MLS May Restrict Use to Members

U.S. District Court, E. Kentucky, 2005: Buyer’s Corner Realty Inc. v. N. Kentucky Assoc. of REALTORS®

April 1, 2006

In a victory for the MLS membership model, a federal court in Kentucky has ruled that an MLS can limit participation to members of the local REALTOR® association.

The principal of a real estate brokerage sued the Northern Kentucky Association of REALTORS®, alleging that the association and its wholly owned subsidiary, the Northern Kentucky Multiple Listing Service, illegally tied association membership to MLS services. The principal, Sherry Edwards, claimed that, although she was a member of the association, she joined only to gain access to the MLS.

After considering the case, the federal court ruled that the anticompetitive effects of tying association membership and MLS participation weren’t sufficient to justify an antitrust claim. Tying arrangements violate antitrust laws if the arrangement restrains competition in the relevant market and has a substantial impact on interstate commerce, and the tying company has an interest in the sale of the tied product.

The court found that Edwards had failed to identify any competitors in the market who were harmed by the membership requirement. It noted that Edwards had joined one of the only other associations (the National Association of Exclusive Buyer Agents) she had identified as competition, so the requirement of membership hadn’t kept her from joining other groups. In addition, the court found that associations such as the NAEBA didn’t provide the same services as the REALTOR® association and so was not in the same product market. Therefore, said the court, the tying agreement didn’t violate antitrust law.