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RE: License

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Title: Re: License

We bid on a single family home in Chicago and were undercut by 75% by a

New “sole practitioner”


A classic "group boycott," also known as a concerted refusal to deal, is an agreement or combined action among industry members to drive a competitor from the industry by denying the competitor a source of supply or a source of customers. Such conduct is illegal per se. Specifically regarding the real estate industry, numerous cases have dealt with alleged "group boycotts" in the context of multiple listing services ("MLS") and local real estate boards. The common theory of these lawsuits has been that various challenged exclusions by a local MLS or real estate board was done for anticompetitive reasons in violation of the Act. So far, while the United States Supreme Court has failed to rule on the issue, in the context of the real estate profession, these matters have been analyzed under the "rule of reason" standard, as opposed to being declared illegal "per se." Thus, exclusions of industry members from either a local MLS, or a local real estate board, will be upheld if the MLS or the board can show that the membership exclusions are designed to reasonably protect the integrity of the organization and are narrowly tailored to accomplish the legitimate end sought. Federal district courts have upheld (i) the denial of a broker from board membership when such broker failed the requirement of having a favorable business reputation,[7] (ii) the exclusion of non-board members from board decisions,[8] and (iii) the exclusion from a local MLS of non-board members.[9] However, the most exhaustive analysis of the "group boycott" issue has been undertaken by the Fifth Circuit Court of Appeals, in United States v. Realty Multi- List. Inc.[10] and the subsequent case styled Pope v. Mississippi Real Estate Commission.[11] In Realty Multi-List, the defendant MLS restricted access to the service to only those brokerage firms who (1) had an active real estate office open during all business hours, (2) had a favorable reputation and credit report, and (3) had purchased stock in the MLS corporation at a price to be determined by the MLS board. The Court refused to apply a "per se" analysis to these restrictions, instead analyzing the same under the "rule of reason" analysis discussed previously. However, even under a "rule of reason" analysis, the Court declared these access restrictions illegal, concluding that such restrictions exceeded the legitimate requirements of the MLS. The Court held that the "favorable credit report and business reputation" requirements were unnecessary to protect the MLS. It also found that the "business hours" requirement was needlessly harmful to part-time brokerages. Finally, the Court condemned the stock purchase requirement on the ground that the price of the stock was not related to the operational needs of the MLS. In Pope, the Fifth Circuit once again reviewed the exclusionary access provisions of a local MLS in a challenge by the largest brokerage firm in the relevant market area. The crux of the challenge was twofold. First, the challenger attempted to reargue the same points that had been successful in Realty Multi-List. Second, the challenger contended that it would be paying over half the fees collected by the MLS, because of the number of dues paying agents in its firm, and that such a requirement was unfair and thus anticompetitive. The Fifth Circuit quickly dismissed these arguments, finding that the MLS in question was in full compliance with the Realty Multi-List decision, and that common sense would properly require the largest brokerage firm, which would, of course, be the largest user of the MLS, to pay the largest fee. Arkansas real estate boards and MLS systems should carefully review their membership requirements in light of the decisions discussed above, to be sure that every condition of membership serves a legitimate and lawful purpose, and to be sure that such condition is narrowly tailored to accomplish that purpose and no other. If a review is completed to assure satisfaction of the requirements of the Act, then the local real estate board or MLS should be in compliance with the Act. Before leaving this issue, it is important to note that, where membership or access conditions to either real estate boards or MLS services are directed at improperly coercing the behavior or business practices of third parties, they will not be analyzed under the "rule of reason," but instead will be struck down as illegal "per se".[12] This article should not be construed to mean that only the situations discussed herein can give rise to liability under the Act. To the contrary, any time a sufficient number of brokers in a given market area act in concert to drive a competitor from the market area, or to influence the competitor's business practices in an anticompetitive manner, a violation of the Act has occurred. For example, in Park v. El Paso Bd. of Realtors,[13] several brokers were found liable "per se" under the Act for damages suffered by a competitor when the defendant brokers tried to drive the competitor from the market by damaging his reputation and refusing to treat the competitor's listings on a par with the listings of other brokers in the market.