A federal antitrust lawsuit, filed against the National Association of Realtors trade group in 2005 following a two-year investigation, has reached a proposed settlement that calls for the adoption of a new online listings policy.
Deborah A. Garza, deputy assistant attorney general for the U.S. Justice Department, today characterized the proposed settlement as "a full success" for the department. "We were able to achieve full relief with respect to the practices we were concerned about," she said.
Meanwhile, Richard F. Gaylord, president for the National Association of Realtors, said in a statement, "This is clearly a win-win for the real estate industry and the consumers we serve," and the association characterized the outcome as "favorable."
At the center of the lawsuit were NAR-adopted policies governing the online sharing and display of property listings, including Virtual Office Web site (VOW) and Internet Listings Display (ILD) policies.
Another set of data-sharing policies for multiple listing services and participants, known as Internet Data Exchange (IDX) policies, were not challenged in the lawsuit and are unaffected by the proposed settlement.
The Justice Department had alleged in its lawsuit that NAR’s policies could have the impact of restricting competition and consumer choice in real estate services, and discouraging low-cost services.
One of the rules challenged by the Justice Department required that multiple listing services permit brokers to selectively withhold property listings from companies that operate VOW-based search sites that feature a collection of property listings from MLS members.
"Many local MLSs adopted NAR’s (VOW) policy before NAR suspended its policy during the department’s investigation," according to the Justice Department announcement today, and in one market area in Kansas "all brokers withheld their listings from the one VOW in the community, which was then forced to discontinue its popular Web site."
The settlement proposal provides that the display of listing information on a VOW site "does not require separate permission from the participant whose listings will be available on the VOW," but does provide that individual sellers can choose to block information about their home from display on the Internet.
Those MLSs that had adopted policies in violation of the settlement proposal must rescind those rules, and "Under the new policy, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office Web sites," DOJ announced.
Another rule challenged by Justice Department officials relates to restrictions in using VOW sites as a source of referral fees from other brokers. The proposed settlement provides that an MLS "may not prohibit, restrict, or impede a participant from referring registrants to any person or from obtaining a fee for such referral."
Also under the proposed settlement, NAR will offer antitrust compliance training programs to instruct local Associations of Realtors about proposed settlement and antitrust laws in general.
Lucien Salvant, spokesman for NAR, noted that NAR paid no monetary penalty and makes no admission of wrongdoing in the settlement agreement.
"We don’t think the DOJ showed any instance in which the VOW policy harmed anyone," he said, adding that the settlement strengthens NAR’s position by allowing that all members of MLS "must be actively engaged in the act of real estate buying and selling," which prevents MLS participants from joining an MLS specifically to "scrape" property listings from other members.
NAR officials had stated in November 2007 that the association would engage in settlement talks with Justice Department officials.
The proposed settlement will be published in the Federal Register and is subject to a 60-day comment period and a 30-day review by a judge before it is finalized.
NAR must adopt the modified VOW policy within five business days of the final judgment on the settlement agreement.
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