In a recent opinion finding filed by the Federal Trade Commission (FTC), Realcomp II, a realtors’ group based in Farmington Hills, Michigan, was charged with violating federal law by restricting the ability of member real estate agents to offer consumers lower-priced alternatives of traditional real estate services.

Realcomp, a National Association of Realtors (NAR) affiliate, failed to release discount real estate listing to its own and other public Web sites and made these listings unavailable on default searches from their database. By restricting access to these listings, the FTC said the company narrowed consumer choice and harmed competition. Realcomp is now required to provide non-discriminatory access to non-traditional and lower-price listings on its Multiple Listing Service (MLS), and they must stop preventing these listing from being sent to other public real estate sites, according to the FTC.

The opinion finding by the FTC stated that, “The practices at issue improperly limit consumers’ access to information about the availability of these lower-priced alternatives. [Realcomp’s] acts and practices unreasonably restrain trade in violation of section one of the Sherman Act and section five.” This decision will resolve the litigation arising from a complaint alleging that Realcomp’s policies violate section five of the Federal Trade Commission Act.

As an MLS, member brokers of Realcomp provide information on homes for sale, and members representing buyers can use this information, provided in a database, to find prospective homes for their clients. According to the FTC, public access to MLS listings has increased their effectiveness, making the internet a vital factor for selling homes.

Findings from the FTC proved that full-service real estate brokers, making up the majority of Realcomp’s membership, saw the public availability of these listings as a serious threat to their business model. To defuse this threat, Realcomp established policies limiting the availability of discount brokers’ listings. The company only provided their more expensive, full-service listings to publicly available web sites, restricting buyers’ ability to see listings offered by discount brokers. The FTC also found that Realcomp hindered competition by setting their default search settings in its proprietary database to exclude listings of discount brokers.
In its opinion finding, the FTC said, “Technological dynamism and organizational innovation can place enormous pressure on traditional business models and create possibilities for ‘the new commodity, the new technology, the new source of supply, the new type of organization’ that can transform markets. Because [these] are powerful stimulants for economic progress, an especially important application of antitrust law is to see that incumbent service providers do not use improper means to suppress innovation-driven competition that benefits consumers.”
The decision made by the FTC reversed the 2007 decision by the administrative law judge who dismissed charged against Realcomp. The vote approving the opinion finding and order was 4-0. Through this new action, Realcomp is forbid from discriminating against discount brokers by determining what listing it transmits to public Web sites or pre-setting its default search criteria. Additionally, Realcomp is required to amend its rules and regulations to conform to the order’s provisions within 30 days of the order’s finalization. Within 90 day of the order, the company must inform its members of these amendments, providing each customer with a copy of the order. Realcomp is also required to update their Web site to include the updated rules and regulations and place a statement on the site announcing the amendments.