Antitrust Suit Against Realtors Moves Forward

Peter Coy

There was big news this week in the government's antitrust case against the National Association of Realtors, but the press missed it. The news is that a federal court in Chicago on Nov. 27 allowed the Department of Justice's antitrust suit against the Realtors to proceed. The DOJ argues that the Realtors' rules illegally limit competition from brokers who use the Internet. The Realtors deny they're breaking any laws.

Here's a (long) excerpt from the government's press release:

"The brokers that NAR targeted with its rules operate password-protected Web sites through which they provide information, including property listings, to their customers, potential home buyers. These are sometimes called "virtual office websites" or "VOWs," because a broker operating such a site is able to provide customers with the same property listing information on-line that customers can obtain by visiting the "brick-and-mortar" office of a traditional broker."

"Consumers who work with brokers that operate VOWs are better able to educate themselves about available properties that may meet their requirements. By working with a VOW broker, customers can search the database of local property listings on their own, using their home computers to obtain the same information other brokers provide by less convenient means, such as by hand at their office or via fax, mail or e-mail. Because VOWs enable consumers to research and learn about the marketplace at their own pace and on their own time, brokers who provide this service can, in turn, lower their costs by reducing the time that their agents spend searching the Multiple Listing Service (MLS) database or showing homes the customer dislikes, the Department alleged. Because the Internet can be used to deliver brokerage services more efficiently ­ resulting in better service and lower prices to consumers ­ brokers who utilize the Internet represent a competitive challenge to traditional brokers, the Department said."

"NAR's policy enables traditional brokers to exercise an "opt out" right to block their competitors' customers from having full on-line access to all of the MLS's listings. When exercised, the opt-out provision prevents VOW brokers from providing all MLS listings that respond to a customer's search, effectively inhibiting the new technology. The Department alleges in its lawsuit that these policies significantly alter the rules that govern MLSs by permitting traditional brokers to discriminate against other brokers based on their business model, denying them the full benefits of MLS participation. The Department's lawsuit seeks to ensure that traditional brokers cannot use NAR's policy to deprive consumers of the benefits of these new ways of competing."

Strikes me that the court letting the suit go ahead is pretty big news. But I used the Factiva news retrieval service today and couldn't find a single mention in any of the thousands of publications it collects. There was a small handful of online news stories and blog entries.

Here's the court's opinion. And here's the press release from the trustbusters at Justice.