VOWs and Antitrust

Opt-out risks

August 1, 2003

As alternatives for displaying listings on the Internet continue to evolve, the NATIONAL ASSOCIATION OF REALTORS® has established a new policy on how virtual office Web sites can use MLS data. But the policy’s opt-out provision, which gives brokers the choice not to have their listings displayed on other brokers’ VOWs, could create potential for violating antitrust laws if it’s not implemented properly.

Antitrust statutes prohibit agreements between competitors that unreasonably restrain trade. To avoid antitrust violations, brokers should exercise care in complying with VOW opt-out policies.

Two opt-out options

NAR’s VOW policy provides for both a blanket opt out and a selective opt out. With a blanket opt out, a listing broker doesn’t allow the company’s listings to be shown on the VOWs of any other brokers participating in the MLS. With a selective opt out, a listing broker allows company listings to be made available on the VOWs of some, but not all, of the other brokers participating in the MLS.

The policy also permits sellers to opt out of having their listing—or just the address of their home—displayed on the VOWs of participating brokers, while still permitting the display of the listing on the listing broker’s own VOW or other Web site.

To implement a blanket opt out, the listing broker notifies the MLS of the opt-out decision. Then the MLS has two alternatives. It can prepare a data feed for brokers operating VOWs (separate from the regular MLS feed) that includes only the listings of brokers and sellers who haven’t opted out on a blanket basis. Or, if an MLS doesn’t have the technological capability to prepare separate data feeds, it can maintain a list of brokers and sellers who have opted out and provide that list to all brokers who operate VOWs. VOW operators are then responsible for deleting the listings of brokers who have opted out.

Brokers can implement the selective opt-out alternative in one of two ways. They can send a private communication—preferably in writing—to a VOW operator, indicating that the VOW may not display any of the broker’s listings. In such an instance, a broker shouldn’t provide copies of this private communication to the MLS, the state or local REALTOR® association, or any competing broker. The communication must remain private to protect the broker from possible allegations that the decision to opt out was the result of an agreement among competitors, as well as to avoid an accusation that the broker was “signaling” or encouraging other brokers to opt out.

The second, more technologically complex method of implementing a selective opt out requires listing brokers to notify the MLS privately about which specific VOW operators shouldn’t receive their listings. The MLS would then provide each VOW operator with a customized data feed containing only those listings authorized for each participating VOW operator.

Stay out of opt-out conversations

Regardless of whether a broker chooses to opt out on a blanket or selective basis, it’s absolutely essential that the decision be made independently, rather than in concert with other real estate companies. Brokers should never discuss their opt-out decisions with competitors, either before or after making the choice. Any such discussions could raise a very real concern that brokers might be accused of participating in an agreement, or conspiracy, in restraint of trade.

If brokers are present when a competitor begins to discuss opt-out plans, they should immediately interrupt the conversation and advise those present that the discussion is inappropriate. If the topic of conversation doesn’t change immediately, they should make it clear to all present that they will not participate in such a discussion and leave promptly. The risks of being accused of violating antitrust laws and becoming embroiled in an expensive lawsuit are simply too great.

NAR also strongly encourages MLSs to exercise care in advising MLS participants about the opt-out decisions made by other participants. Notification of opt out should be made on a need-to-know basis only. For example, in cases where an MLS creates an opt-out list rather than providing a feed, that list should be provided only to VOW operators. It shouldn’t be distributed to all MLS participants.

An MLS must also avoid any action that might be characterized as facilitating listing brokers’ ability to signal each other about their decisions to opt out, such as publishing a list of those brokers who opted out. By facilitating such communications among listing brokers, an MLS could be accused of participating in an illegal conspiracy in restraint of trade.

How VOWs differ from IDX

 

It’s particularly important for MLSs to note that VOW policy differs from NAR’s Internet Data Exchange (IDX) policy, which regulates the advertising of others’ listing data online. For instance, under the IDX policy, a blanket opt out is the only alternative available to brokers. In addition, under IDX, a broker opting out advises the MLS, which then communicates the decision to all other brokers. With VOWs, in contrast, MLSs should communicate opt outs only to the brokers who have notified the MLS that they’re operating VOWs and thus need to know in order to bring their VOWs into compliance.

The legal risks to the MLS from unrestricted dissemination of the names of brokers who opt out are greater with VOWs than with IDX because very few IDX participants chose to opt out. It’s too early to say whether VOWs will have as high a participation level as IDX. If a significant number of participants opt out and VOW operators feel limited in providing complete listing data to customers, they may be more inclined to bring legal challenges to the manner in which the VOW program has been implemented.

The bottom line in working with VOWs: Listing brokers and their sellers are free to decide, consistent with antitrust laws, how a property will be marketed, and can opt out of having a listing displayed on a VOW. However, if two or more competing brokers make similar opt-out decisions, they run the risk of being accused of agreeing on a course of action in violation of antitrust laws.

Protect yourself by ensuring that all your decisions are made independently, without discussion with competitors, and based on rational business strategies.

Laurie K. Janik was general counsel for the NATIONAL ASSOCIATION OF REALTORS® from 1987 to November 2013.

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