DOJ SETTLES WITH CONSOLIDATED MULTIPLE LISTING SERVICE, INC.

On May 4, 2009, the Department of Justice (“DOJ”) reached a settlement with Consolidated Multiple Listing Service, Inc. (“CMLS”) that requires CMLS to change its rules to allow for increased competition between low-priced, innovative real estate brokers compete with traditional real estate brokers in the Columbia, South Carolina market.
A multiple listing service (“MLS”), like the one operated by CMLS, is a database that includes members’ home listings information. Members are allowed to communicate amongst themselves as well as search through all of the home listings available in the area through the database. As such, access to a MLS is critical for any broker to service clients efficiently.

According to the DOJ, the policies and rules of CMLS stifled competition among real estate brokers by requiring burdensome prerequisites which barred small real estate brokers from membership to its MLS in Columbia, South Carolina. Applicants were required to share the nature of their business with a committee of incumbent members who had the power to deny membership if they thought the new applicant would compete too aggressively. Furthermore, according to the DOJ, membership rules such as forcing all members to adopt a single set of brokerage services to consumers, thereby discouraging innovation and competition.

The settlement forces CMLS to allow any real estate broker, with appropriate credentials, to become a member. It also requires CMLS to repeal rules that force member brokers to only provide consumers with a single set of brokerage services. CMLS’s requirement that members use a single contract by CMLS must be repealed as well. This requirement prevented home sellers to make other arrangements that allowed them to avoid commission charges, if the home sellers found their own buyers. Finally, the settlement prohibits CMLS to adopt new rules that could exclude real estate brokers based on their business models and price structures.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com