The antitrust regulator said the trade group refused to modify the deal to protect the agency’s ability to investigate other NAR conduct that could impact real estate competition.
The U.S. Department of Justice is pulling out of a proposed settlement with the National Association of Realtors in order to broaden its investigation into the trade group’s rules, the agency announced Thursday.
The DOJ sued the 1.4 million-member trade group in November, alleging some of its rules are illegal restraints on Realtor competition. The federal agency filed a proposed settlement at the same time as it filed the antitrust suit requiring NAR to repeal or change several rules regarding buyer broker commissions and lockbox access.
But now the DOJ says NAR refused to modify the settlement to protect the agency’s ability to investigate other NAR conduct that could impact competition in the real estate market. Therefore, on Thursday the DOJ filed a notice of withdrawal of consent to the proposed settlement and also filed to voluntarily dismiss its complaint without prejudice. “Without prejudice” means the agency can file suit again at a later date.
“The department is taking this action to permit a broader investigation of NAR’s rules and conduct to proceed without restriction,” the DOJ said in a press release.
“Because the settlement resolved only some of the department’s concerns with NAR’s rules, this step ensures that the department can continue to enforce the antitrust laws in this important market,” the DOJ added.
The DOJ noted that NAR’s rules and policies affect millions of real estate brokers and agents and therefore millions of homebuyers and sellers who paid more than $85 billion in residential real estate commissions last year.
“The proposed settlement will not sufficiently protect the Antitrust Division’s ability to pursue future claims against NAR,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division in a statement.
“Real estate is central to the American economy and consumers pay billions of dollars in real estate commissions every year. We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”
NAR did not immediately respond to a request for comment.
The proposed settlement would have required NAR to:
- Repeal any rule, and to require its member boards and multiple listing services to repeal any rule, that “prohibits, discourages, or recommends against an MLS or MLS Participant publishing or displaying to consumers any MLS database field specifying compensation offered to other MLS Participants.”
- Adopt a rule that requires all MLS participants, including subscribers, to provide to clients information about the amount of compensation offered to other MLS participants.
- Repeal any rule, and require all member boards and MLSs to repeal any rule, that permits all MLSs and MLS participants, including buyer brokers, to represent that their services are free or available at no cost to their clients. NAR must also prohibit all MLSs and MLS participants from representing that their services are free or available at no cost to their clients.
- Adopt a rule that prohibits MLS participants from filtering or restricting MLS listings that are searchable by or displayed to consumers based on the level of compensation offered to the buyer broker or the name of the brokerage or agent, and repeal any rule that permits or enables such filtering.
- Adopt a rule that requires all member boards and MLSs to allow any licensed real estate agent or agent of a broker, to access, with seller approval, the lockboxes of those properties listed on an MLS.
In March, NAR told Inman that the trade group was continuing to work through the details of the rule changes with the DOJ, “which is a process that can take months.”
The settlement would also have required NAR to appoint an Antitrust Compliance Officer whose initial appointment and replacement must be approved by the DOJ. If that officer or NAR management were to learn of any potential violation of the settlement, NAR would have been required to investigate and cease or modify the potentially violating activity so that it complies with the settlement terms. NAR would also have had to file a statement with the DOJ describing the potential violation and steps taken to remedy it.
The proposed settlement stated, “Nothing in this Final Judgment shall limit the right of the United States to investigate and bring actions to prevent or restrain violations of the antitrust laws concerning any Rule or practice adopted or enforced by NAR or any of its Member Boards.”
However, in its withdrawal notice, the DOJ said it sought NAR’s consent to amend that section of the proposed deal “to eliminate any potential limitation on the future ability of the United States to investigate and challenge additional potential antitrust violations committed by Defendant,” but that NAR “declined to consent.”