Monday, October 27, 2008

MLS4owners.com wins one in federal antitrust case

When it comes to freedom of choice in real estate, MLS4owners.com is an advocate for consumers. Unless they are running for office, not many people monitor activities of federal, state and local governments. We try to keep on top of these things because they are important not only to us, but also to homeowners.

MLS4owners.com was the only Washington company to file a public comment on the recent proposed settlement in United States of America v. National Association of REALTORS®, and last week our work paid off.

The Department of Justice has for years been investigating NAR policies that DOJ considers anti-competitive, and in 2005 it filed a lawsuit regarding NAR’s Virtual Office Website (VOW) policy.

The way DOJ understands it, “VOWs are password protected websites through which brokers provide brokerage services to customers or clients, including the opportunity to search MLS listings and other information. NAR’s “Internet Data Exchange” or “IDX” rules govern websites operated by brokers though which they can advertise listings to consumers with whom the broker has not yet established a customer or client relationship.”

IDX policies allow listings of all brokers to display on other brokers’ websites. For example, in the Northwest Multiple Listing Service (NWMLS) brokers have a choice on their websites – they can display the listings of either ALL other brokers or NO other brokers. They are not permitted to publicly display Broker A’s listings while rejecting Broker B’s listings. As most brokers prefer to have as much content as possible on their websites in hopes of earning commissions by representing buyers, they tend to display the listings of all brokers. As a result, the local websites of MLS4owners.com, Windermere, John L Scott, Coldwell Banker, Prudential, RE/MAX (and many others) display the listings of all NWMLS members. While this has been very successful in Washington, NAR would like to allow brokers to selectively ban website display for the listings of some brokers. This would obviously be bad for the owners of those homes, as well as for buyers who thought they were seeing all available properties but were in fact seeing only a portion.

On May 27, 2008 a proposed lawsuit settlement was announced in USA v. NAR, based on recent amendments to NAR’s VOW policy. The settlement also included the statement, “the United States does not allege that Defendant’s Internet Data Exchange (IDX) Policy in its current form violates the antitrust laws.” NAR took this statement and ran with it, claiming that “the proposed final order validates NAR’s longstanding Internet Data Exchange (IDX) policy.”

We knew the reality to be different, and we urged DOJ to clarify its position. We pointed out that the IDX Policy was NOT the subject of the DOJ’s pre-complaint investigation, complaint, amended complaint or discovery, and that three was no basis for NAR’s statements. We asked DOJ to go back to the table and renegotiate the language to be more consistent with its stated goal – “The United States brings this action to enjoin the defendant a national association of real estate brokers—from maintaining or enforcing policies that restrain competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers, and from adopting other related anticompetitive rules.” We also asked that steps be taken to ensure NAR’s compliance with DOJ’s public pronouncement that “NAR will enact a new policy that guarantees that Internet-based brokerage companies will not be treated differently than traditional brokers.”

While DOJ understandably does not want to void the settlement before it even gets through the court system, they responded to our concerns by telling the judge that “The United States takes no position as to the permissibility under the antitrust laws of NAR’s IDX Policy.” This will be part of the federal record, and should prevent NAR from feeling it has a free pass to limit consumer options when they choose what type of real estate brokerage to use when marketing their homes. As Chicago attorney Michael Erdman pointed out on Inman News on October 23, 2008, “it was crystal clear that [DOJ] is not taking a position on whether the IDX policy, as written or applied, is fully compliant with federal antitrust laws.”

We are members of the National Association of REALTORS® and we appreciate many things our organization does. However, we will not hesitate to speak up when we see creeping anti-competitive behavior that would hurt our customers.

1 comment:

Marguerite said...

With all the other really important issues in our industry it can be frustrating with the assicociation gets bogged down with drama. The reputation of Realtors across the country will not be served if they are perceived as restricting consumers access to certain listings. It's sometimes easy to forget that in other parts of the country MLS's are still wasting their time arguing over this stuff.