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U.S. set to sue Realtors over commissions

U.S. antitrust regulators are preparing to sue the National Association of Realtors (NAR) over policies they believe will illegally restrict commission discounting and harm online competitors, the Wall Street Journal reported Monday.
/ Source: Reuters

U.S. antitrust regulators are preparing to sue the National Association of Realtors (NAR) over policies they believe will illegally restrict commission discounting and harm online competitors, the Wall Street Journal reported Monday.

The effort by the Justice Department and the Federal Trade Commission aims to protect buyers and sellers of homes and could help contain high real-estate costs in a booming housing market, the newspaper said.

The association is the nation's largest trade group for brokerage firms, agents and others involved in selling real estate.

The report, citing lawyers close to the case, said the Justice Department is expected to charge that the association, in a pending bylaw, illegally adopted practices intended to stifle Internet-based rivals and discounters.

The competitors often charge commissions below the traditional 6 percent that is divided between buying and selling agents.

The NAR bylaw would allow its more than 1.2 million members to withhold property listings from online brokers, the newspaper said. The date for it to take effect, which has been delayed several times because of discussions with the Justice Department, is now set for this July.

The move comes as the federal government is also targeting efforts in states to protect full-service real-estate agents, the newspaper said.

It said the Justice Department last month sued a Kentucky state agency that sought to restrict rebate payments to customers by residential real-estate agents and brokers. In a complaint filed in U.S. District Court in Louisville, the U.S. charged that the Kentucky Real Estate Commission illegally conspired to impose and enforce the rebate ban in order to fix commissions and deprive consumers of price competition by brokers.

The Justice Department and the FTC have warned several states in recent months that such laws hamper innovation and competition, and have formally objected to industry-supported proposals in Oklahoma and Texas.

The NAR said the federal agencies are simply "lobbying on behalf of limited-service brokers" and improperly interfering in a largely state-regulated industry.

The federal investigation of the NAR's rules has been under way for more than a year. When it was first disclosed in October 2003, the group said it would cooperate with the inquiry and that its proposed rules regarding access to Internet listings wouldn't violate antitrust law.

Late last Friday, however, an NAR lawyer acknowledged that government officials and the association have so far been unable to resolve their differences and that a federal antitrust challenge was likely to come soon.