U.S. Court of Appeals Decision will Allow Justice Department to Investigate Conduct of National Association of Realtors

The U.S. Court of Appeals for the District of Columbia Circuit has lifted restrictions imposed by a lower court that had prevented the Justice Department from investigating potentially anticompetitive conduct by the National Association of Realtors (NAR).

In a 2-1 decision, the court decided that the DOJ is within its rights to reopen the investigation into potentially anticompetitive practices taking place in the real estate industry through rules set by NAR.

The D.C. Circuit’s decision confirms the United States’ position that it retains the authority to investigate NAR’s Participation Rule and Clear Cooperation Policy to protect competition for the benefit of homebuyers.

“Real-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division’s ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem,” U.S. Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division, said in a statement.

The decision follows the recent settlement which the powerful real estate group which agreed in March to pay $418 million to resolve several class-action lawsuits alleging it conspired to inflate commissions.

See here for a video explainer on the settlement by Ira Zlotowitz.

The NAR, which denies any wrongdoing, also said it would revise a compensation structure that typically carves out 5 to 6 percent of a home’s sale price for agents.

“The Antitrust Division is committed to fighting to lower the cost of buying and selling a home. I would like to commend the staff of the Antitrust Division and our colleagues in the department for achieving this important result,” Kanter’s statement continued.

The Realtors association, which can appeal the decision, said it was “reviewing today’s decision and evaluating next steps.”

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