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A major broker-owned Multiple Listing Service is pushing back against the Justice Department’s view of a proposed settlement to resolve antitrust claims brought by home sellers in a major commission case known as “Nosalek.”
On Monday, MLS Property Information Network (MLS PIN) urged U.S. District Judge Patti B. Saris of the District of Massachusetts to reject the Justice Department’s arguments against the settlement and approve the deal, calling the federal agency’s proposed “blanket injunction “A commission offered by a seller to a buyer’s agent (whether inside or outside the MLS) itself violates antitrust laws and the First Amendment’s free speech clause.
“Not only does the Department of Justice’s policy position go far beyond what is required by antitrust law; it also creates opportunities for MLS PIN that would not otherwise exist,” attorneys for MLS PIN wrote in a June 10 response to the DOJ Statement of Interest. Antitrust issues. “
“MLS PIN cannot enter into an agreement prohibiting the release of free market compensation packages without violating the very antitrust principles the Department of Justice claims to protect. Enforcing such a ban through a federal injunction would also suppress First Amendment-protected speech.”
MLS PIN notes that the DOJ is not saying that sellers should not pay buyer’s brokers, as antitrust enforcement agencies have made clear that buyers can require sellers to pay buyer’s brokers in an offer to purchase, but that the offer of payment should be given priority. of.
“The Department of Justice has never denied that sellers have the right to provide compensation to buyer’s agents; it has merely argued for arbitrary limitations on communication of compensation packages,” the filing states.
“But paying buyer’s agent commissions has long been legal under Massachusetts and federal law. This proposal to ban truthful and non-misleading statements made in furtherance of lawful activity led directly to a series of Supreme Court cases , these cases recognized that such bans would not survive First Amendment muster.
For MLS PINs, prohibiting home sellers from compensating buyers’ agents would be “a blatant restriction of trade that is more severe than other MLS rules that have been repealed as anti-competitive,” the filing adds.
MLS PIN also believes the DOJ has other avenues to change how commissions are paid if it chooses to do so.
“Crucially, nothing in the proposed settlement agreement between Plaintiffs and MLS PIN limits the Department of Justice’s ability to change real estate market practices in Massachusetts or anywhere else through legislative advocacy or administrative rulemaking,” the filing states. ability.
“Indeed, the entirety of the DOJ statement sounds like it falls within the realm of policy and should be addressed to the agency responsible for developing rules and regulations: namely, Congress or the Federal Trade Commission.”
MLS PIN noted that the Biden administration has directed the Federal Trade Commission, which shares antitrust responsibilities with the Justice Department, to exercise its rulemaking authority “in areas such as … unfair occupational licensing restrictions, unfair occupational licensing restrictions, and other areas.” Unfair tying practices or exclusionary practices in real estate brokerage or listing; and any other unfair industry-specific practices that significantly inhibit competition.
According to MLS PIN, the Federal Trade Commission “is the appropriate forum to address policy issues.”
Just as the Federal Commission Suits Moehrl and Sitzer | Burnett and Nosalek seek a class-action lawsuit, claiming that sharing commissions between listing brokers and buyer’s brokers drives up sellers’ costs, is a conspiracy to restrain trade, and violates the X.C. Mann Antitrust Law.
However, the Nosalek lawsuit differs from the others in one important way: The National Association of Realtors is not named as a defendant, while MLS PIN is. MLS has 60 full-time employees and approximately 46,000 subscribers in six New England states and New York.
The Settlement Class consists of sellers who paid or paid buyer’s agent commissions on behalf of their seller’s agent as of December 17, 2016, in connection with the sale of residential real estate listed on Pinergy, the Multiple Listing Service system of the MLS .
If Judge Sarris chooses to deny final approval of the settlement with MLS PIN, the case against MLS will continue unless another settlement agreement is reached and finalized.
Under the current proposed settlement, the MLS PIN would eliminate the requirement that home sellers provide indemnification to a buyer’s agent; require listing brokers to notify sellers that they are not required to provide indemnification to a buyer’s agent and that they can if the buyer’s agent requests indemnification reject; and clarify that if the seller makes an offer to the buyer’s agent and the buyer makes a counteroffer, the commission will be negotiated between the seller, buyer, seller’s agent, and buyer’s agent.
“MLS PIN believes that these three additional changes—(1) no compensation required, (2) mandatory disclosure, and (3) mandatory certification—are unnecessary,” the filing states.
“But they undeniably argue that the MLS PIN’s role in the conspiracy was merely a bridge between buyers and sellers. These changes fully resolve the contested antitrust conspiracy claims raised in this lawsuit.”
However, in its statement of interest, the Justice Department rejected the rule changes in the settlement, instead calling for “an injunction prohibiting sellers from offering commissions to buyer’s brokers,” which the agency said would promote competition and innovation among buyer-brokers. in person, as buyers will have the right to negotiate directly with their own agent.
But MLS PIN stresses that the Justice Department’s own policy statement previously said sellers can compensate buyers’ agents “up front” on the MLS, which can lower transaction costs because listing agents don’t have to work with each potential buyer individually. Negotiation Broker.
“Antitrust laws do not require MLS at all Definitely prohibited Sellers are not allowed to compensate buyers’ agents, documents say [emphasis in original].
“However, the Department of Justice’s core position is that any proposed settlement must do this to be fair and reasonable. The Department of Justice ignores dozens of federal cases that have established the legality of the practices it now seeks to enjoin.
“The same is true of state law, federal statutes and regulations, and the Department of Justice’s own prior policy positions. The Department of Justice has provided no contrary authority.
Furthermore, MLS PIN argued that “the evaluation of the proposed class settlement does not require a mini-trial on hotly contested antitrust issues,” but instead requires an evaluation of whether the deal is “fair and reasonable to class members.”
“The Department of Justice is entirely concerned with the question of whether the proposed settlement would allow the alleged anticompetitive conduct to continue,” the filing reads. “But that is exactly what the court is not required to consider when evaluating a proposed antitrust settlement. “
The U.S. Department of Justice declined to comment for this story. The U.S. Department of Justice, the plaintiffs and MLS PIN will submit a joint statement regarding the settlement to the court on June 21.
Read MLS PIN’s response to the DOJ Statement of Interest:
Send an email to Andrea V. Brambila.
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