So, after a few years of hearing complaints about the FTC lawsuits going on against all these Multiple Listing Services across the country, it appears that the Gestapo tactics of intimidation are starting to back fire on the FTC. Just this week, two MLS boards have been vindicated in the court of law for NOT having anti-competitive practices in place.
The most recent case comes from Michigan, Realcomp II, Ltd., a regional multiple listing service located in southeastern Michigan. The issue presented was whether the MLS treatment of “Exclusive Agency Listings” (EAL), those that allow a seller to not pay a commission to the listing broker should the seller bring the buyer, was anti-competitive and in violation of antitrust law.
“The FTC argued that: the MLS’s policies discriminated against discount brokers utilizing EAL listings by limiting the distribution of their distribution and making it more difficult for other MLS participants to locate these listings. In particular, the FTC identified two policies which caused the alleged harm: the Website Policy and the Search Function Policy. None of the policies prohibited the submission of EAL to the MLS; rather, the policies addressed how the MLS would treat the listings after submission“…to read the full review visit here. (Login Required)
- The Website Policy only submitted “Exclusive Right to Sale Listings” (ERS) to Realtor.com and IDX feeds.
- The Search Policy only showed ERS listings but gave the MLS participants the option of checking a box to include all EAL listings in their search.
To claim a violation against Antitrust Laws, three standards must be used:
- per se analysis, when the restraint is obviously anticompetitive
- quick-look analysis, for restraints with some pro-competitive justifications
the rule of reason, for restraints where the effect on competition is harder to determine
The administrative law judge over the case determined that the “rule of reason” best described the way to judge the MLS rules. He then looked to see how these were anti-competitive and if they harmed consumers. Here is what the judge found:
The Search Policy was not anti-competitive because it gave the option of checking a box to include ALL listings.
The Website Policy was not anti-competitive because the FTC was not able to show any proof that the policy harmed the public or competition.
The judge further found that the alleged broker victims (discount brokers) had actually increased their gains revenues and increased their business during the years the Website Policy was in affect, so the claim that the policy hurt their business was false.
It is not against anti-trust laws to charge a broker an additional fee for submitting EAL listings.
Most importantly, the judge found that the MLS had the right to protect itself from “free loaders”. It’s policy helped “prevent sellers, who do not pay a commission to a MLS participant, from receiving advertising provided by the MLS but without paying dues to the MLS like all other MLS participants must. The MLS’s policy of excluding the EAL from public websites and IDX addressed this problem.” It also protects buyers that are working with a broker from being forced by sellers to ditch their agent representation, in order to negotiate on the home.
NO BIG SURPRISE…the judge dismissed the FTC complaint.
So there you have it. The FTC is not winning some of its cases. For those MLS boards that have caved before going to trial and given in to the FTC, they should seriously rethink their decision. Just because the government comes a knocking and threatens to take you down for anti-competitiveness, doesn’t mean you have to get scared and give in. It’s time we all stood up and said enough. Thankfully the law, which the FTC is trying to use in it’s cases, is proving to be more on the side of the MLS boards, then with it.