Representatives for the U.S. Justice Department and Federal Trade Commission, during a meeting of multiple listing service industry professionals this month, discussed the agencies’ role in enforcing antitrust law for the real estate industry and outlined actions the agencies are taking to protect consumers and industry participants from anticompetitive behavior.
The representatives were invited by organizers to an annual meeting for the Council of Multiple Listing Service, a group of MLS industry officials that includes MLS executives, staff, vendors and technologists.
Federal antitrust actions are fresh on the minds of many MLS officials — FTC officials announced a series of actions last year targeting MLSs for passing rules that the agency found were in violation of federal antitrust law, and that complaint led to two lawsuits against MLSs — one of those cases has settled, and the other is pending a final decision by an administrative law judge.
Also, the Justice Department this month announced that it has reached a settlement agreement with a local-area MLS in South Carolina over MLS rules that the DOJ charged are anticompetitive, and that agency is also engaged in an antitrust lawsuit against the National Association of Realtors trade group over policies related to the online sharing and display of property listings information. The Justice Department has requested or obtained data from about 20 MLS areas as a part of that lawsuit, and has named more than one dozen other MLS areas from which it has already drawn evidence for the case or plans to draw evidence.
The Council of Multiple Listing Service, which launched in 1957 to serve MLS industry professionals in the Pacific Northwest, now has a national membership and also has members in Canada.
In a session titled “The DOJ Speaks,” Matt Bester, a trial lawyer for the DOJ’s Antitrust Division, described the benefits of MLSs and the harm that MLSs can cause by adopting anticompetitive policies. While MLSs can “benefit brokers (and) ultimately consumers by lowering some effort and cost of doing business,” he also noted that MLS rules can run afoul of federal antitrust law when they establish rules that “restrict how brokers do business, favor one business model over another, (or) dictate compensation or services to be performed,” according to materials Bester presented at the conference.
His presentation included an “Anticompetitive MLS Rules Checklist” with questions that MLS officials should ask when setting policy, such as, “Is the rule exclusionary or (does it) restrict competition among brokers? Is there a pro-competitive justification for the rule? If there is, is it narrowly tailored to minimize the effects on competition and maximize the benefits to consumers?”
Rules that raise entry barriers for potential competitors, maintain the price of brokerage services by dictating services for all brokers, or limit consumer choice by preventing the entry of new business models may be considered anticompetitive, for example, according to Bester.
He also stated in his presentation that antitrust laws “protect competition, not competitors,” that “new business models are emerging that benefit consumers,” and that “MLS rules produce benefits, but also may negatively affect competition and consumers.”
And he noted that the Justice Department’s Antitrust Division has focused on two categories of anticompetitive legislation and regulations in the real estate sector: restrictions that prevent real estate brokers from offering gifts, rebates or promotional items to consumers, and measures that mandate real estate services for brokers whether or not consumers want those services.
Sean P. Gates, deputy assistant director for the FTC’s Anticompetitive Practices Division, discussed a complaint that the FTC filed in October 2006 against Realcomp II, a Michigan MLS, over policies that the group has adopted. Following the complaint, the MLS did change some of its policies, and a decision is expected in that case by Dec. 10.
Materials that Gates presented at the CMLS conference suggest that MLSs that place restrictions on the types of property listings that are favored by alternative business models tend to have a far lower volume of those types of property listings.
The meeting also featured a number of other presentations by MLS industry officials, academics and vendors.
Chris Nye, a flat-fee real estate broker in Tacoma, Wash., who attended the CMLS meeting in Seattle as a representative for the American Real Estate Broker Alliance — a group of flat-fee brokers that advocates for full disclosure, real estate innovation and consumer choice in real estate services — said he was encouraged that federal antitrust agency representatives were invited to speak at the CMLS meeting.
“I think people are scared to talk about (antitrust law) sometimes. I would recommend that we talk more and understand each others’ businesses. My recommendation is we need more meetings like this. Maybe this is the icebreaker — it’s OK to talk about this in the right context,” Nye said. “I think it’s a great step forward and I’m hoping more dialog happens.”
Jack Johnson, president and CEO for Northwest MLS, which played host to the CMLS conference, could not be reached Monday for comment about the CMLS meeting.