A U.S. Department of Justice (DOJ) lawsuit alleging that the National Association of Realtors tried to hinder Web-based real-estate agents will move forward after a judge rejected the group’s motion to dismiss the case.
The DOJ, in an antitrust lawsuit filed in September 2005, accused the National Association of Realtors (NAR) of enacting policies allowing traditional real-estate agents to block Web-based agents from posting real-estate listings on their Web sites. Past NAR policies required competing brokers to share listings, but a policy NAR passed in May 2003 allowed traditional brokers to block listings to sellers offering Web-based searches and other services.
The Web-based agents, offering sites sometimes called virtual office Web sites, or VOWs, help customers educate themselves about homes for sale and can lower costs by cutting traditional office overhead, the DOJ said. The DOJ accused the NAR of passing the 2003 policy in order to protect traditional real-estate agents and their fee structure.
The NAR, in its motion to dismiss the DOJ lawsuit, said it has changed its Web-listing policy, making the lawsuit unnecessary. The NAR in August 2005 rescinded its 2003 Web policy allowing traditional real-estate agents to selectively opt out of sharing listings with Web-base brokers, but the modified policy still prohibited any broker participating in a multiple listing service (MLS) from sharing the listings online without the permission of the listing broker. The NAR controls most of the U.S. MLSes, which are joint ventures offered by competing brokers, according to court documents.
“This provision would prevent a VOW broker from providing over the Internet the same [listing] information that can be provided in person, or through any non-Internet technology, without restriction,” wrote Judge Mark Filip, of the U.S. District Court of the Northern District of Illinois, in a decision released by the DOJ Tuesday.
Filip rejected the NAR’s arguments that the DOJ lawsuit was no longer valid because of the change in policy. The DOJ argued that both policies were “part of a single, ongoing contract, combination, or conspiracy” that violates U.S. antitrust laws, Filip wrote. While the NAR argued that its policies do not restrain trade, at least one Web-based broker in Kansas discontinued operations after other brokers froze him out of listings, Filip added.
A NAR spokeswoman said the group expected the judge’s ruling this week, after he issued a preliminary ruling two months ago indicating he’d turn down the motion to dismiss. “It was no surprise to us,” said NAR spokeswoman Mary Trupo. “We fully expect this will go to the court and be rectified in our favor.”
The DOJ applauded the decision and said it looks forward to making its case at a trial. The NAR policies allow traditional brokers to “discriminate against other brokers based on their business model,” the DOJ said in a press release. “The … lawsuit seeks to ensure that traditional brokers cannot use NAR’s policy to deprive consumers of the benefits of these new ways of competing.”
Editor’s note: Added NAR reaction, replaced incorrect acronym (NAB) with NAR.