A large multiple listing service in Washington has worked to monopolize property listings in the state and has driven many independent MLSs out of business, according to a lawsuit that was announced today.
The Bellingham-Whatcom County MLS, which has about 900 members in 70 offices and maintains 1,800 active listings, charges that the Northwest Multiple Listing Service, based in Kirkland, Wash., has engaged in a “pattern of anticompetitive activities,” including the absorption of eight formerly independent MLSs in nearby counties and the offer of “unwritten ‘sweetheart’ deals to local brokers at large real estate franchises to undercut independent (MLSs).”
Also, the lawsuit alleges that Northwest’s “specific intent in taking over (MLSs) is to control the market for real estate listings, benefiting Northwest’s three top members — Windermere, Coldwell Banker and John L. Scott.”
Tom Resick, a lawyer representing the Bellingham-Whatcom County MLS, in November 2004 filed an antitrust complaint with the Federal Trade Commission, alleging that Northwest appears to be “intent on driving the Bellingham-Whatcom County (MLS) out of business.” That complaint has been referred to the Washington, D.C., FTC office.
Resick said that the lawsuit addresses issues that cannot be considered by the FTC.
The lawsuit alleges that Northwest breached its contract in terminating a network that allowed members to share property listings information, and charges Northwest MLS officers and directors with violating fiduciary duties and misappropriating assets from an information network.
Bellingham-Whatcom County MLS seeks an injunction requiring Northwest MLS to reinstate this Washington Information Network (WIN) computer network and listings, reimbursement for lost sales and profits “from the dismantling of WIN,” and compensation for other damages.
In a news release, Resick stated, “Essentially our client wants free and full reciprocal access to listings throughout the state of Washington.”
Northwest MLS officials had said, in response to the earlier FTC complaint, that the MLS “knows of no law, agreement, or decision that requires it or any other (MLS) or association to give free access to its data and services to non-members.” Northwest MLS officials have also said that Northwest is engaged in “overt competition,” not anti-competitive behavior.
Northwest Multiple Listing Service officials said the lawsuit appears to be “a response to NWMLS’s decision to begin offering its services in Whatcom County to its member brokers and agents.”
Chris Osborn, a lawyer who represents Northwest MLS, said, “NWMLS is confident that this lawsuit is without merit.” He added, “It will vigorously defend against this lawsuit so that it can continue to offer these services to all of its members throughout the state, including those in Whatcom County.”
The lawsuit charges that the Northwest MLS “began driving independent listings services, including many WIN members, out of business. Northwest would then absorb the brokers and real estate agents into its listing service. Northwest has now set its sights on taking over the Bellingham-Whatcom County (MLS).”
In June, 2004, Northwest MLS “barred Bellingham members from posting or receiving listings through the reciprocal WIN program,” the lawsuit also alleges. “This was part of a coordinated, statewide strategy to disconnect independent local listing services from the network. By terminating the program, Northwest has intentionally interfered with the ability of non-Northwest members to compete for both local and Northwest’s listings.”
Also according to the lawsuit, the purpose of WIN was to “promote the exchange of listings and other information while protecting a competitive balance of listing services.”
As of December 2004, Northwest MLS had about 18,312 active listings. Northwest MLS membership includes about 1,300 brokerages with about 17,000 sales associates, and its service area includes 15 counties, mostly in Western Washington.
A Feb. 25 hearing relating to the lawsuit is scheduled at Whatcom County Superior Court.
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