Thursday, April 14, 2011

Multiple Listing Service Rules Were Illegal, Appellate Court Confirms

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

The largest multiple listing service (MLS) in Michigan, whose members included almost half of all realtors in the state, violated Sec. 5 of the FTC Act by adopting anticompetitive policies that restricted the ability of low-cost, limited service brokerages to get their listings included on heavily-used public websites, the U.S. Court of Appeals in Cincinnati has ruled.

The association’s petition for review of a 2009 Commission opinion (2009-2 Trade Cases ¶76,784) was therefore denied.

According to the appellate court, substantial evidence supported the Commission's findings that:

(1) The association’s website policy gave rise to potential genuine adverse effects on competition due to its substantial market power and the website policy's anticompetitive nature;

(2) The website policy in fact caused actual anticompetitive effects; and

(3) The association’s proffered procompetitive justifications were insufficient to overcome a prima facie case of adverse impact.
These findings established that the association’s website policy unreasonably restrained competition in the market for the provision of residential real-estate-brokerage services in southeastern Michigan and the rest of the area served by the MLS.

Following the ruling, FTC Chairman Jon Leibowitz said the decision "ensures that home buyers will receive the benefits of competition in making one of the most financially significant decisions of their lives. Eliminating restrictions on discount listings published over the Internet will force real estate brokers to compete on the costs and quality of their services, which is good."

The decision is Realcomp II, Ltd. v. Federal Trade Commission, 2011-1 Trade Cases ¶77,409.

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