NEWS BULLETIN: Government Files Memo in Opposition to NAR’s Motion to Dismiss Antitrust Lawsuit

Suit challenges policy that allows MLS members to choose an ?opt out? provision that prohibits other brokers from displaying that member’s listings
RISMEDIA, Feb. 7 ? The U.S. government on Monday filed a memorandum in opposition to a motion to dismiss an antitrust lawsuit against the National Association of Realtors®. The suit challenges a new policy that allows MLS members to choose an ?opt out? provision that prohibits all other brokers from displaying that member’s listings.

According to NAR, the policy ensures that all members of Realtor multiple listing services will receive exactly the same MLS property listings for display on their Web sites as their competitors.

However, the government has said that NAR’s policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting.

In its memorandum, the government has responded to NAR’s motion to dismiss, which includes three points as grounds for dismissal:

1. According to court documents, the government asserts that ?the court has jurisdiction over the Initial VOW Policy, despite NAR’s contention that it modified that policy shortly before the U.S. filed suit.

2. NAR’s VOW policies constitute restraints of trade, despite NAR’s protestations to the contrary, because they restrain competition in real estate markets, generally, and the behavior of multiple listing services (?MLSs?) and virtual office Web site (?VOW?) operators, in particular,? court documents say.

3. The government has ?specifically alleged anticompetitive harm from NAR’s Modified VOW Policy. NAR’s contrary claim and its assertion of a heightened pleading standard are unfounded,? court documents state.

For these reasons, the government says that NAR’s motion to dismiss should be denied.

However, NAR believes its new policy is fair and in the best interest of consumers.

?We believe the new [Internet Listing Display] policy is fair, pro-consumer, pro-competitive and accommodates innovation,? an NAR statement said in September. Many of the changes incorporated in the new policy are in direct response to concerns they have raised over the course of the two-year investigation.

Under the new policy, listing brokers will not be allowed to restrict the display of their listings on selected competitors? Web sites, as they were under the controversial provision known as ?selective opt-out? contained in NAR’s now-defunct Virtual Office Web site (VOW) policy, according to NAR.

But the government says that the new policy continues to discriminate against innovative brokers, and does not resolve the government?s concerns. In addition, according to the government, those who choose to ?opt out? are still listed on NAR’s consumer Web site, www.Realtor.com.

Known as Internet Listing Display (ILD), the new policy consolidates and replaces both the VOW policy and NAR’s Internet Data Exchange (IDX) policy to create a single, unified policy governing the Internet display of all property information originating from the more than 800 multiple listing services owned and operated by Realtor organizations, NAR has said. All Realtor MLSs will be required to comply with the new policy by July 1, 2006.

But in its original complaint, the government alleges that NAR’s policy restrains competition by requiring NAR-affiliated MLSs to adopt rules that will allow brokers to withhold their clients’ listings from other brokers’ Web sites by using the “opt out” feature.

In essence, NAR’s policy enables traditional brokers to block their competitors’ customers from having full online access to all of the MLSs listings. When exercised, the opt-out provision prevents Web-based brokers from providing all MLS listings that respond to a customer’s search, effectively inhibiting the new technology, the government has said.

According to NAR, all MLS property listing data available for display will automatically be available to all MLS members unless a member notifies the MLS in advance that he or she does not want to participate in ILD.

In that case, none of the listings he or she enters into the MLS will be available for display on other brokers? Web sites nor will he or she be allowed to display other brokers? listings on his or her own Web site. A broker who has elected to ?opt out? may not reverse that decision for 90 days.

This provision, known as ?blanket opt-out,? is included in the IDX policy and has been in force by hundreds of MLSs for three-and-a-half years. It has been widely accepted by the industry and very few brokers have chosen to opt out, according to NAR.

Further, the new ILD policy contains a new feature that allows brokers who have opted out of displaying their listings on competitors? Web sites the opportunity to make an exception at the direction of a particular seller who wants to have his or her property displayed on the Web sites of all other members of the MLS, NAR has said.

The government?s lawsuit seeks to ensure that traditional brokers, through NAR’s policy, cannot deprive consumers of the benefits that would flow from these new ways of competing.

NAR’s policy denies brokers using new technologies and business models the same benefits of MLS membership available to their competitor brokers, suppresses innovation, discourages competition on price and quality, and prevents new, efficient competitors from entering into the marketplace?all to the detriment of consumers, the government said.

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