Future of MLS: DOJ Suit Amended

NAR will defend policies against antitrust action.

November 1, 2005

The U.S. Department of Justice on Oct. 4 filed an amended antitrust complaint against the NATIONAL ASSOCIATION OF REALTORS®’ policies governing the display of listings on brokers’ Web sites, saying the association’s new Internet Listing Display rules, like its now-rescinded virtual office Web site policy, put Internet-based brokerages at a competitive disadvantage against traditional brokers.

NAR strongly backs its policies and says it has no plans to settle the case.

“NAR’s policies that are under attack by the Justice Department preserve the integrity of multiple listing services, including the vital benefits that MLSs bring to sellers and buyers and the rights of listing brokers and their customers to direct the marketing of their own properties,” NAR said in a prepared statement. “This ill-considered lawsuit jeopardizes the future of the nation’s 900 MLSs.”

In its complaint, amended from a suit filed Sept. 8, the DOJ says provisions in the new ILD policy that give brokers the ability to unilaterally withhold their listings from display on competitors’ Web sites, known as a blanket opt-out, violate antitrust laws. It also finds fault with what it says is an unwarranted exception that allows brokers who’ve opted out to display their listings on public sites such as REALTOR.com.

The DOJ cites as anticompetitive ILD provisions it claims “interfere” with certain cobranding relationships between MLS participants and third parties but that, in fact, merely require such cobranding to be not misleading or deceptive.

The suit also takes aim at a separate NAR MLS rule that defines an MLS participant as a broker who makes offers of compensation to and accepts such offers from other brokers. Prior to the rule, an MLS participant had only to be capable of making and accepting offers of compensation.

The amended complaint also includes charges made against three provisions in the rescinded VOW policy. The first is the ability of brokers to opt out selectively (from competitor Web sites of their choosing). The second is a prohibition on the use of other brokers’ listings solely for the purpose of collecting and making referrals to other brokers for a fee. And the third is a prohibition on placing third-party advertising adjacent to displays of the listings of other brokers, which the DOJ incorrectly asserts applies only to VOWs. Actually, the prohibition could be imposed only if the MLS necessitates an equivalent restriction in the “bricks and mortar” environment, such as when listings are e-mailed or faxed to customers or given to buyers in the office.

The VOW policy was intended to regulate online brokerages that aim to replicate bricks-and-mortar brokerage services by letting consumers who register with the site search MLS data directly.

While the lawsuit is pending, NAR is instructing local associations of REALTORS® to continue implementing the national association’s Internet data exchange policy. The IDX policy, in effect since 2001, regulates brokers’ online display of MLS listing data for advertising purposes. The policy, which has never been challenged by the DOJ, was updated earlier this year.

Local associations that had implemented the VOW policy have been instructed to either rescind the policy or refrain from applying and enforcing the provisions targeted as anticompetitive by the DOJ: the blanket and selective opt-outs, referral rule, and advertising prohibitions.

NAR has 60 days to respond to the DOJ’s amended complaint.

“A victory by the Department of Justice will drive brokers out of MLSs,” NAR says, “resulting in less competition in real estate services, higher costs, [and] less availability of listing information, the very outcome Justice seeks to avoid.”

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.

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