Court Greenlights DOJ Case Against Realtors

A Chicago district court cleared the way Tuesday for the Department of Justice (DoJ) to proceed with its antitrust lawsuit against the National Association of Realtors (NAR).

The DoJ contends the NAR is engaging in anti-competitive behavior against online home brokers. The NAR hoped the court would dismiss the suit when it made changes to its listing policies for online brokers.

“NAR has failed, with all respect, to demonstrate that this case should be dismissed at the outset,” the court wrote in its opinion.

According to the DoJ, the NAR is concerned online sites might lead to lower commissions for real estate brokers. In 2003, NAR passed rules allowing traditional brick-and-mortar brokers to block their home listings to brokers operating Virtual Office Web sites (VOWs).

The DoJ filed its antitrust suit in September 2005. On the same day, NAR changed its rules, no longer allowing brokers to selectively block their listings. Instead, brokers are still allowed to block listings but they must block all Internet listings or none at all.

“Sounds like the same policy to us,” J. Bruce McDonald, deputy assistant attorney general in the DoJ’s Antitrust Division, said at the time.

The brokers that NAR targeted with its rules operate password-protected sites that provide information to potential homebuyers. Working with a VOW broker, customers can obtain the same information through their home or office computers that brick-and-mortar brokers offer.

By allowing potential homebuyers to research and learn about properties on their own and at their own pace, VOW brokers can lower their commissions to homebuyers.

The DoJ claims online brokers can deliver brokerage services more efficiently, resulting in better services and lower prices.

In the DoJ’s antitrust lawsuit, the government contends the NAR policy of allowing traditional brokers to block listings to online sites inhibits new technology beneficial to consumers.

The department’s lawsuit seeks to ensure that traditional brokers cannot use NAR’s policy to deprive consumers of the benefits of these new ways of competing.

“The Department of Justice’s Antitrust Division is committed to preserving competition in this vital sector of our nation’s economy,” McDonald said in a Tuesday statement. “We are pleased that the court has allowed the lawsuit to proceed and we look forward to presenting our case at trial.”

The NAR did not respond for a request for comment on the lawsuit.

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