This
policy prevents consumers from receiving the full benefits of
competition and threatens to lock in outmoded business models and
discourage discounting, said the Department in its case against the
National Association of Realtors (NAR).
According to the Department, in most markets, real estate
brokers share information about properties for sale, known as
listings, through the local Multiple Listing Service (MLS) – a
joint venture among competing brokers. Participation in the local
MLS makes it possible for a broker to provide customers with
listings for virtually all properties for sale in the community,
which is critical to compete in the local market.
Traditionally, brokers provided listings for properties to their
customers in a variety of ways, such as by hand at their offices,
or by mail, fax, or email. But some brokers have recently begun
offering brokerage services to their customers over the internet,
using so-called virtual office websites, or VOWs.
VOWs are password-protected internet sites that allow the
broker's customers to search the MLS database on their own, using
their home computers to obtain the same information that would be
available in a broker's brick-and-mortar office.
This gives consumers more control over their search for a home,
allowing them to educate themselves about their options at their
own pace and on their own time. It also allows brokers to reduce
the time that their agents spend searching the MLS database or
showing homes the customer dislikes.
But because the internet can be used to deliver brokerage
services more efficiently – resulting in better service and lower
costs to consumers – brokers who use the internet represent a
competitive challenge to traditional brokers. Some brokers are
therefore unwilling to participate in the scheme.
According to the Justice Department, the NAR developed a policy
that required NAR-affiliated MLSs to adopt rules that will allow
brokers to withhold their clients' listings from other brokers'
websites by means of an opt-out.
In essence, NAR's policy enabled traditional brokers to block
their competitors' customers from having full online access to all
of the MLS's listings. When exercised, the opt-out provision
prevents web-based brokers from providing all MLS listings that
respond to a customer's search, effectively inhibiting the new
technology.
“The purchase of a home is one of the most significant financial
decisions a family can make, and NAR's policy stifles competition
to advantage some of its members at the expense of home buyers and
sellers across the country," said J Bruce McDonald, Deputy
Assistant Attorney General in the Department's Antitrust Division.
"Consumers benefit when real estate brokers are free to compete
vigorously by offering innovative services."
The Justice Department has therefore filed suit – on the very
day that the NAR announced a revised policy.
According to the NAR, its new policy will ensure that all MLS
property listing data available for display will automatically be
available to all MLS members unless a member notifies the MLS in
advance that he or she does not want to participate. In that case,
none of the listings he or she enters into the MLS will be
available for display on other brokers’ websites nor will he or she
be allowed to display other brokers’ listings on his or her own
website.
The new policy also contains an entirely new feature that allows
brokers who have opted out of displaying their listings on
competitors’ websites the opportunity to make an exception at the
direction of a particular seller who wants to have his or her
property displayed on the websites of all other members of the
MLS.
“After months of negotiations, we are at a loss to understand
why the Department of Justice would bring a legal action," said the
NAR in a statement. "Many of the changes incorporated in the new
policy are in direct response to concerns they have raised over the
course of the two-year investigation."
But the revised policy does not go far enough, according to the
Justice Department.
The complaint alleges that NAR's policy significantly alters 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 lawsuit
seeks to ensure that traditional brokers, through NAR's policy,
cannot deprive consumers of the benefits that would flow from these
new ways of competing.
