Washington, DC-based Title Plant Agrees to Settle FTC Charges

The Federal Trade Commission today announced a proposed consent order against Commonwealth Land Title Insurance Company that would resolve FTC concerns that the company’s proposed consolidation of its title plant with its only competitor in the Washington, DC market would violate antitrust laws by restricting competition.

Title plants are used by abstractors, title insurers, title insurance agents, and others to determine ownership of and interests in real property in connection with underwriting and issuance of title insurance policies and for other purposes. According to the FTC, the proposed consolidation created a monopoly for title plant services in the Washington, DC market, leaving users of the plant with no viable alternative.

According to the agency, Commonwealth proposed to consolidate its DC title plant operations with those of First American Title Insurance Company. After discussions in 1996 and 1997, the companies entered into a letter of intent in September 1997 to form a new joint venture entity to consolidate their title plants in the District of Columbia. In late November 1997, before the new entity was formed, Commonwealth moved its title plant operations to the Capitol Hill location used by First American. In addition, Commonwealth terminated existing contracts with customers and required that they execute new "Interim Plant Use Agreements," causing them to pay higher prices for title plant services that were jointly provided by Commonwealth and First American pending formation of a joint title plant entity. According to the agency, the interim agreements were at significantly higher prices for many Commonwealth customers and did not permit some forms of title plant access that had been available under prior contracts.

Commonwealth and First American did not complete formation of the new joint title plant entity. After the proposed consolidation was questioned by FTC staff, Commonwealth discontinued its participation in the planned joint venture and undertook to re-establish its title plant as an independent competitor to First American’s on the terms embodied in the proposed consent order. In late February 1998, after the events in question, Commonwealth became a subsidiary of LandAmerica Financial Group, Inc.

Under the terms of the proposed consent order, which will be published in the Federal Register shortly, Commonwealth would be required to relocate its operations and maintain them as a fully functional title plant in competition with First American. In addition, Commonwealth would be required to rescind all Interim Plant Use Agreements and, for a year after the agreement is signed, to provide services to customers based on the prices, terms and conditions available before November 1997. The proposed order also would require Commonwealth to make refunds to customers who were charged more under the interim agreements than under their previous contracts. If Commonwealth fails to comply with the proposed order, the Commission may appoint a trustee to carry out its provisions. The proposed order also would require that for 10 years Commonwealth must provide prior notice to the Commission before it merges, combines or otherwise consolidates its operations with any other title plant serving the District of Columbia.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

The Commission vote to publish the proposed consent order was 4-0.

Copies of the complaint, the proposed consent order, and an analysis to aid public comment are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 202-326-2502. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone