Opinion ID: 214064
Heading Depth: 4
Heading Rank: 2

Heading: Actual Adverse Effects

Text: The Commission also examined direct evidence of competitive effects and concluded that Realcomp's policies adversely affected competition. We conclude that the Commission's findings of actual adverse effects are supported by relevant evidence that a reasonable mind might accept as adequate to support [its] conclusion. In re Detroit Auto Dealers Ass'n, 955 F.2d at 469. Evidence described in Part II.C.1, supra, demonstrates that the website policy in fact limited access to internet marketing and imposed financial and administrative costs on brokers seeking to dual-list with other MLSs. Three quantitative analyses conducted by the Commission's economic expert, Dr. Darrell Williams, corroborated other record evidence showing substantial consumer harmspecifically, a reduction of the share of discount listings in the southeastern Michigan real-estate market. A time-series analysis conducted by Dr. Williams established that the share of EA listings declined by 50% after the introduction of the Realcomp restrictions. The analysis compared the share of EA listings in the Realcomp MLS before and after the challenged policies went into effect and showed that, from May 2004 to October 2006, the monthly average share of EA listings fell from about 1.5% of total listings to about 0.75%. As the Commission noted, although the study showed a reduction in only 0.75 absolute percentage points, the share of EA listings had dropped by half, revealing that non-traditional arrangements [were] losing their toehold in the market. Pet'r App. Vol. I at 51 (Comm'n Op. at 45). [9] While the time-series analysis documented the drop in EA listings, it could not rule out the influence of other economic factors that might have caused the decline. The conclusion that the drop was at least in part caused by Realcomp's restrictive policies was supported by other evidence. A benchmark study conducted by Dr. Williams compared the share of EA listings in the local MLSs of Metropolitan Statistical Areas (MSAs) without restrictions (labeled Control MSAs) to that of MSAs with restrictions (labeled Restriction MSAs). [10] Control MSAs were selected based on a combination of economic and demographic factors that rendered the MSAs statistically similar to Detroit. The benchmark study revealed relatively low shares of EA listings in all the Restriction MSAsaveraging only 1.4% of MLS listingsdespite differences among the MSAs with respect to other variables such as population size. Dr. Williams also found that the weighted average share of EA listings in Control MSAs was higher than in Restriction MSAs5.6% compared to 1.4%and that Realcomp's MLS had a significantly smaller share of EA listings than each of the MLSs without similar restrictions. [11] For the period from 2002 to 2006, Dayton, the MSA most statistically similar to Detroit, was also the Control MSA with the lowest share of EA listings, at 1.24%. Over that same period, the share of EA listings on Realcomp's MLS, by comparison, was 1.01%. However, even Dayton's low share of EA listings is 22.7% greater than the share of EA listings on Realcomp. [12] These findings support Dr. Williams's conclusion that restrictive policies like Realcomp's Website Policy lead to a reduction in the share of EA listings. Attributing the decline in EA shares to a buyers' market, the ALJ credited testimony that in a declining or distressed market, where both the value of a home and the seller's equity are declining, more home sellers would choose full service ERTS listings over EA listings because they want the professional marketing services of a full service broker. Pet'r App. Vol. II at 164 (Dec. at 103). Indeed, the ALJ found that, between 2003 and 2005, EA listings grew from 2% to 15% of listings nationally, but between 2005 and 2006, fell from 15% to 8%. However, the ALJ also heard testimony that demand for the services of limited-service brokers increases in a softening housing market because the reduced cost appeals to home sellers without equity in their homes. Furthermore, as the Commission noted, prior to November 2006, NAR permitted members to adopt restrictive policies like Realcomp's, suggesting that such policies could have interfered with the prevalence of EA listings in MLSs nationwide. This evidence is sufficient to provide substantial evidence for the Commission's inferences. Dr. Williams also conducted ten statistical-regression analyses to evaluate the effects of different factors, including Realcomp's policies, on the share of EA listings. Dr. Williams concluded that Realcomp's policies are associated with a reduction in the share of EA listings of between 5.47 and 6.15 percentage points, leading him to predict that the percentage of EA listings in Realcomp would be higher, and the percentage of ERTS listings would be lower, in the absence of Realcomp's policies. The ALJ found Dr. Williams's analyses instructive, though not conclusive, and accepted the testimony of Realcomp's expert, Dr. Eisenstadt, that Dr. Williams failed to include relevant variables in his regressions. Pet'r App. Vol. II at 171 (Dec. at 110). Dr. Eisenstadt testified that, when certain variables were measured at both the MSA and the local level, the effect of the Realcomp policies on the share of EA listings was not statistically different from zero. The Commission, however, concluded that MSA-level variables were properly excluded from Dr. Williams's analysis because they were already captured by similar county and zip-code-level data. The Commission's conclusion is strongly supported by the fact that, in his response to Dr. Eisenstadt's report, Dr. Williams incorporated county and zip-code-level measures of the variables suggested by Dr. Eisenstadtand still found that the restrictions were associated with a statistically significant decrease in non-ERTS contracts. Applying these variables to Dr. Eisenstadt's sample, which excluded MLSs with restrictions other than Realcomp, Dr. Williams found that Realcomp's restrictions are associated with a statistically significant 5.2% decrease in the share of non-ERTS contracts. The remaining difference was that Dr. Williams excluded MSA-level measures of Dr. Eisenstadt's suggested variables when those variables were already measured at the county and zip-code levels. For example, Dr. Williams incorporated county-level median household income, but excluded MSA-level median household income. In other words, Dr. Williams excluded duplicative variables. In statistical terms, the MSA-level variables were excluded on the grounds that they were highly collinear with other explanatory variables and would render unreliable the results of the analysis. [13] Dr. Williamsand the Commission evaluating his workthus explored the implications of including MSA-level data into the analysis, and concluded that the MSA-level data was already captured at the county level. [14] Dr. Williams's time-series, benchmark, and statistical-regression analyses thus provide substantial evidence in support of the Commission's findings of anticompetitive effects. And, even if the evidence of actual effects is inconclusive, the Commission also demonstrated the adverse potential of Realcomp's website policy by establishing Realcomp's market power and the anticompetitive tendencies of the website policy. [15]