Ahead of a final Nov. 26 approval hearing on NAR’s proposed class-action settlement, DOJ lawyers narrowed in on a provision requiring written agreements between buyers and agents before tours.
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The Department of Justice on Sunday filed a five-page statement of interest in the Sitzer | Burnett case, two days ahead of a final hearing on the National Association of Realtors’ proposed commission settlement.
Attorneys for the DOJ took no position on whether Judge Stephen R. Bough should approve the settlement Tuesday, but balked at rules requiring buyers and brokers to enter into written agreements before touring homes — one of the key practice changes that took effect in August as part of the antitrust settlement.
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Additionally, attorneys warned that practice changes unveiled in March wouldn’t prevent further legal challenges and added that Bough should clarify that the settlements most players in the industry agreed to aren’t protections against future enforcement.
“While the Court may ultimately find that the proposed settlement achieves important concessions in the interests of the private actors in this litigation and satisfies [settlement rules], such determination does not mean that the proposed settlement effectively prevents or restrains ongoing antitrust violations or remedies past violations, or itself contemplates practices that fully comply with the antitrust laws,” the attorneys wrote.
NAR and the brokerages, franchisors and MLSs that opted into the settlement or negotiated their own could seek to use those agreements as a “shield against future enforcement action” by the DOJ, the attorneys added.
“For this reason, the United States respectfully requests that if the Court approves the settlement, it should clarify that such approval does not address whether the proposed settlement prevents and restrains current antitrust violations, remedies past violations, or contains revised policies and practices that comply with the antitrust laws,” the attorneys wrote.
Specifically, the DOJ took aim at the provision that requires buyers and brokers to enter into written agreements before touring a home, which they said “bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws” in other cases.
“Buyer brokers under the proposed rule may not show a house, even a no-obligation showing, without first obtaining a written agreement,” the attorneys wrote. “Thus, the concerns remain that the broker agreement rule may limit how brokers compete, and there is no record available in the current posture addressing this concern.”
The attorneys wrote that the concern could be addressed in multiple ways. The first is to eliminate the provision.
Or they could “disclaim that the settlement creates any immunity or defense under the antitrust laws.”
“Alternatively, the Court could clarify that approval of the settlement affords no immunity or defense for the buyer-agreement provision,” they wrote.
“Because the United States did not participate in either this litigation or the proposed settlement, the proposed settlement does not limit the United States’ ability to enforce the antitrust laws, including to seek greater relief for the conduct at issue here,” the attorneys wrote.
Even if Bough approves the settlement, the DOJ attorneys made clear that wasn’t the end of its focus on the industry.
“The United States continues to scrutinize policies and practices in the residential real-estate industry that may stifle competition,” they wrote. “It is a matter of public record that the United States has an open investigation into these practices.”
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Read the filing here. [Refresh page if the PDF doesn’t load on the first attempt.]