Tuesday, June 03, 2008

National Association of Realtors Settles Restraint of Trade Charges

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The National Association of Realtors has agreed to change policies and adhere to certain conduct remedies that allow Internet-based residential real estate brokers to compete with traditional brokers.

The trade association has agreed to settle a civil suit brought by the Department of Justice Antitrust Division, alleging that it obstructed real estate brokers who used innovative Internet-based tools to offer better services and lower costs to consumers.

The Justice Department had charged that the association’s policies prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models.

The September 2005 lawsuit challenged two policies adopted in 2003 and 2005. The first rule challenged by the Justice Department required multiple listing services (MLSs) to permit traditional brokers to withhold their listings from password-protected Internet sites—known as virtual office web sites or VOWS—by means of an “opt out.” The association did not permit brokers to withhold their listings from tradition broker members of an MLS. The association subsequently suspended its policy during the Justice Department’s investigation.

The second rule prevented a broker from educating customers about homes for sale through a VOW and then referring those customers (for a referral fee) to other brokers, who would help customers view homes in person and negotiate contracts for them. Some of the VOWs that focused on referrals also passed along savings to consumers as a result of increased efficiencies, according to the Justice Department.

Under the terms of the settlement, awaiting approval in the federal district court in Chicago, the association will repeal its anticompetitive policies and require affiliated MLSs to repeal their rules that were based on these policies. The association will enact a new policy guaranteeing that Internet-based brokerage companies will not be treated differently than traditional brokers.

Under the new policy, brokers participating in an affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through VOWs. In addition, brokers will be able to use VOWs to educate consumers, make referrals, and conduct brokerage services. Such brokers will not be excluded from MLS membership based on their business model.

The association also has agreed to adopt antitrust compliance training programs that will instruct local realty associations about the antitrust laws generally and about the requirements of the propose settlement specifically.

Statement by Realty Association

The National Association of Realtors issued a May 27 statement, saying that it had reached a favorable settlement. According to the association, the proposed final judgment “validates [the association’s] longstanding Internet Data Exchange (IDX) policy and strengthens the rule governing participation in multiple listing services.”

Further details regarding the proposed final judgment—as well as the complaint and other documents—in U.S. v. National Association of Realtors appears here at the Department of Justice Antitrust Division’s website.

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