After a three year battle, the FTC has ruled that a Michigan MLS (multiple-listing service for real estate) had unfair policies that restricted trade. They have been ordered to change their policies and provide a level playing field for all participants.
The Federal Trade Commission issued an Opinion finding that Realcomp II – a Michigan-based realtors’ group – violated federal law by restricting the ability of member real estate agents to offer consumers lower-priced alternatives to traditional real estate services. Realcomp refused to transmit discount real estate listings to its own and other publicly available Web sites and excluded such listings from the default searches within its own database. The Commission found that these policies restricted access to these listings and harmed competition. The FTC’s Final Order requires Realcomp to provide its members non-discriminatory access to non-traditional and lower-price listings on its Multiple Listing Service (MLS) and to stop preventing such listings from being sent to its public real estate sites.
The Commission found that “the practices at issue improperly limit consumers’ access to information about the availability of these lower-priced alternatives,” and . . . concluded “that [Realcomp’s] acts and practices unreasonably restrain trade in violation of Section 1 of the Sherman Act . . . and Section 5.” The Commission’s administrative decision resolves litigation arising from a complaint charging that Realcomp’s policies violate Section 5 of the Federal Trade Commission Act.
In my opinion, this is a very important decision that will allow for greater competition and more new media business models in real estate. The FTC said that, “The Internet has become vital to selling homes, and a majority of buying and selling homes begins on the Internet.” I completely agree with this statement and believe that if the current leadership in the real estate industry does not embrace technology then they will become increasing irrelevant.
These changes, the Commission wrote, “illustrate how technological dynamism and organizational innovation can place enormous pressure on traditional business models and create possibilities for ‘the new commodity, the new technology, the new source of supply, the new type of organization’ [Joseph A. Schumpeter, Capitalism, Socialism, and Democracy 84 (1942)] that can transform markets. Because [these] are powerful stimulants for economic progress, an especially important application of antitrust law is to see that incumbent service providers do not use improper means to suppress innovation-driven competition that benefits consumers.”
NAR financially supported the MLS in defense of these anti-competitive practices. We can only speculate as to whether the nations’ largest trade group was providing support based on preexisting mutual aid agreements or if they agreed with the policies of the MLS.
