The U.S. Department of Justice has reached an agreement with the broker-owned Multiple Listing Service of Hilton Head Island Inc. to settle charges that the MLS sought to regulate the price of brokerage services and passed rules that restricted competition.
Justice Department officials announced Tuesday that the department has filed a civil antitrust lawsuit in South Carolina’s U.S. District Court against the Multiple Listing Service of Hilton Head Island Inc. and has proposed a settlement to the court that would require changes to the MLS rules in order to resolve the complaint.
Yvette Acuff, CEO for the MLS, said Tuesday that the MLS has reached an agreement with the Justice Department but does “not admit that there were any wrongdoings.” She said she was still reviewing the Justice Department announcement Tuesday evening.
About 215 brokerages and 1,800 sales agents subscribe to the MLS, Acuff said. The MLS is not affiliated with the National Association of Realtors trade group.
Justice Department and U.S. Federal Trade Commission officials have engaged in a series of actions over the past few years targeting possible anticompetitive activity in the real estate industry. Earlier this month the Justice Department launched a Web site focusing on competition in the real estate industry that features statistics and graphics describing the cost of real estate services and barriers to competition in the industry, such as restrictive industry and government measures.
The Justice Department two years ago filed an antitrust lawsuit against the National Association of Realtors over the trade group’s online policies for the display and sharing of property information, and that lawsuit is ongoing.
The lawsuit against the Hilton Head MLS alleges that the MLS “has authorized its board of trustees to adopt rules that would regulate commissions and impose discriminatory requirements on Internet-based brokers. The mere prospect that the board might adopt such rules likely inhibits price and service competition. Their actual adoption would stabilize prices and competitively disadvantage Internet-based brokers.”
Also, the lawsuit charges that the MLS denies membership to real estate brokers “who would likely compete aggressively on price or would introduce Internet-based brokerage into the market, and imposes unreasonable membership costs on publicly owned brokerage companies.” MLS rules allegedly “stabilize prices by forcing member brokers to provide a certain set of brokerage services, whether or not the consumer desires to purchase those services,” the lawsuit states.
These restrictions, according to the complaint, serve to restrain competition, limit consumer choices for real estate services and stabilize the price of real estate services.
“Today’s settlement will remove unlawful impediments to competition for real estate brokerage services in the Hilton Head area, which should lead to increased options and reduced brokerage fees for consumers,” said Thomas O. Barnett, assistant attorney general for the Justice Department’s Antitrust Division, in a statement.
The proposed settlement agreement requires the MLS to rescind the rules that are deemed anticompetitive by the Justice Department and prohibits the MLS from adopting new rules “that have the effect of excluding real estate brokers from membership based on such criteria as their business model or price structure and that dictate the services and prices that its members must offer to their clients,” the Justice Department announced.
The proposed settlement is intended to ensure that the MLS “does not exclude from membership real estate brokers who might be likely to adopt innovative business models, offer services at discount prices, or offer a subset of the services that traditional full-service real estate brokers provide,” according to the Justice Department announcement.
The text of the proposed settlement will be published in the Federal Register, and written comments can be submitted within 60 days of its publication. Comments can be addressed to: John R. Read, chief, litigation III Section, Antitrust Division, U.S. Department of Justice, 325 7th St., NW, Suite 300, Washington, D.C. 20530.
At the conclusion of the 60-day comment period, the court will determine whether to finalize the settlement.
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