Despite DOJ’s verdict, NAR isn’t out of the antitrust woods yet
The National Association of Realtors (NAR), while it was a great day for the group when Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia ruled in favor of the trade group in the reopened Department of Justice antitrust probe, isn’t done yet.
NAR is still facing multiple antitrust lawsuits filed by private parties despite the judge’s verdict. Some of these suits have already been defended by the DOJ. It appears that the DOJ will continue to be involved in them. The DOJ requested an amicus brief from Top Agent Network regarding NAR’s Clear Cooperation policy just days before Kelly’s verdict.
It remains to be seen if Kelly’s decision will be appealed by the DOJ.
“It is a great American pastime not to accept any court decision until it has been finally overturned by the U.S. Supreme Court. According to Steve Murray, co-founder of RealTrends Consulting: “In short, I expect the DOJ will appeal the decision.” “They will appeal it to a Federal Appellate Court, and the court must decide if the judge made a mistake.”
Murray believes that NAR’s DOJ antitrust woes may not be over. However, Kelly’s support will be a huge help to NAR in any antitrust lawsuits the trade organization faces.
Murray stated that this was a positive development for the class action cases against NAR. “You have the major antitrust investigation Federal authority saying that they found nothing wrong. I am glad that I won’t be representing the plaintiff and have to tell the jury that the DOJ did not find any wrong after two years of investigation. However, we will still make a case for our own.
Rob Hahn, a managing director at 7DS Associates, feels the opposite.
Hahn stated that “I don’t see this having any effect on the other lawsuits since they are all civil lawsuits and whatever a judge decides regarding an administrative law case should have no impact.” “The impact could be a little bit negative, because the plaintiffs might now ask why NAR is so afraid to transparency. They sued the Department of Justice because they were so desperate to avoid being investigated. Who does that?
Hahn added that it was important to keep in mind exactly what NAR “won” in the verdict of this lawsuit.
Hahn stated that “NAR is not winning anything substantive over the DOJ.” “This isn’t NAR going before the judge and saying, ‘The Department of Justice is saying our rule is anticompetitive. They are wrong. It is actually good news for consumers’ and they winning that case. NAR is going to the judge saying, “The DOJ wants us to be investigated, please stop them.” This is a completely different type of victory.
Hahn however agrees with Murray’s assertions that the DOJ will appeal the decision, but is uncertain about the outcome.
Hahn wrote that “What I find most interesting [about the decision] was that the court never once mentioned the Tunney Act.” He wrote this in his NotoriousVIP newsletter. The Tunney Act, a federal law, requires judicial review of settlement agreements and consent decrees in antitrust cases. All of the Tunney Act cases and commentaries have shown that a settlement reached by the DOJ (or any government agency, as we’ll soon see) is not worth the paper it’s written on unless a judge approves the settlement. In this case, DOJ wants the court not to approve any settlements. The court responds that they did have a deal.
“If I understand correctly the court’s reasoning here, it is saying, despite the fact the court would have to reject the consent decree — the actual Proposed Final Judgment that had all sorts of requirements for NAR — that the court would need to reject the Tunney Act — for failing to comply with the statutory requirements of NAR… the agreement that NAR, the DOJ reached to get to the consent order is a legally binding contract?” Hahn continued.
NAR’s Clear Cooperation Policy and Participation Rule are at the heart of these antitrust lawsuits. The Participation Rule requires listing agents to offer a blanket offer of compensation to buyer broker in order to submit a listing for an NAR-affiliated multiple list service. The Clear Cooperation Policy requires that the listing agent submit a listing for their local MLS within one day of marketing a property, eliminating the possibility pocket listings.
Ken Trepeta, executive director of Real Estate Services Providers Council stated that “The MLS is more than just where all the listings go up. It is also a way for data to be uniform. It is also a way manage the relationship between agents, brokers, and other parties in the transaction.” To avoid a rematch later, people need to be clear about what they are willing and able to share of the commission.
Trepeta stated that he believes the Clear Cooperation Policy was created to limit pocket listing practices and maintain an equal playing field for all agents and brokers.
Trepeta is positive that the DOJ will appeal, and that the other antitrust lawsuits can continue as planned, but he is optimistic about NAR’s chances.
Trepeta stated that the idea that this is a nefarious way of keeping commission rates high doesn’t make sense. “Commissions have become more and better negotiable as the market has become more competitive. You don’t have have to pay them if you don’t want to. Just choose the agency or firm that allows you to do what is most comfortable. There is no evidence to suggest that there is an intentional effort to maintain a certain amount of commission. Over 30 years I have been in this industry. Prices have risen, but commission rates have not.