Kage, CEO for Realcomp II, in an Inman News interview earlier this year.

Kage has also said that the MLS passed the rule relating to exclusive agency listings because of the potential for those listings to facilitate a sale without a Realtor. Realcomp II’s shareholders include the Dearborn Board of Realtors, Detroit Association of Realtors, Eastern Thumb Association of Realtors, Livingston Association of Realtors, Metropolitan Consolidated Association of Realtors, North Oakland County Board of Realtors, and Western-Wayne Oakland County Association of Realtors.

Kage could not be reached for comment about the administrative hearing, which began June 19.

The FTC had also charged that the Realcomp MLS search screen was set to default to exclusive right to sell listings, so that Realcomp members were required to select additional listing types in the search screen to view exclusive agency listings.

But after the FTC filed the legal complaint against Realcomp II, its board of governors voted in May to change the search-function policy, so that “the Realcomp MLS search screen will no longer have a default with regard to listing type,” according to a May 7 legal filing.

Six MLSs have earlier agreed to change their policies to settle FTC complaints, making Realcomp II the lone holdout. MiRealSource, a broker-owned MLS with about 7,000 members, was the latest MLS to settle antitrust allegations brought by the FTC over similar policies. The FTC announced the settlement in February.

FTC officials have not provided a full list of witnesses expected to testify in the Realcomp II, and transcripts for the case are not yet publicly available.

Steven Murray, publisher of real estate research and information company Real Trends, was the first witness called by the government to testify, and Craig Mincy, of Michigan flat-fee property listing company MichiganListing.com, also reportedly testified.

The list of people who gave depositions for the case include Kage, David Elya, Daniel Mulvihill, Alissa Nead, Douglas Hardy, Darralyn Bowers, Robert Gleason, Robert Taylor, Carl Williams, Virginia Bratt, Martin Nowak, Gerald Burke, Thomas Rademacher, Walt Baczkowski, John Cooper, Michelle Brant, Ryan Tucholski, Clifford Niersbach, Robert Goldberg, Philip Dawley, Paul Bishop, Paul Simos, Robert Greenspan, Wayne Aronson, Anita Groggins, Jeff Kermath, Dreu Adams and John Kersten, according to a legal filing.

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Send tips or a Letter to the Editor to glenn@inman.com, or call (510) 658-9252, ext. 137.

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