The U.S. Federal Trade Commission has finalized the settlement of an antitrust complaint against Multiple Listing Service Inc., a Realtor-operated multiple listing service based in Wauwatosa, Wis., despite objections by the National Association of Realtors trade group.
FTC officials in December announced an agreement to settle its concerns with the MLS over policies that placed restrictions on some property listings based on the type of listing contract that home sellers entered into with MLS members.
That settlement agreement was finalized on March 13, though the National Association of Realtors had sought to at least delay the settlement based on an administrative law judge’s decision in a separate but related FTC dispute with Realcomp II, a Michigan MLS.
If the judge’s decision holds in favor of Realcomp, argued NAR General Counsel Laurie Janik in a Jan. 9 public comment to the FTC, the consent agreement with Multiple Listing Service Inc. "should be rescinded," along with "all previous consent decrees based on substantially similar conduct" by MLSs.
FTC officials in October 2006 announced a series of actions against a group of seven MLSs across the country, charging that the MLSs had adopted policies that set restrictions on some property listings such as preventing those listings from appearing on some public property-search Web sites.
The policies specifically impacted property listings under an excusive agency contract — a type of contract with sellers that was favored by alternative real estate business models — the agency had charged, such as those companies that offer limited real estate service options at a low cost. Meanwhile, the more commonly used exclusive-right-to-sell contract was not subject to the same MLS restrictions.
Six MLSs from the group of seven have entered into settlement agreements with the FTC, and the FTC has also entered into similar agreements with a handful of other MLSs that were not a part of that group. Realcomp is the lone holdout from the group of seven, and a hearing by the full Federal Trade Commission is planned April 1 to consider whether to accept or reject a federal administrative law judge’s earlier decision in the case.
In December, the judge dismissed that complaint, stating that the FTC "has not demonstrated that Realcomp … unreasonably restrained or substantially lessened competition, thereby resulting in consumer harm." Lawyers for the FTC have appealed to the full commission to overturn that ruling.
Because the ruling was in favor of Realcomp, NAR has hopes of applying this ruling — if it stands — to other complaints the FTC had brought against MLSs.
Janik argues on behalf of NAR in her Jan. 9 letter that "at almost the same time that the consent decree" in the Multiple Listing Service Inc. case was put out for public comment, the judge in the Realcomp II lawsuit issued a decision in the favor of that MLS.
"The same analysis (in the Realcomp case) should lead to the same result with respect to MLSI," Janik argues, "regardless of any minor factual distinctions between the two proceedings."
Janik also stated that the board of directors for MLSI "voted to rescind the challenged policy in October of 2006 — prior to agreeing to the consent order and prior to the commission’s initial acceptance of that order."
Finalizing the settlement agreement with MLSI, Janik argued, could discourage other parties under investigation from entering into similar consent agreements, as they may be resistant to settle "while the relevant issues are being litigated by another respondent."
If the judge’s decision to dismiss the FTC complaint against Realcomp is overturned, and the full commission finds that Realcomp policies did violate federal antitrust law, Janik stated in her public comment that it’s possible the Realcomp case could end up in a federal appellate court "and possibly even … the Supreme Court."
NAR has offered financial support for Realcomp’s defense, approving a contribution of up to $125,000 in November and earlier approving a $175,000 contribution.
Donald S. Clark, a secretary for the FTC, stated in a March 13 response to Janik that "the commission has determined that the public interest would best be served by issuing the decision and order in final form without modification."
MLSI entered into the consent agreement with the FTC while the Realcomp II case was pending, the response letter states, and "Respondents who settle understand that they are giving up the certainty of knowing ho their cases would have been resolved if adjudicated," and "the proper way to deal with future legal developments is not to keep matters pending."
Instead, the response letter offers that a party bound by a settlement could seek to modify the terms of that settlement if "changed conditions of law or fact require such order to be altered, modified or set aside, in whole or in part."
The FTC complaint against MLSI charged that the MLS adopted a 2001 rule stating that all active listings of all MLS participants are eligible for Internet publication unless "the listing is subject to an ‘exclusive agency’ contract," and the MLS withdrew its policy in 2007.
A final decision and order in the MLSI matter provides that the MLS must "cease and desist from adopting or enforcing any policy, rule, practice or agreement … to deny, restrict or interfere with the ability of participants to enter into exclusive agency listings or other lawful listing agreements with the sellers of properties."
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