FTC examines e-commerce barriers

ERealty Inc. calls its e-commerce Web site an intranet. Access is controlled, and customers must log on to see real estate listings – an experience intended to model a visit to a broker. But its business model may be under attack.

The National Association of Realtors (NAR) next month will decide whether Houston-based eRealty, and companies like it, can have unfettered access to property listings. The NAR may give brokers fearful of competition the right to block listings on what eRealty calls its Virtual Office Web site.

Such a move would force eRealty to undertake coding work on its systems and make listing information that can’t be displayed on the Web available to customers via e-mail and fax, said George Stephens, eRealty’s director of compliance. IT costs would increase, he said.

Next week, the U.S. Federal Trade Commission (FTC) will hear from eRealty officials, as well as about 70 other experts, industry representatives and corporate executives, on whether U.S. states and industry groups are erecting anti-competitive barriers to e-commerce. It will examine a range of industries including automotive, financial services, pharmaceutical sales, online legal services, financial services and retailing.

The FTC sees problems. Last year, it formed a task force to investigate the issue but has already made moves to prevent anti-competitive actions. For instance, in the late 1990s, a group of 25 Chrysler dealers threatened to refuse to sell certain models unless Chrysler limited its supply of cars to an Internet seller. The FTC filed a complaint against the dealers, resulting in a settlement that ended the threat.

Some states bar financial services firms from operating unless they have an in-state office. FTC officials say they can see possible consumer protections to such a rule, but anti-competitive issues arise if consumer choice is restricted.

Another area is wine sales. The FTC will hear from Daniel McFadden, the 2000 Nobel laureate in economics and a California vineyard owner. He will urge the FTC to combat restrictive sales practices, such as a Florida law that bars residents from having wine shipped in from out of state.

A Florida resident visiting a California vineyard can’t have wine shipped home, even though it would be legal to purchase the wine in Florida, McFadden said in prepared remarks released by the FTC. “The Florida legislation is a direct attack on interstate commerce, making a transaction illegal simply because it crosses state lines,” he wrote.

Although a wide range of subjects will be covered, one key group that won’t be speaking at the hearing is the NAR. The association is still debating whether a listing broker can control use of listing data by competitors. Until a policy is set, it isn’t ready to discuss the matter, said Laurie Janik, the NAR’s general counsel. The NAR was invited to speak at the event but declined for that reason, she said.

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