FTC Busts Online Realtors On Antitrust Case

    July 14, 2006
    WebProNews Staff

The Austin Board of Realtors found itself on the receiving end of the Federal Trade Commission’s ire due to the FTC’s contention the Multiple Listing Service (MLS) used by the Board blocked the marketing of certain listings from the service.

As these listings were for “exclusive agency” agreements, which provide lower or no commissions to realtors, the FTC considered the banning of these listings as unlawfully restraining competition.

The FTC explained in a statement about the case that an exclusive agency listing is used to offer lower-cost, unbundled real estate brokerage services to consumers. By banning those listings from the MLS, the Austin Board caused many home sellers to switch from exclusive to traditional listings, and thus incur higher costs. From the FTC:

(A)fter the policy was implemented in 2005, the number of Exclusive Agency Listings decreased from 18 percent to 2.5 percent of the total listings on ACTRIS. This decrease has had an adverse effect on consumers, the FTC alleges, by limiting home sellers choices of brokerage services, and by denying home buyers the opportunity to use the Internet to see all of the houses listed by real estate brokers in the Austin area.

The Commission also contends that ABOR’s Web site policy does not produce competitive efficiencies to balance its anticompetitive effects.

A consent order issued by the FTC will be in force for ten years to compel compliance with the FTC’s findings. In response to the FTC’s statement, the Austin Board’s president and CEO, David Foster, took issue with its wording:

“As an association that supports members of all business models, we feel the approach outlined in the FTC ruling is correct. However, we also feel the FTC’s press release misrepresented the purpose of the ABoR rule.”

Foster continued, “The rule was initially established to ensure that our consumer Web site was used to promote listings to benefit members. We realized, however, that the rule was confusing and did not work as well as we’d intended, which was why it was rescinded so quickly. We are disappointed that the FTC’s press release implies that we are guilty of wrongdoing — which the agreement expressly contradicts — and that the spirit of cooperation with which the FTC and ABoR negotiated the consent order did not translate to the FTC’s public statement.”


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David Utter is a staff writer for WebProNews covering technology and business.