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A statement the U.S. Department of Justice made earlier this month regarding data sharing in a class-action lawsuit against major pork producers could have far-reaching implications for the real estate industry.
Brian Schneider of ArentFox Schiff, an attorney who represents several MLSs, told Real Estate News that data sharing is a “super hot” topic right now, in part because of the way it can be used to control price and supply.
The issue came up in a lawsuit the DOJ filed against RealPage this summer, in which the department alleged that the property management software company’s rent-pricing algorithm is anti-competitive.
The DOJ’s recent statement on data sharing can also be read as a warning to associations and MLSs, according to Schneider, who pointed out this specific statement from the department: “When competitors agree to exchange competitively sensitive information only among each other, it suggests that the information sharing will benefit only the competitors at the expense of consumers, workers, or other market participants.”
With artificial intelligence increasingly a part of the conversation, data sharing has become more of an antitrust risk, Schneider continued.
“It used to be that to share information, you had to go out and conduct a survey, or maybe you get to a meeting and everyone would sort of talk about their pricing policies,” the attorney told Real Estate News. “Now with artificial intelligence, you can do some pretty rigorous analysis of pricing.” If most competing companies end up using the same software to do this, “it can start to become an antitrust risk.”
The DOJ’s move earlier this year to get rid of “safety zones” for information sharing poses an additional challenge for companies hoping to avoid the DOJ’s scrutiny.
Still, the DOJ continues to keep a watchful eye over buyer agent compensation, the National Association of Realtors’ policies and Zillow’s litigation with REX.
For MLSs and associations, the risk grows if these organizations collect data on consumer transactions while “facilitating a price-fixing arrangement inadvertently,” according to Schneider.
The DOJ’s recent statement of interest addresses this issue specifically by noting that the sharing of information among competitors could violate antitrust law “even without proof of an agreement to fix prices.”
Key factors at play that will determine whether an exchange of information is anticompetitive include the sensitivity of the information, how detailed it is, the public’s accessibility to the information, how recent the information is, and the structure of the industry in which such information is being shared, The National Law Review explained.
One way to avoid inadvertently violating antitrust law may be to openly share data with consumers. For instance, a survey about commissions might only cause MLSs trouble with the DOJ if the findings from the survey are only shared with other industry players, instead of making those findings available to consumers as well.
Likewise, the sharing of some standard industry documents, like the ALTA forms created by the American Land Title Association, which contain information about pricing, commission and parties involved in a transaction, could be problematic if only shared by parties within the industry.
“If you have a database that shows exactly what each broker was paid … and it’s pretty recent data, and it’s pretty active data, and you’re sharing that with competing companies, that is a seriously problematic information-sharing platform,” according to the DOJ, Schneider said.
Fortunately, because that data is currently collected in PDFs and sometimes in paper format, Schneider says it is not accessible or transparent enough to be problematic from the DOJ’s standpoint.
Last week, NAR petitioned the U.S. Supreme Court to weigh in on the group’s legal fight against the DOJ’s investigation into the association’s practices and rules, including those surrounding commissions and pocket listings.
