The National Association of Realtors has hit back against the U.S. Department of Justice’s intervention in an antitrust lawsuit brought by discount brokerage REX Real Estate, urging a federal court to “ignore” the DOJ’s filing.
In response, REX called out NAR on Monday for allegedly using “false assertions” in an attempt to shield itself from further investigation of its rules.
REX sued NAR and Zillow in March, alleging antitrust violations for a NAR rule, dubbed the “No-Commingling Rule,” that prompted Zillow to separate non-multiple listing service listings from MLS listings on its website, including listings from REX.
In motions to dismiss in July, NAR and Zillow hit back against REX’s allegations that it is the target of an illegal boycott. One of NAR’s arguments was that a 2008 consent decree with the DOJ allowed Realtor-affiliated multiple listing services to require that MLS listings be searched separately from listings obtained from other sources.
Last week, the DOJ submitted a statement of interest in the case “to prevent the drawing of unwarranted inferences from a now-expired 2008 consent decree” between the DOJ and NAR. The statement said that the DOJ had not determined whether the rule at issue in the REX case was consistent with antitrust laws, pro-competitive or lawful as part of that consent decree and the implication that the rule had been approved by the agency was “incorrect.”
On Thursday, NAR responded to the DOJ’s statement of interest by saying the DOJ was attempting to “rewrite” the history of the rule, a rule that was required in the consent decree approved by the DOJ. That approval, the 1.48 million-member trade group contends, “does show the rule is at least competition neutral (and legal)” because the DOJ “would not require NAR to adopt a policy that was anticompetitive or violated the law.”
Moreover, the DOJ’s assertion that the consent decree expressly said the agreement would not 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” was an “irrelevant strawman argument,” NAR’s attorneys said, because the DOJ “did not simply ignore the rule and leave it for another day” but rather “expressly approved of and required NAR to adopt the rule at issue.”
“Nothing in the decree, the decree caselaw, or common sense excused the United States’ responsibility to review every decree provision to determine if it was in the public interest,” they wrote.
“For all these reasons, NAR respectfully requests that the Court simply ignore the United States’ statement. This is not the time or the forum for the United States to relitigate the terms of a settlement that was negotiated and accepted by the United States and an Illinois federal court in 2008.”
In response to NAR’s filing, REX’s attorneys stressed that the 2008 consent decree concerned NAR’s Virtual Office Website (VOW) policies and the decree expressly said it did not concern NAR’s Internet Data Exchange (IDX) policies. The No-Commingling Rule at issue in REX’s case is an IDX rule, not a VOW rule, they said.
“The 2008 consent decree stated clearly that an ‘MLS may . . . impose [this rule] on the operation of VOWs,’” REX’s attorneys wrote. “It does not mention or in any way authorize NAR to adopt any IDX rules, including the segregation rule challenged by the complaint.”
In addition, REX’s attorneys argued that, even though NAR says the No-Commingling Rule is “materially similar” to the rule included in the 2008 consent decree, the two have “no resemblance either in their purpose, language or their impact on competition.”
“The VOW rule that was the subject of the 2008 consent decree requires the broker operating the website to provide consumers a separate search of listings from any source other than the multiple listing service in which it is a participant, whether it be another MLS or non- MLS broker,” they wrote. “It does not discriminate against non-MLS listings.
“The IDX rule at issue in this lawsuit does not discuss the search function at all. Instead, the IDX rule requires ‘Listings obtained through IDX feeds from Realtor association MLSs’ to be ‘displayed separately from listings obtained from other sources.’ And unlike the VOW rule referenced by the 2008 Consent Decree, the IDX rule affirmatively discriminates against listings from a source other than a NAR-affiliated MLS.”
In a press release, REX General Counsel Michael Toth said, “NAR’s response to the DOJ filing was a major swing and miss. Called out for mischaracterizing a previous settlement with the Justice Department, NAR doubled down on false assertions.
“While NAR attempted to use a now-expired consent decree regarding previous exclusionary, anti-consumer behavior, the reality is the National Association of Realtors continues to harm consumers, limit competition, and discriminate against pro-consumer, innovative platforms like REX.”
The federal government appears to be increasing its scrutiny of real estate competition in recent months. In June, President Joe Biden appointed antitrust champion Lina Khan as chair of the Federal Trade Commission. In July, the DOJ pulled out of a proposed settlement with NAR to broaden its investigation into the trade group’s rules.
The Biden administration also issued an executive order that encouraged the FTC to exercise its rule-making authority “in areas such as … unfair occupational licensing restrictions; unfair tying practices or exclusionary practices in the brokerage or listing of real estate; and any other unfair industry-specific practices that substantially inhibit competition.”
On Monday, lawmakers sent a letter to the FTC urging the agency to investigate Zillow’s planned acquisition of ShowingTime and Zillow confirmed that the ShowingTime deal is currently under FTC review.
“We appreciate the federal government weighing in to correct the National Association of Realtors’ disregard for the facts and consumers,” REX CEO and co-founder Jack Ryan said in a statement.
“We feel strongly about the merits of our case, which is likely why the National Association of Realtors has had to resort to using incorrect facts to inflate their case, the same way their broken brokerage policies increase costs for consumers.”
In an emailed statement, NAR questioned REX’s own adherence to the truth and, as the trade group has previously done, alluded to the brokerage’s alleged use of antitrust as a business strategy.
“There are some who would ignore the truth, blame their business shortcomings on others and distort reality — all to the detriment of consumers,” said Mantill Williams, NAR’s vice president of communications.
“We are certain that we will prevail because the truth is on our side,” Williams continued. “NAR and Realtors put consumers first. NAR helps ensure consumers have access to accurate, reliable property information and the transparency to see as many homes as possible in a given market, which also helps ensure everyone can enjoy fair housing.
“81 percent of NAR members are small businesses, and NAR helps ensure that they have the tools they need to compete with each other, and provide a variety of services to homesellers and homebuyers.
“One broker blaming its business shortcomings on others won’t overshadow the fact that consumers are not interested in the services sold by that broker.”
Zillow did not respond to a request for comment.