DOJ sues MLS in South Carolina

Complaint alleges anticompetitive rules

The U.S. Justice Department has filed a lawsuit against a broker-operated multiple listing service in Columbia, S.C., charging that the MLS’s rules restrict competition and drive up the cost of real estate services.

The civil antitrust lawsuit, filed Friday in U.S. District Court in Columbia, alleges that CMLS "requires brokers to perform a prescribed set of services, which limits consumer choice, and excludes competitors who might offer innovative options that could provide better services to consumers in that area."

The announcement was released late Friday, and representatives for the MLS could not immediately be reached for comment. The MLS has about 370 broker members that represent about 3,100 agents in the Columbia area.

MLS rules "prevent members from providing a set of brokerage services that includes less than the full array of services that brokers traditionally have provided — even if a consumer prefers to save money by purchasing less than all of such services," the complaint states, adding that the rules require members to use a standard contract that "prevents its members from offering to a home seller the option of avoiding paying the broker a commission if the seller finds the buyer on her own."

The rules, the DOJ alleges, also "impose unreasonable objective criteria for membership and contain subjective standards for admission to membership that allow CMLS representatives to deny membership to brokers who might be expected to compete more aggressively or in more innovative ways than CMLS’s members would prefer," which DOJ asserts could exclude such brokers or deter them from seeking membership.

Antitrust officials at the Justice Department and the U.S. Federal Trade Commission officials have engaged in a series of actions to oppose rules set by other MLSs that they have deemed to be anticompetitive.

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The Federal Trade Commission is pursuing a complaint against a Michigan MLS, for example, over policies that restrict the MLS from sharing of broker-supplied property information with a variety of public-facing Web sites. A federal administrative law judge has found in favor of the Michigan MLS, Realcomp II, in that case, though the full panel of the Federal Trade Commission will consider whether to reverse that decision or uphold it.

The FTC has settled similar charges with several other MLSs.

In October 2007, the Justice Department announced an agreement with another broker-owned MLS in South Carolina — MLS of Hilton Head Island Inc. — over allegations that the MLS passed sought to regulate the price of brokerage services and passed rules that restricted competition. The MLS of Hilton Head Island acknowledged no wrongdoing in that settlement.

In its lawsuit against the Consolidated Multiple Listing Service in Columbia, the Justice Department seeks to permanently block the MLS from engaging in activities such as those alleged in the complaint, and to eliminate its rules that DOJ deems to "unreasonably restrain trade."

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