[Federal Register Volume 73, Number 123 (Wednesday, June 25, 2008)]
[Notices]
[Pages 36104-36118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13902]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. National Association of Realtors[supreg]; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the Northern District of Illinois in 
United States of America v. National Association of Realtors[supreg], 
No. 05-C-5140. On September 8, 2005, the United States filed a 
Complaint alleging that the National Association of Realtors[supreg] 
(``NAR'') violated section 1 of the Sherman Act, 15 U.S.C. 1, by 
adopting policies that suppress competition from real estate brokers 
who use password-protected ``virtual office Web sites'' or ``VOWs'' to 
deliver high-quality brokerage services to their customers. The 
proposed Final Judgment, filed on May 27, 2008, requires NAR to repeal 
the challenged policies and to adopt new rules that do not discriminate 
against brokers who use VOWs.
    Copies of the Amended Complaint, proposed Final Judgment and 
Competitive Impact Statement are available for inspection at the 
Department of Justice, Antitrust Division, Antitrust Documents Group, 
450 5th Street, NW., Room 1010, Washington, DC 20530 (telephone: 202 
514-2481), on the Department of Justice's Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States 
District Court for the Northern District of Illinois. Copies of these 
materials may be obtained from the Antitrust I Division upon request 
and payment of the copying fee set by Department of Justice 
regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be addressed 
to John R. Read, Chief, Litigation III section, Antitrust Division, 
U.S. Department of Justice, 450 5th Street, NW., Suite 4000, 
Washington, DC 20530, (202) 307-0468.

J. Robert Kramer II,
Director of Operations, Antitrust Division.

United States District Court for the Northern District of Illinois 
Eastern Division

United States of America, Department of Justice, Antitrust Division, 
325 7th Street, NW., Suite 300, Washington, DC 20530.
Plaintiff,

v.

National Association of Realtors, 430 North Michigan Ave., Chicago, 
IL 60611, Defendant.

Civil Action No. 05C-5140,
Judge Filip,
Magistrate Judge Denlow,
Filed: October 4, 2005.

Amended Complaint

    The United States of America, by its attorneys acting under the 
direction of the Attorney General, brings this civil action pursuant 
to section 4 of the Sherman Act, as amended, 15 U.S.C. 4, to obtain 
equitable and other relief to prevent and restrain violations of 
section 1 of the Sherman Act, as amended, 15 U.S.C. 1. The United 
States alleges:
    1. The United States brings this action to enjoin the defendant 
a national association of real estate brokers--from maintaining or 
enforcing policies that restrain competition from brokers who use 
the Internet to more efficiently and cost effectively serve home 
sellers and buyers, and from adopting other related anticompetitive 
rules.
    2. The brokers against whom the policies discriminate operate 
secure, password-protected Internet sites that enable the brokers' 
customers to search for and receive real estate listings over the 
Internet. These Web sites thus replace or augment the traditional 
practice by which the broker conducts a search of properties for 
sale and then provides information to the customer by hand, mail, 
fax, or e-mail. Since these Web sites were first developed in the 
late 1990s, brokers' use of the Internet in connection with their 
delivery of brokerage services has become an important competitive 
alternative to traditional ``brick-and-mortar'' business models.
    3. Defendant's members include traditional brokers who are 
concerned about competition from Internet-savvy brokers. Before 
defendant adopted its policies, several of its members voiced 
opposition to brokers' delivery of listings to customers through 
their Web sites--sites that defendant referred to as ``virtual 
office Web sites,'' or ``VOWs.'' The head of the working group 
created by defendant to develop regulations for VOWs argued that 
defendant should act quickly in adopting regulations for the use of 
these Web sites because brokers operating VOWs were ``scooping up 
market share just below the radar.'' The chairman of the board of 
RE/MAX, the nation's second-largest real estate franchisor, publicly 
expressed his concern that these Internet sites would inevitably 
place downward pressure on brokers' commission rates. One broker 
complained that because of the lower cost structure of brokers who 
provide listings to their customers over the Internet, ``they are 
able to kick-back 1% of the sales price to the buyer.'' And Cendant, 
the nation's largest real estate franchisor and owner of the 
nation's largest real estate brokerage, asserted in a widely 
circulated white paper that it was ``not feasible'' for even the 
largest traditional brokers to compete with large Internet companies 
that operated or affiliated with brokers operating VOWs.
    4. In response to such concerns, defendant, through its members, 
adopted a policy (the ``Initial VOW Policy'') limiting this new 
competition. The Initial VOW Policy has been implemented in many 
markets. After plaintiff informed NAR of its intention to bring this 
action, NAR announced that it had modified this policy (the 
``Modified VOW Policy''). Plaintiff challenges both policies in this 
action as part of a single, ongoing contract, combination, or 
conspiracy.
    5. These policies significantly alter the governing multiple 
listing services (``MLSs''). MLSs collect detailed information about 
nearly all properties for sale through brokers and are indispensable 
tools for brokers serving buyers and sellers in each MLS's market 
area. Defendant's local Realtor associations (``member boards'') 
control a majority of the MLSs in the United States.
    6. Defendant's VOW Policies permit brokers to withhold their 
clients' listings from VOW operators by means of an ``opt-out'' 
right. In essence, the policies allow traditional brokers to block 
the customers of web-based competitors from using the Internet to 
review the same set of MLS listings that the traditional brokers 
provide to their customers.
    7. The working group that formulated defendant's Initial VOW 
Policy understood that the opt-out right was fundamentally 
anticompetitive and harmful to consumers. Two members of the working 
group wrote that the opt-out right would be ``abused beyond belief'' 
as traditional brokers selectively withhold listings from particular 
VOW-based competitors. The chairman of the working group admitted 
that the opt-out right was likely to be exercised by brokers 
notwithstanding the fact that ``it may not be in the seller[']s best 
interest to opt out.'' But he took comfort in the fact that the rule 
did not require brokers to disclose to clients that their listings 
would be withheld from some prospective purchasers as a result of 
the

[[Page 36105]]

brokers' opt-out decision, thus providing brokers ``flexibility 
without conversation.''
    8. Defendant's VOW Policies restrict the manner in which brokers 
with efficient, Internet-based business models may provide listings 
to their customers, and impose additional restrictions on brokers 
operating VOWs that do not apply to their traditional competitors. 
Defendant thus denies brokers using new technologies and business 
models the same benefits of MLS membership available to their 
competitor brokers, and it suppresses technological innovation, 
discourages competition on price and quality, and raises barriers to 
entry. Defendant--an association of competitors--has agreed to 
policies that suppress new competition and harm consumers.

Jurisdiction and Venue

    9. This Complaint is filed under section 4 of the Sherman Act, 
as amended, 15 U.S.C. 4, to prevent and restrain violations by 
defendant of section 1 of the Sherman Act, 15 U.S.C. 1. This Court 
has subject matter jurisdiction over this action under 28 U.S.C. 
1331, 1337(a), and 1345.
    10. Venue is proper in this district under 28 U.S.C. 1391(b) 
because defendant maintains its principal place of business in 
Chicago, Illinois, and is found here.

Defendant

    11. Defendant National Association of Realtors (``NAR'') is a 
trade association organized under the laws of Illinois with its 
principal place of business in Chicago, Illinois. NAR establishes 
and enforces policies and professional standards for its over one 
million individual member brokers and their affiliated agents and 
sales associates (``Realtors''), and 1,600 local and state member 
boards. NAR's member brokers compete with one another in local 
brokerage services markets to represent consumers in connection with 
real estate transactions.

Concerted Action

    12. Various others, not named as defendants, have contracted, 
combined, or conspired with NAR in the violations alleged in this 
Complaint and have performed acts and made statements in furtherance 
thereof.

Trade and Commerce

    13. NAR's policies govern the conduct of its members in all 
fifty states, including all Realtors and all of NAR's member boards. 
NAR's member boards control approximately eighty percent of the 
approximately 1,000 MLSs in the United States.
    14. NAR's activities, and the violations alleged in this 
Complaint, affect home buyers and sellers located throughout the 
United States.
    15. NAR, through its members, is engaged in interstate commerce 
and is engaged in activity affecting interstate commerce.

Relevant Markets

    16. The provision of real estate brokerage services to sellers 
of residential real property and the provision of real estate 
brokerage services to buyers of residential real property are 
relevant service markets.
    17. The real estate brokerage business is local in nature. Most 
sellers prefer to work with a broker who is familiar with local 
market conditions and who maintains an office or affiliated sales 
associates within a reasonable distance of the seller's property. 
Likewise, most buyers seek to purchase property in a particular 
city, community, or neighborhood, and typically prefer to work with 
a broker who has knowledge of the area in which they have an 
interest. The geographic coverage of the MLS serving each town, 
city, or metropolitan area normally establishes the outermost 
boundaries of each relevant geographic market, although meaningful 
competition among brokers may occur in narrower local areas.

Background of the Offense

    18. At any one time there are over 1.5 million homes for sale in 
the United States. Most home sellers and buyers engage residential 
real estate brokers to facilitate transactions.
    19. The predominant form of payment for brokerage services is a 
``commission,'' a percentage of the price paid for the property. In 
a typical transaction, the seller agrees to pay a commission to the 
broker who has contracted with the seller to market the home (the 
``listing broker''). If the listing broker finds the buyer, the 
listing broker keeps the full commission. Frequently, however, a 
second broker (the ``cooperating broker'') finds the buyer, and the 
two brokers share the commission.
    20. After a listing broker has established an agency 
relationship with a seller, the broker typically submits detailed 
information regarding the seller's property to a local NAR-
affiliated MLS. Along with the information about the property it 
submits to the MLS, the listing broker also typically includes an 
offer to split the commission with any cooperating broker.

Multiple Listing Services

    21. MLSs are joint ventures among competing brokers to share 
their clients' listings and to cooperate in other ways. MLSs list 
virtually all homes for sale through a broker in the areas they 
serve. In a substantial majority of markets, a single MLS provides 
the only available comprehensive compilation of listings. The MLS 
allows brokers representing sellers to effectively market the 
sellers' properties to all other broker participants in the MLS and 
their buyer customers. Conversely, the MLS allows brokers to provide 
their buyer customers information about all listed properties in 
which the customers might have an interest.
    22. NAR promulgates rules governing the conduct of MLSs and 
requires its member boards to adopt these rules.
    23. The vast majority of brokers believes that they must 
participate in the MLS operating in their local market in order to 
adequately serve their customers and compete with other brokers. As 
a result, few brokers would withdraw from MLS participation even if 
the fees or other costs associated with that participation 
substantially increased.
    24. By virtue of industry-wide participation and control over a 
critically important input, the MLS (a joint venture of competing 
brokers) has market power in almost every relevant market.
    25. The methods of making MLS information available to customers 
have changed as technology has evolved. From the l920s, when MLSs 
first became prevalent, brokers allowed customers to view a printed 
``MLS book.'' Later, the availability of copy machines allowed 
brokers to reproduce pages from the MLS book and deliver the pages 
with responsive listings to customers by hand or mail. The advent of 
facsimile transmission--and, later, electronic mail--further 
quickened the process of delivering MLS listings to customers.

Virtual Office Web Sites

    26. With the development of the Internet as an information 
source for consumers, potential home buyers began to seek Internet 
sources of information about homes for sale. Beginning in the late 
1990s, a number of NAR member brokers began creating password-
protected Web sites that enabled potential home buyers, once they 
had registered as customers of the broker and agreed to certain 
restrictions on their use of the data, to search the MLS database 
themselves and to obtain responsive MLS listings over the Internet. 
These Web sites came to be known as virtual office Web sites or 
VOWs. NAR recognizes the Internet delivery of MLS listings to 
customers to be an authorized method of providing brokerage 
services.
    27. Brokers can use the Internet to operate more efficiently 
than they can by using only traditional methods. By transferring 
search functions from the broker to customers who prefer such 
control over the process, VOW-operating brokers allow customers to 
educate themselves at their own pace about the market in which they 
are considering a purchase. By doing so, brokers with successful 
password-protected Web sites are able to reduce or eliminate the 
time and expense involved in identifying and providing relevant 
listings and otherwise educating their customers. These brokers also 
spend less time on home tours with their buyer customers, as these 
buyers frequently tour fewer homes before making a purchase decision 
than typical buyers. With lower cost structures, brokers with 
Internet-intensive business models have offered discounted 
commissions to sellers or commission rebates to buyers.
    28. Other sources of listing information on the Internet are 
inferior to the password-protected VOWs because they do not and 
cannot guarantee access to all information available in the MLS.
    29. Brokers can also use the Internet to support a ``referral'' 
business model. Referral services provide brokers information about 
potential buyers in return for a share of any commission the broker 
receives if the ``lead'' results in a completed transaction. Brokers 
are not obliged to purchase leads from referral services and do so 
only when they choose to. Some traditional brokers refer customers 
to other brokers for a fee, and some VOW operators, similarly, have 
referred (or have considered referring) some of their customers to 
other brokers for a fee. Many brokers dislike the concept of paying 
for leads, and the prospect that Internet-savvy brokers could 
support referral business

[[Page 36106]]

models has been a source of industry antipathy to VOWs.

Nature of the Offense

    30. Brokers with innovative, Internet-based business models 
present a competitive challenge to brokers who provide listings to 
their customers only by traditional methods. Many brick-and-mortar 
brokers fear the ability of VOW operators to use Internet technology 
to attract more customers and provide better service at a lower 
cost.
    31. In response to concerns raised by certain NAR members about 
this new form of competition, NAR's Board of Directors voted on May 
17, 2003, to adopt the ``Initial VOW Policy,'' a ``Policy governing 
use of MLS data in connection with Internet brokerage services 
offered by MLS Participants (`Virtual Office Web sites').'' Prior to 
the filing of the Complaint in this action, NAR had mandated that 
all 1,600 of its member boards implement the Initial VOW Policy by 
January 1, 2006. Approximately 200 member boards implemented the 
Initial VOW Policy and received NAR's approval of their implementing 
rules.
    32. Section 1.3 of the Initial VOW Policy contains an opt-out 
provision that forbids any broker participating in an MLS from 
conveying a listing to his or her customers via the Internet without 
the permission of the listing broker. Specifically, the opt-out 
provision allows brokers to direct that their clients' listings not 
be displayed on any VOW (a ``blanket opt-out''), or on a particular 
competing broker's VOW (a ``selective opt-out'').
    33. In contrast, prior to NAR's adoption of the Initial VOW 
Policy, a broker could provide any relevant listing in the MLS 
database to any customer--by whatever method the customer or broker 
preferred, including via the Internet. Nearly all of NAR's member 
boards had also adopted rules requiring all participants in their 
affiliated MLSs to submit, with minor exceptions, all of their 
clients' listings to the MLS. More importantly, NAR did not permit 
any broker to withhold his or her clients' listings from a rival.
    34. In several of the markets in which NAR's member boards have 
implemented the Initial VOW Policy, brokers have already exercised 
their opt-out rights to withhold their clients' listings from the 
customers of brokers operating VOWs, as well as from brokers who 
will use password-protected Web sites to provide listings to their 
customers in the future. In at least one such instance, an 
innovative broker discontinued operation of his Web site because all 
of his competitor brokers had opted out, making him unable to 
effectively serve his customers through operation of his site.
    35. Section II.4.g of the Initial VOW Policy contains an ``anti-
referral'' provision that, with minor exceptions, forbids VOW 
operators from referring their customers to ``any other entity'' for 
a fee. In contrast, no NAR rule limits referrals for a fee by 
brokers who do not convey MLS listings to customers over the 
Internet.
    36. The Initial VOW Policy includes other provisions that impose 
greater restrictions and limitations on brokers with Internet-based 
business models than on traditional brokers. For example, under 
section IV.I.b of the Initial VOW Policy, NAR's member boards may 
forbid VOW operators from displaying advertising on any Web site on 
which MLS listings information is displayed. In contrast, no NAR 
rule limits the ability of traditional brokers to include 
advertisements in packages of printed listings they provide to their 
customers.
    37. The Initial VOW Policy also contains provisions to make it 
obligatory and enforceable. Section I.4 of the Initial VOW Policy 
expressly forbids NAR's member boards from adopting rules ``more or 
less restrictive than, or otherwise inconsistent with'' the Initial 
VOW Policy, including the opt-out provisions and the anti-referral 
provision. Appendix A to the Initial VOW Policy provides for 
remedies and sanctions for violation of the Policy, including 
financial penalties and termination of MLS privileges.
    38. On September 8, 2005, after plaintiff informed NAR of its 
intention to bring this action, NAR advised its member boards to 
suspend application and enforcement of the above-referenced 
provisions of the Initial VOW Policy, and announced its adoption of 
a new ``Internet Listings Display Policy'' and its revision of an 
MLS membership policy (together, the ``Modified VOW Policy''). NAR's 
Modified VOW Policy continues to impede brokers from using the 
Internet to serve home sellers and buyers more efficiently and cost 
effectively. NAR's Modified VOW Policy mandates that all of NAR's 
member boards enact rules implementing the Internet Listings Display 
Policy by July 1, 2006, but NAR subsequently communicated to its 
member boards that they ``wait to adopt'' the policy ``until th[is] 
litigation is over.''
    39. Section 1.3 of the Modified VOW Policy contains a blanket 
opt-out provision that forbids any broker participating in an MLS 
from conveying a listing to his or her customers via the Internet 
without the permission of the listing broker. Specifically, the opt-
out provision allows brokers to direct that their clients' listings 
not be displayed on any competitor's Internet site. When exercised, 
this provision prevents a broker from providing over the Internet 
the same MLS information that brick-and-mortar brokers can provide 
in their offices. Additionally, NAR's Modified VOW Policy 
specifically exempts its own ``Official Site,'' Realtor.com, from 
the blanket opt-out that applies to all Internet sites operated by 
brokers.
    40. The portion of the Modified VOW Policy that is NAR's 
revision to its membership policies--much like the Initial VOW 
Policy's anti-referral rule--denies MLS membership and access to 
listings to brokers operating referral services. This membership 
policy effectively forbids Internet-based brokers from referring 
their customers to other brokers for a fee.
    41. NAR's Modified VOW Policy includes other provisions that 
restrict brokers' ability to use the Internet to serve their 
customers effectively. The Modified VOW Policy, for example, allows 
MLSs to downgrade the quality of the data feed they provide brokers, 
effectively restraining brokers from providing innovative, Internet-
based features to enhance the service they offer their customers. 
The Modified VOW Policy also permits MLSs to interfere with 
efficient ``cobranding'' relationships between brokers and entities 
that refer potential customers to the broker.
    42. Defendant's policies, both the Initial VOW Policy and the 
Modified VOW Policy, thus prevent brokers from guaranteeing 
customers access through the Internet to all relevant listing 
information, increase the business risk and other costs associated 
with operating an efficient, Internet-intensive brokerage, deny 
brokers a source of high-quality referrals, and withhold from 
Internet brokers revenue streams permitted to other participants in 
the MLS. Moreover, the opt-out provisions provide brokers an 
effective tool to individually or collectively punish aggressive 
competition by any Internet-based broker.
    43. Unless permanently restrained and enjoined, defendant will 
continue to engage in conduct that restricts competition from 
innovative brokers in violation of section 1 of the Sherman Act, 15 
U.S.C. 1.

Violation Alleged

    44. NAR's adoption of the above-referenced provisions in its 
Initial VOW Policy and its Modified VOW Policy, or equivalent 
provisions, constitutes a contract, combination, or conspiracy by 
and between NAR and its members which unreasonably restrains 
competition in brokerage service markets throughout the United 
States in violation of section 1 of the Sherman Act, 15 U.S.C. 1.
    45. The aforesaid contract, combination, or conspiracy has had 
and will continue to have anticompetitive effects in the relevant 
markets, including:
    a. Suppressing technological innovation;
    b. Reducing competition on price and quality;
    c. Restricting efficient cooperation among brokers;
    d. Making express or tacit collusion more likely; and
    e. Raising barriers to entry.
    46. This contract, combination, or conspiracy is not reasonably 
necessary to accomplish any procompetitive objective, or, 
alternatively, its scope is broader than necessary to accomplish any 
such objective.

Request for Relief

    Wherefore, the United States prays that final judgment be 
entered against defendant declaring, ordering, and adjudging:
    a. That the aforesaid contract, combination, or conspiracy 
unreasonably restrains trade and is illegal under section 1 of the 
Sherman Act, 15 U.S.C. 1;
    b. That the defendant be restrained and enjoined from requiring 
or permitting its member boards or the MLSs with which they are 
affiliated to adopt rules implementing the opt-out provisions;
    c. That the defendant be restrained and enjoined from requiring 
or permitting its member boards or the MLSs with which they are 
affiliated to adopt rules implementing the anti-referral provision 
or an MLS

[[Page 36107]]

membership restriction that denies MLS access to operators of 
Internet-based referral services;
    d. That the defendant be restrained and enjoined from requiring 
or permitting its member boards or the MLSs with which they are 
affiliated to adopt rules that restrict--or condition MLS access or 
MLS participation rights on--the method by which a broker interacts 
with his or her customers, competitor brokers, or other persons or 
entities;
    e. That the Court grant such other relief as the United States 
may request and the Court deems just and proper; and
    f. That the United States recover its costs in this action.

    Dated: October 4, 2005.

J. Bruce Mcdonald,
Deputy Assistant Attorney General.

J. Robert Kramer II,
Director of Operations.

Patrick J. Fitzgerald,
United States Attorney, Northern District of Illinois, by Linda 
Wawzenski, Assistant United States Attorney.

Craig W. Conrath,
David C. Kully,
Mary Beth Mcgee,
Allen P. Grunes,
Lisa A. Scanlon,
Attorneys for the United States, Department of Justice, Antitrust 
Division, 325 Seventh Street, NW., Suite 300, Washington, DC 20530, 
Telephone: (202) 305-9969, Facsimile: (202) 307-9952.

Certificate of Service

    I hereby certify that on this 4th day of October, 2005, I have 
caused a copy of the foregoing Amended Complaint be served by 
Federal Express upon counsel for Defendant in this matter:

Jack R. Bierig, Sidley Austin Brown & Wood, LLP, Bank One Plaza, 10 
South Dearborn Street, Chicago, IL 60603.

Linda Wawzenski.

United States District Court for the Northern District of Illinois 
Eastern Division

United States of America, Plaintiff, v. National Association of 
Realtors[supreg], Defendant.

Civil Action No. 05 C 5140,
Judge Kennelly,
Magistrate Judge Denlow.

[Proposed] Final Judgment

    Whereas, Plaintiff, the United States of America, filed its 
Amended Complaint on October 4, 2005, alleging that Defendant 
National Association of Realtors[supreg] (``NAR'') adopted policies 
that restrain competition from innovative real estate brokers in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and 
Plaintiff and Defendant, by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact, and without this Final Judgment 
constituting any evidence against, or any admission by, any party 
regarding any issue of fact or law;
    Whereas, Defendant has not admitted and does not admit either 
the allegations set forth in the Amended Complaint or any liability 
or wrongdoing;
    Whereas, the United States does not allege that Defendant's 
Internet Data Exchange (IDX) Policy in its current form violates the 
antitrust laws; and
    Whereas, the United States requires Defendant to agree to 
certain procedures and prohibitions for the purpose of preventing 
the loss of competition alleged in the Complaint;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact, and upon consent of the parties, 
it is Ordered, Adjudged and Decreed:

 I. Jurisdiction

    This Court has jurisdiction over the Parties and subject matter 
of this action. The Complaint states a claim upon which relief may 
be granted against Defendant under section 1 of the Sherman Act, as 
amended (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    A. ``Broker'' means a Person licensed by a state to provide 
services to a buyer or seller in connection with a real estate 
transaction. The term includes any Person who possesses a Broker's 
license and any agent or sales associate who is affiliated with such 
a Broker.
    B. ``Customer'' means a seller client of a Broker or a Person 
who has expressed to a Broker an interest in purchasing residential 
real property and who has described the type, features, or location 
of the property in which he or she has an interest, entitling the 
Broker to Provide the Customer multiple listing service (``MLS'') 
listing information by any method (e.g., by hand, mail, facsimile, 
electronic mail, or display on a VOW).
    C. ``Final Judgment'' includes the Modified VOW Policy attached 
as Exhibit A and the definition of MLS Participant and accompanying 
Note attached as Exhibit B.
    D. ``ILD Policy'' means the ``ILD (Internet Listing Display) 
Policy'' that NAR adopted on or about August 31, 2005, and any 
amendments thereto.
    E. ``Including'' means including, but not limited to.
    F. ``Listing Information'' means all records of residential 
properties (and any information relating to those properties) stored 
or maintained by a multiple listing service.
    G. ``Member Board'' means any state or local Board of 
Realtors[supreg] or Association of Realtors[supreg], including any 
city, county, inter-county, or inter-state Board or Association, and 
any multiple listing service owned by, or affiliated with, any such 
Board of Realtors[supreg] or Association of Realtors[supreg].
    H. ``Modified VOW Policy'' means the policy attached to this 
Final Judgment as Exhibit A.
    I. ``NAR'' means the National Association of Realtors[supreg], 
its predecessors, successors, divisions, subsidiaries, affiliates, 
partnerships, and joint ventures and all directors, officers, 
employees, agents, and representatives of the foregoing. The terms 
``subsidiary,'' ``affiliate,'' and ``joint venture'' refer to any 
Person in which there is or has been partial (twenty percent or 
more) or total ownership or control between NAR and any other 
Person.
    J. ``Person'' means any natural person, corporation, company, 
partnership, joint venture, firm, association, proprietorship, 
agency, board, authority, commission, office, or other business or 
legal entity, whether private or governmental.
    K. ``Provide'' means to deliver, display, disseminate, convey, 
or reproduce.
    L. ``Rule'' means any rule, model rule, ethical rule, bylaw, 
policy, standard, or guideline and any interpretation of any Rule 
issued or approved by NAR, whether or not the final implementation 
date of any such Rule has passed.
    M. ``VOW'' or ``virtual office Web site'' means a Web site, or 
feature of a Web site, operated by a Broker or for a Broker by 
another Person through which the Broker is capable of providing real 
estate brokerage services to consumers with whom the Broker has 
first established a Broker-consumer relationship (as defined by 
state law) where the consumer has the opportunity to search MLS 
data, subject to the Broker's oversight, supervision, and 
accountability.
    N. ``VOW Policy'' means the ``Policy governing use of MLS data 
in connection with Internet brokerage services offered by MLS 
Participants (`Virtual Office Web sites'),'' adopted by NAR on or 
about May 17, 2003, and any amendments thereto.
    O. The terms ``and'' and ``or'' have both conjunctive and 
disjunctive meanings.

III. Applicability

    This Final Judgment applies to NAR and all other Persons in 
active concert or participation with NAR who have received actual 
notice of this Final Judgment. A Member Board shall not be deemed to 
be in active concert with NAR solely as a consequence of the Member 
Board's receipt of actual notice of this Final Judgment and its 
affiliation with or membership in NAR and its involvement in regular 
activities associated with its affiliation with or membership in NAR 
(e.g., coverage under a NAR insurance policy, attendance at NAR 
meetings or conventions, or review of Member Board policies by NAR).

IV. Prohibited Conduct

    Subject to the provisions of sections V and VI of this Final 
Judgment, the Modified VOW Policy (Exhibit A), and the definition of 
MLS Participant and accompanying Note (Exhibit B), NAR shall not 
adopt, maintain, or enforce any Rule, or enter into or enforce any 
agreement or practice, that directly or indirectly
    A. Prohibits a Broker from using a VOW or prohibits, restricts, 
or impedes a Broker who uses a VOW from providing to Customers on 
its VOW all of the Listing Information that a Broker is permitted to 
Provide to Customers by hand, mail, facsimile, electronic mail, or 
any other methods of delivery;
    B. Unreasonably disadvantages or unreasonably discriminates 
against a Broker in the use of a VOW to Provide to Customers all of 
the Listing Information that a Broker is permitted to Provide to 
Customers by hand, mail, facsimile, electronic mail, or any other 
methods of delivery;

[[Page 36108]]

    C. Prohibits, restricts, or impedes the referral of Customers 
whose identities are obtained from a VOW by a Broker who uses a VOW 
to any other Person, or establishes the price of any such referral;
    D. Imposes fees or costs upon any Broker who operates a VOW or 
upon any Person who operates a VOW for any Broker that exceed the 
reasonably estimated actual costs incurred by a Member Board in 
providing Listing Information to the Broker or Person operating the 
VOW or in performing any other activities relating to the VOW, or 
discriminates in such VOW related fees or costs between those 
imposed upon a Broker who operates a VOW and those imposed upon a 
Person who operates a VOW for a Broker, unless the MLS incurs 
greater costs in providing a service to a Person who operates a VOW 
for a Broker than it incurs in providing the same service to the 
Broker; or
    E. Is inconsistent with the Modified VOW Policy.

V. Required Conduct

    A. Within five business days after entry of this Final Judgment, 
NAR shall repeal the ILD Policy and direct each Member Board that 
adopted Rules implementing the ILD Policy to repeal such Rules at 
the next meeting of the Member Board's decisionmaking body that 
occurs more than ten days after receipt of the directive, but no 
later than ninety days after entry of this Final Judgment.
    B. Within five business days after entry of this Final Judgment, 
NAR shall direct Member Boards that adopted Rules implementing the 
VOW Policy to repeal such Rules at the next meeting of the Member 
Board's decisionmaking body that occurs more than ten days after 
receipt of the directive, but no later than ninety days after entry 
of this Final Judgment.
    C. Within five business days after entry of this Final Judgment, 
NAR shall adopt the Modified VOW Policy. NAR shall not change the 
Modified VOW Policy without either obtaining advance written 
approval by the United Slates Department of Justice, Antitrust 
Division (``DOJ'') or an order of the Court pursuant to Section VIII 
of this Final Judgment authorizing the proposed modification.
    D. Within five business days after entry of this Final Judgment, 
NAR shall direct Member Boards to adopt the Modified VOW Policy 
within ninety days after entry of this Final Judgment, and to 
thereafter maintain, act consistently with, and enforce Rules 
implementing the modified VOW Policy. NAR shall simultaneously 
direct Member Boards, beginning upon receipt of the directive, not 
to adopt, maintain, or enforce any Rule or practice that NAR would 
be prohibited from adopting, maintaining, or enforcing pursuant to 
Section IV of this Final Judgment (including Rules or practices that 
unreasonably discriminate against Brokers in their operation of 
VOWs).
    E. If NAR determines that a Member Board has not timely adopted 
or maintained, acted consistently with, or enforced Rules 
implementing the Modified VOW Policy, it shall, within thirty days 
of such determination, direct in writing that the Member Board do 
so. NAR shall deny coverage under any NAR insurance policy (or cause 
coverage to be denied) to any Member Board for as long as that 
Member Board refuses to adopt, maintain, act consistently with, and 
enforce rules implementing the Modified VOW Policy. NAR shall also 
notify the DOJ of the identity of that Member Board and the Modified 
VOW Policy provisions it refused to adopt, maintain, act 
consistently with, or enforce. For purposes of this provision, a 
failure of a Member Board to adopt, maintain, act consistently with, 
or enforce Rules implementing the Modified VOW Policy within ninety 
days of a written directive to that Member Board from NAR shall 
constitute a refusal by the Member Board to do so.
    F. If NAR determines that a Member Board has adopted, 
maintained, or enforced any Rule or practice that NAR would be 
prohibited from adopting, maintaining, or enforcing pursuant to 
Section IV of this Final Judgment (including Rules or practices that 
unreasonably discriminate against Brokers in their operation of 
VOWs), it shall, within thirty days of such determination, direct in 
writing that the Member Board rescind and cease to enforce that Rule 
or practice. NAR shall deny coverage under any NAR insurance policy 
(or cause coverage to be denied) to any Member Board for as long as 
that Member Board refuses to rescind and cease to enforce that Rule 
or practice. NAR shall also notify the DOJ of the identity of that 
Member Board and the Rule or practice it refused to rescind and 
cease to enforce. For purposes of this provision, a Member hoard's 
failure to rescind and cease to enforce the Rule or practice within 
ninety days of a written directive from NAR shall constitute a 
refusal by the Member board to do so.
    G. Within thirty days of entry of this Final Judgment, NAR shall 
designate an Antitrust Compliance Officer with responsibility for 
educating Member Boards about the antitrust laws and for achieving 
full compliance with this Final Judgment. The Antitrust Compliance 
Officer shall be responsible for the following:
    (1) Supervising NAR's review of Rules of NAR's Member Boards for 
compliance with this Final Judgment and the Modified VOW Policy;
    (2) Maintaining copies of any communications with any Person 
containing allegations of any Member Board's (i) noncompliance with 
any provision of the Modified VOW Policy or with this Final Judgment 
or (ii) failure to enforce any Rules implementing the Modified VOW 
Policy;
    (3) Reporting to the United States 180 days after entry of this 
Final Judgment and again on the first anniversary of the entry of 
this Final Judgment, the identity of each Member Board that has not 
adopted Rules implementing the Modified VOW Policy;
    (4) Ensuring that each of NAR's Member Boards that owns or 
operates a multiple listing service are provided briefing materials, 
within ninety days of the entry of this Final Judgment, on the 
meaning and requirements of the Modified VOW Policy and this Final 
Judgment; and
    (5) Holding an annual program for NAR Member Boards and their 
counsel that includes a discussion of the antitrust laws (as applied 
to such Member Boards) and this Final Judgment.
    H. NAR shall maintain and shall furnish to the DOJ on a 
quarterly basis (beginning ninety days after entry of this Final 
Judgment) copies of any communications with any Person containing 
allegations of any Member's Board's (1) noncompliance with any 
provision of the Modified VOW Policy or with this Final Judgment or 
(2) failure to enforce any Rules implementing the Modified VOW 
Policy.
    I. Within five business days after entry of this Final Judgment, 
NAR shall provide, in a prominent size and location on its Web site 
(http://www.realtor.org) a hyperlink to a Web page on which NAR has 
published copies of
    (1) This Final Judgment;
    (2) A notification that Member Boards must repeal any Rules 
implementing the ILD and VOW Policies (in accordance with Sections 
V.A and V.B of this Final Judgment); and
    (3) A copy of the Modified VOW Policy.
    NAR shall also publish each of the three above items in the 
first issue of Realtor[supreg] Magazine scheduled for publication 
after the date of entry of this Final Judgment.

 VI. Permitted Conduct

    A. Subject to section IX of this Final Judgment, nothing in this 
Final Judgment shall prohibit NAR from adopting and maintaining the 
definition of MLS Participant and the accompanying Note, together 
attached as Exhibit B. However, NAR shall direct each Member Board 
not to suspend or expel any Broker from multiple listing service 
membership or participation for reasons of the Broker's then-failure 
to qualify for membership or participation under the definition of 
MLS Participant and the accompanying Note, together attached as 
Exhibit B, until May 27, 2009.
    B. Notwithstanding any of the above provisions, and subject to 
section IX of this Final Judgment, nothing in this Final Judgment 
shall prohibit NAR from adopting, maintaining, or enforcing Rules 
that are generally applicable on their face and that do not, in 
their application, unreasonably restrict any method of delivery of 
Listing Information to Customers.

VII. Compliance Inspection

    A. For the purposes of determining or securing compliance with 
this Final Judgment, or of determining whether this Final Judgment 
should be modified or vacated, and subject to any legally recognized 
privilege, from time to time authorized representatives of the DOJ, 
including consultants and other Persons retained by the United 
States, shall, upon written request of an authorized representative 
of the Assistant Attorney General in charge of the Antitrust 
Division, and on reasonable notice to NAR, be permitted:
    (1) Access during NAR's office hours to inspect and copy, or at 
the option of the United States, to require NAR to provide hard copy 
or electronic copies of, all books, ledgers, accounts, records, 
data, and documents in the possession, custody, or control of NAR, 
relating to any matters contained in this Final Judgment; and

[[Page 36109]]

    (2) To interview, either informally or on the record, NAR's 
officers, employees, or agents, who may have their individual 
counsel and counsel for NAR present, regarding such matters. The 
interviews shall be subject to the reasonable convenience of the 
interviewee and without restraint or interference by NAR. NAR may, 
however, prevent the interviewee from divulging matters protected by 
the attorney-client privilege, work product doctrine, or other 
applicable privilege.
    B. Upon the written request of an authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
NAR shall submit written reports or response to written 
interrogatories, under oath if requested, relating to its compliance 
with any of the matters contained in this Final Judgment as may be 
requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any Person 
other than an authorized representative of the executive branch of 
the United States, except in the course of legal proceedings to 
which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this 
Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by NAR 
to the United States, NAR marks as confidential any pertinent page 
of such material on the grounds that such page contains information 
as to which a claim of protection may be asserted under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure, then the United 
States shall give NAR ten calendar days notice prior to divulging 
such material in any legal proceeding (other than a grand jury 
proceeding).

VIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this 
Final Judgment to apply to this Court at any time for further orders 
and directions as may be necessary or appropriate to carry out or 
construe this Final Judgment, to modify any of its provisions, to 
enforce compliance, and to punish violations of its provisions.

IX. No Limitation on Government Rights

    Nothing in this Final Judgment shall limit the right of the 
United States to investigate and bring actions to prevent or 
restrain violations of the antitrust laws concerning any Rule or 
practice adopted or enforced by NAR or any of its Member Boards.

X. Expiration of Final Judgment

    This Final Judgment shall expire ten years from the date of its 
entry.

XI. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The 
parties have complied with the requirements of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16, including making copies 
available to the public of this Final Judgment, the Competitive 
Impact Statement, and any comments thereon and the United States's 
responses to comments. Based upon the record before the Court, which 
includes the Competitive Impact Statement and any comments and 
response to comments filed with the Court, entry of this Final 
Judgment is in the public interest.

Dated: Court approval subject to procedures of Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16.

Matthew F. Kennelly,

United States District Judge.

Exhibit A

Policy Governing Use of MLS Data in Connection With Internet Brokerage 
Services Offered by MLS Participants (``Virtual Office Web sites'')

I. Definitions and Scope of Policy

    1. For purposes of this Policy, the term Virtual Office Website 
(``VOW'') refers to a Participant's Internet Web site, or a feature 
of a Participant's Internet Web site, through which the Participant 
is capable of providing real estate brokerage services to consumers 
with whom the Participant has first established a broker-consumer 
relationship (as defined by state law) where the consumer has the 
opportunity to search MLS data, subject to the Participant's 
oversight, supervision, and accountability.
    a. A Participant may designate an Affiliated VOW Partner 
(``AVP'') to operate a VOW on behalf of the Participant, subject to 
the Participant's supervision and accountability and the terms of 
this Policy.
    b. A non-principal broker or sales licensee, affiliated with a 
Participant, may, with the Participant's consent, operate a VOW or 
have a VOW operated on its behalf by an AVP. Such a VOW is subject 
to the Participant's supervision and accountability and the terms of 
this Policy.
    c. Each use of the term ``Participant'' in this Policy shall 
also include a Participant's non-principal brokers and sales 
licensees (with the exception of references in this section to the 
``Participant's consent'' and the ``Participant's supervision and 
accountability,'' and in section III.10.a, below, to the 
``Participant acknowledges''). Each reference to ``VOW'' or ``VOWs'' 
herein refers to all VOWs, whether operated by a Participant, by a 
non-principal broker or sales licensee, or by an AVP.
    2. The right to display listings in response to consumer 
searches is limited to display of MLS data supplied by the MLS(s) in 
which the Participant has participatory rights. This does not 
preclude a firm with offices participating in different MLSs from 
operating a master Web site with links to such offices' VOWs.
    3. Participants' Internet Web sites, including those operated 
for Participants by AVPs, may also provide other features, 
information, or services in addition to VOWs (including the Internet 
Data Exchange (``IDX'') function).
    4. The display of listing information on a VOW does not require 
separate permission from the Participant whose listings will be 
available on the VOW.
    5. Except as permitted in sections III and IV, MLSs may not 
adopt rules or regulations that conflict with this Policy or that 
otherwise restrict the operation of VOWs by Participants.

II. Policies Applicable to Participants' VOWs

    1. A Participant may provide brokerage services via a VOW that 
include making MLS active listing data available, but only to 
consumers with whom the Participant has first established a lawful 
consumer-broker relationship, including completion of all actions 
required by state law in connection with providing real estate 
brokerage services to clients and customers (hereinafter 
``Registrants''). Such actions shall include, but are not limited 
to, satisfying all applicable agency, non-agency, and other 
disclosure obligations, and execution of any required agreement(s).
    2. A Participant's VOW must obtain the identity of each 
Registrant and obtain each Registrant's agreement to Terms of Use of 
the VOW, as follows:
    a. A Registrant must provide his or her name and a valid e-mail 
address. The Participant must send an e-mail to the address provided 
by the Registrant confirming that the Registrant has agreed to the 
Terms of Use (described in subsection c below). The Registrant may 
be permitted to access the VOW only after the Participant has 
verified that the e-mail address provided is valid and that 
Registrant received the Terms of Use confirmation.
    b. The Registrant must supply a user name and a password, the 
combination of which must be different from those of all other 
Registrants on the VOW, before being permitted to search and 
retrieve information from the MLS database via the VOW. The user 
name and password may be established by the Registrant or may be 
supplied by the Participant, at the option of the Participant. An e-
mail address may be associated with only one user name and password. 
The Registrant's password and access must expire on a date certain 
but may be renewed. The Participant must at all times maintain a 
record of the name and e-mail address supplied by the Registrant, 
and the user name and current password of each Registrant. Such 
records must be kept for not less than 180 days after the expiration 
of the validity of the Registrant's password. If the MLS has reason 
to believe that a Participant's VOW has caused or permitted a breach 
in the security of the data or a violation of MLS rules related to 
use by one or more Registrants, the Participant shall, upon request, 
provide to the MLS a copy of the record of the name, e-mail address, 
user name, current password, and audit trail, if required, of any 
Registrant identified by the MLS to be suspected of involvement in 
the violation.
    c. The Registrant must be required affirmatively to express 
agreement to a ``Terms of Use'' provision that requires the 
Registrant to open and review an agreement that provides at least 
the following:
    i. That the Registrant acknowledges entering into a lawful 
consumer-broker relationship with the Participant;
    ii. That all data obtained from the VOW is intended only for the 
Registrant's personal, non-commercial use;
    iii. That the Registrant has a bona fide interest in the 
purchase, sale, or lease of real estate of the type being offered 
through the VOW;

[[Page 36110]]

    iv. That the Registrant will not copy, redistribute, or 
retransmit any of the data or information provided;
    v. That the Registrant acknowledges the MLS's ownership of, and 
the validity of the MLS's copyright in, the MLS database.
    After the Registrant has opened for viewing the Terms of Use 
agreement, a ``mouse click'' is sufficient to acknowledge agreement 
to those terms. The Terms of Use Agreement may not impose a 
financial obligation on the Registrant or create any representation 
agreement between the Registrant and the Participant.
    The Terms of Use agreement shall also expressly authorize the 
MLS, and other MLS Participants or their duly authorized 
representatives, to access the VOW for the purposes of verifying 
compliance with MLS rules and monitoring display of Participants' 
listings by the VOW.
    d. An agreement entered into at any time between the Participant 
and Registrant imposing a financial obligation on the Registrant or 
creating representation of the Registrant by the Participant must be 
established separately from the Terms of Use, must be prominently 
labeled as such, and may not be accepted solely by mouse click.
    3. A Participant's VOW must prominently display an e-mail 
address, telephone number, or specific identification of another 
mode of communication (e.g., live chat) by which a consumer can 
contact the Participant to ask questions, or get more information, 
about properties displayed on the VOW. The Participant, or a non-
principal broker or sales licensee licensed with the Participant, 
must be willing and able to respond knowledgeably to inquiries from 
Registrants about properties within the market area served by that 
Participant and displayed on the VOW.
    4. A Participant's VOW must protect the MLS data from 
misappropriation by employing reasonable efforts to monitor for and 
prevent ``scraping'' or other unauthorized accessing, reproduction, 
or use of the MLS database.
    5. A Participant's VOW must comply with the following additional 
requirements:
    a. No VOW shall display listings or property addresses of 
sellers who have affirmatively directed their listing brokers to 
withhold their listing or property address from display on the 
Internet. The listing broker or agent shall communicate to the MLS 
that a seller has elected not to permit display of the listing or 
property address on the Internet. Notwithstanding the foregoing, a 
Participant who operates a VOW may provide to consumers via other 
delivery mechanisms, such as e-mail, fax, or otherwise, the listings 
of sellers who have determined not to have the listing for their 
property displayed on the Internet.
    b. A Participant who lists a property for a seller who has 
elected not to have the property listing or the property address 
displayed on the Internet shall cause the seller to execute a 
document that conforms to the form attached to this Policy as 
Appendix A. The Participant shall retain such forms for at least one 
year from the date they are signed.
    c. With respect to any VOW that
    (i) Allows third-parties to write comments or reviews about 
particular listings or displays a hyperlink to such comments or 
reviews in immediate conjunction with particular listings, or
    (ii) Displays an automated estimate of the market value of the 
listing (or hyperlink to such estimate) in immediate conjunction 
with the listing, the VOW shall disable or discontinue either or 
both of those features as to the seller's listing at the request of 
the seller. The listing broker or agent shall communicate to the MLS 
that the seller has elected to have one or both of these features 
disabled or discontinued on all Participants' Web sites. Except for 
the foregoing and subject to subparagraph (d), a Participant's VOW 
may communicate the Participant's professional judgment concerning 
any listing. Nothing shall prevent a VOW from notifying its 
customers that a particular feature has been disabled ``at the 
request of the seller.''
    d. A VOW shall maintain a means (e.g., e-mail address, telephone 
number) to receive comments about the accuracy of any data or 
information that is added by or on behalf of the VOW operator beyond 
that supplied by the MLS and that relates to a specific property 
displayed on the VOW. The VOW operator shall correct or remove any 
false data or information relating to a specific property upon 
receipt of a communication from the listing broker or listing agent 
for that property explaining why the data or information is false. 
However, the VOW operator shall not be obligated to remove or 
correct any data or information that simply reflects good faith 
opinion, advice, or professional judgment.
    e. Each VOW shall refresh MLS data available on the VOW not less 
frequently than every 3 days.
    f. Except as provided elsewhere in this Policy or in MLS rules 
and regulations, no portion of the MLS database may he distributed, 
provided, or made accessible to any person or entity.
    g. Every VOW must display a privacy Policy that informs 
Registrants of the ways in which information obtained from them will 
be used.
    h. A VOW may exclude listings from display based only on 
objective criteria, including, but not limited to, factors such as 
geography, list price, type of property, cooperative compensation 
offered by listing broker, or whether the listing broker is a 
Realtor[supreg].
    6. A Participant who intends to operate a VOW must notify the 
MLS of its intention to establish a VOW and must make the VOW 
readily accessible to the MLS and to all MLS Participants for 
purposes of verifying compliance with this Policy and any other 
applicable MLS rules or policies.
    7. A Participant may operate more than one VOW itself or through 
an AVP. A Participant who operates a VOW itself shall not be 
precluded from also operating VOWs in conjunction with AVPs.

III. Policies Applicable to Multiple Listing Services

    1. A Multiple Listing Service shall permit MLS Participants to 
operate VOWs, or to have VOWs operated for them by AVPs, subject to 
the requirements of state law and this Policy.
    2. An MLS shall, if requested by a Participant, provide basic 
``downloading'' of all MLS non-confidential listing data, including 
without limitation address fields, listings types, photographs, and 
links to virtual tours. Confidential data includes only that which 
Participants are prohibited from providing to customers orally and 
by all other delivery mechanisms. They include fields containing the 
information described in paragraph IV(1) of this Policy, provided 
that sold data (i.e., listing information relating to properties 
that have sold) shall be deemed confidential and withheld from a 
download only if the actual sales prices of completed transactions 
are not accessible from public records. For purposes of this Policy, 
``downloading'' means electronic transmission of data from MLS 
servers to a Participant's or AVP's server on a persistent basis. An 
MLS may also offer a transient download. In such case, it shall 
also, if requested, provide a persistent download, provided that it 
may impose on users of such download the approximate additional 
costs incurred by it to do so.
    3. This Policy does not require an MLS to establish publicly 
accessible sites displaying Participants' listings.
    4. If an MLS provides a VOW-specific feed, that feed must 
include all of the non-confidential data included in the feed 
described in paragraph 2 above except for listings or property 
addresses of sellers who have elected not to have their listings or 
addresses displayed on the Internet.
    5. An MLS may pass on to those Participants who will download 
listing information the reasonably estimated costs incurred by the 
MLS in adding or enhancing its ``downloading'' capacity to enable 
such Participants to operate VOWs.
    6. An MLS may require that Participants (1) utilize appropriate 
security protection, such as firewalls, as long as such requirement 
does not impose security obligations greater than those employed 
concurrently by the MLS, and/or (2) maintain an audit trail of 
Registrants' activity on the VOW and make that information available 
to the MLS if the MLS has reason to believe that any VOW has caused 
or permitted a breach in the security of the data or a violation of 
applicable MLS rules.
    7. An MLS may not prohibit or regulate display of advertising or 
the identification of entities on VOWs (``branding'' or ``co-
branding''), except to prohibit deceptive or misleading advertising 
or co-branding. For purposes of this provision, co-branding will be 
presumed not to be deceptive or misleading if the Participant's logo 
and contact information (or that of at least one Participant, in the 
case of a VOW established and operated by or for more than one 
Participant) is displayed in immediate conjunction with that of 
every other party, and the logo and contact information of all 
Participants displayed on the VOW is as large as the logo of the AVP 
and larger than that of any third party.
    8. Except as provided in this Policy, an MLS may not prohibit 
Participants from enhancing their VOWs by providing

[[Page 36111]]

information obtained from sources other than the MLS, additional 
technological services (such as mapping functionality), or 
information derived from non-confidential MLS data (such as an 
estimated monthly payment derived from the listed price), or 
regulate the use or display of such information or technological 
services on any VOW.
    9. Except as provided in generally applicable rules or policies 
(such as the Realtor[supreg] Code of Ethics), an MLS may not 
restrict the format of data display on a VOW or regulate the 
appearance of VOWs.
    10. Subject to the provisions below, an MLS shall make MLS 
listing data available to an AVP for the exclusive purpose of 
operating a VOW on behalf of a Participant. An MLS shall make MLS 
listing data available to an AVP under the same terms and conditions 
as those applicable to Participants. No AVP has independent 
participation rights in the MLS by virtue of its right to receive 
data on behalf of a Participant, or the right to use MLS data except 
in connection with operation of a VOW for a Participant. AVP access 
to MLS data is derivative of the rights of the Participant on whose 
behalf the AVP is downloading data.
    a. A Participant, non-principal broker or sales licensee, or AVP 
may establish the AVP's right to receive and use MLS data by 
providing to the MLS a writing in which the Participant acknowledges 
its or its non-principal broker's or sales licensee's selection of 
the AVP to operate a VOW on its behalf.
    b. An MLS may not charge an AVP, or a Participant on whose 
behalf an AVP operates a VOW, more than a Participant that chooses 
to operate a VOW itself (including any fees or costs associated with 
a license to receive MLS data, as described in (g), below), except 
to the extent that the MLS incurs greater costs in providing listing 
data to the AVP than the MLS incurs in providing listing data to a 
Participant.
    c. An MLS may not place data security requirements or 
restrictions on use of MLS listing data by an AVP that are not also 
imposed on Participants.
    d. An MLS must permit an AVP to download listing information in 
the same manner (e.g., via a RETS feed or via an FTP download), at 
the same times and with the same frequency that the MLS permits 
Participants to download listing information.
    e. An MLS may not refuse to deal directly with an AVP in order 
to resolve technical problems with the data feed. However, the MLS 
may require that the Participant on whose behalf the AVP is 
operating the VOW participate in such communications if the MLS 
reasonably believes that the involvement of the Participant would be 
helpful in order to resolve the problem.
    f. An MLS may not condition an AVP's access to a data feed on 
the financial terms on which the AVP provides the site for the 
Participant.
    g. An MLS may require Participants and AVPs to execute license 
or similar agreements sufficient to ensure that Participants and 
AVPs understand and agree that data provided by the MLS may be used 
only to establish and operate a VOW on behalf of the Participant and 
not for any other purpose.
    h. An MLS my not (i) prohibit an AVP from operating VOWs on 
behalf of more than One Participant, and several Participants may 
designate an AVP to operate a single VOW for them collectively, (ii) 
limit the number of entities that Participants may designate as AVPs 
for purposes of operating VOWs, or (iii) prohibit Participants from 
designating particular entities as AVPs except that, if an AVP's 
access has been suspended or terminated by an MLS, that MLS may 
prevent an entity from being designated an AVP by another 
Participant during the period of the AVP's suspension or 
termination.
    i. Except as stated below, an MLS may not suspend or terminate 
an AVP's access to data (a) for reasons other than those that would 
allow an MLS to suspend or terminate a Participant's access to data, 
or (b) without giving the AVP and the associated Participant(s) 
prior notice and the process set forth in the applicable provisions 
of the MLS rules for suspension or termination of a Participant's 
access. Notwithstanding the foregoing, an MLS may immediately 
terminate an AVP's access to data (a) if the AVP is no longer 
designated to provide VOW services to any Participant, (b) if the 
Participant for whom the AVP operates a VOW ceases to maintain its 
status with the MLS, (c) if the AVP has downloaded data in a manner 
not authorized for Participants and that hinders the ability of 
Participants to download data, or (d) if the associated Participant 
or AVP has failed to make required payments to the MLS in accordance 
with the MLS's generally applicable payment policies and practices.
    11. An MLS may not prohibit, restrict, or impede a Participant 
from referring Registrants to any person or from obtaining a fee for 
such referral.

IV. Requirements That MLSs May Impose on the Operation of VOWs and 
Participants

    1. An MLS may impose any, all, or none of the following 
requirements on VOWs but may impose them only to the extent that 
equivalent requirements are imposed on Participants' use of MLS 
listing data in providing brokerage services via all other delivery 
mechanisms:
    a. A Participant's VOW may not make available for search by or 
display to Registrants the following data intended exclusively for 
other MLS Participants and their affiliated licensees:
    i. Expired, withdrawn, or pending listings.
    ii. Sold data unless the actual sales price of completed 
transactions is accessible from public records.
    iii. The compensation offered to other MLS Participants.
    iv. The type of listing agreement, i.e., exclusive right to sell 
or exclusive agency.
    v. The seller(s) and occupant(s) name(s), phone number(s) and e-
mail address(es), where available.
    vi. Instructions or remarks intended for cooperating brokers 
only, such as those regarding showing or security of the listed 
property.
    b. The content of MLS data that is displayed on a VOW may not be 
changed from the content as it is provided in the MLS. MLS data may 
be augmented with additional data or information not otherwise 
prohibited from display as long as the source of such other data or 
information is clearly identified. This requirement does not 
restrict the format of MLS data display on VOWs or display of fewer 
than all of the listings or fewer authorized data fields.
    c. There shall be a notice on all MLS data displayed indicating 
that the data is deemed reliable but is not guaranteed accurate by 
the MLS. A Participant's VOW may also include other appropriate 
disclaimers necessary to protect the Participant and/or the MLS from 
liability.
    d. Any listing displayed on a VOW shall identify the name of the 
listing firm in a readily visible color, and reasonably prominent 
location, and in typeface not smaller than the median typeface used 
in the display of listing data.
    e. The number of current or, if permitted, sold listings that 
Registrants may view, retrieve, or download on or from a VOW in 
response to an inquiry may be limited to a reasonable number. Such 
number shall be determined by the MLS, but in no event may the limit 
be fewer than 100 listings or 5% of the listings in the MLS, 
whichever is less.
    f. Any listing displayed on a VOW shall identify the name of the 
listing agent.
    2. An MLS may also impose the following other requirements on 
the operation of VOWs:
    a. Participants displaying other brokers' listings obtained from 
other sources, e.g., other MLSs, non-participating brokers, etc. 
shall display the source from which each such listing was obtained.
    b. A maximum period, no shorter than 90 days and determined by 
the MLS, during which Registrants' passwords are valid, after which 
such passwords must be changed or reconfirmed.
    3. An MLS may not prohibit Participants from downloading and 
displaying or framing listings obtained from other sources, e.g., 
other MLSs or from brokers not participating in that MLS, etc., but 
may require either that (i) such information be searched separately 
from listings obtained from other sources, including other MLSs, or 
(ii) if such other sources are searched in conjunction with searches 
of the listings available on the VOW, require that any display of 
listings from other sources identify such other source.

Effective Date

    MLSs have until not later than [90 DAYS AFTER ENTRY OF THE FINAL 
JUDGMENT] to adopt rules implementing the foregoing policies and to 
comply with the provisions of section III above, and (2) 
Participants shall have until not later than 180 days following 
adoption and implementation of rules by an MLS in which they 
participate to cause their VOW to comply with such rules.
    See Appendix A for Seller Opt-Out Form.

Appendix A. Seller Opt-Out Form

    1. [Check one]
    a. [Check here] I have advised my broker or sales agent that I 
do not want the listed property to be displayed on the Internet; or
    b. [Check here] I have advised my broker or sales agent that I 
do not want the address

[[Page 36112]]

of the listed property to be displayed on the Internet.
    2. I understand and acknowledge that, if I have selected option 
a, consumers who conduct searches for listings on the Internet will 
not see information about the listed property in response to their 
search.

initials of seller

Exhibit B

(Statement of MLS Policy)

Statement 7.9. Definition of MIS ``Participant''

    The term ``Participant'' in a Board Multiple Listing Service is 
defined, as follows:
    ``Where the term REALTOR[supreg] is used in this explanation of 
policy in connection with the word `Member' or the word 
`Participant', it shall be construed to mean the REALTOR[supreg] 
principal or principals, of this or any other Board, or a firm 
comprised of REALTOR[supreg] principals participating in a Multiple 
Listing Service owned and operated by the Board. Participatory 
rights shall be held by an individual principal broker unless 
determined by the Board or MLS to be held by a firm. It shall not be 
construed to include individuals other than a principal or 
principals who are REALTOR[supreg] Members of this or any other 
Board, or who are legally entitled to participate without Board 
membership. However, under no circumstances is any individual or 
firm, regardless of membership status, entitled to MLS `Membership' 
or `Participation' unless they hold a current, valid real estate 
broker's license and are capable of offering and accepting offers or 
accept cooperation and compensation to and from other Participants 
or are licensed or certified by an appropriate state regulatory 
agency to engage in the appraisal of real property. Use of 
information developed by or published by a Board Multiple Listing 
Service is strictly limited to the activities authorized under a 
Participant's licensure(s) or certification and unauthorized uses 
are prohibited. Further, none of the foregoing is intended to convey 
`Participation' or `Membership' or any right of access to 
information developed by or published by a Board Multiple Listing 
Service where access to such information is prohibited by law. 
Additionally, the foregoing does not prohibit Board Multiple Listing 
Services, at their discretion, from categorizing non-principal 
brokers, sales licensees, licensed and certified appraisers and 
others affiliated with the MLS `Members' or `Participants' as 
`users' or `subscribers' and, holding such individuals personally 
subject to the rules and regulations and any other governing 
provisions of the MLS and to discipline for violations thereof. MLSs 
may, as a matter of local determination, limit participatory rights 
to individual principal brokers, or to their firms, and to licensed 
or certified appraisers, who maintain an office or Internet presence 
from which they are available to represent real estate sellers, 
buyers, lessors or lessees or from which they provide appraisal 
services. (Amended 5/02)
    ``Where the terms `subscriber' or `user' are used in connection 
with a Multiple Listing Service owned or operated by a Board of 
REALTOR[supreg], they refer to non-principal brokers, sales 
licensees, and licensed and certified real estate appraisers 
affiliated with an MLS Participant and may, as a matter of local 
option, also include a Participant's affiliated unlicensed 
administrative and clerical staff, personal assistants, and 
individuals seeking licensure or certification as real estate 
appraisers provided that any such individual is under the direct 
supervision of an MLS Participant or the Participant's licensed 
designee. If such access is available to unlicensed or uncertified 
individuals, their access is subject to the rules and regulations, 
the payment of applicable fees and charges (if any), and the 
limitations and restrictions of state law. None of the foregoing 
shall diminish the Participant's ultimate responsibility for 
ensuring compliance with the rules and regulations of the MLS by all 
individuals affiliated with the Participant. (Adopted 4/92)
    ``Under the `Board of Choice' policy, MLS participatory rights 
shall be available to any REALTOR[supreg] (principal) or any firm 
comprised of REALTORS[supreg] (principals) irrespective of where 
they hold primary membership subject only to their agreement to 
abide by any MLS rules or regulations; agreement to arbitrate 
disputes with other Participants; and payment of any MLS dues, fees, 
and charges'' Participatory rights granted under Board of Choice do 
not confer voting privileges or eligibility for office as an MLS 
committee member, officer, or director, except as granted at the 
discretion of the local Board and/or MLS. (Amended 5/97)
    The universal access to services component of Board of Choice is 
to be interpreted as requiring that MLS Participatory rights be 
available to REALTOR[supreg] principals, or to firms comprised of 
REALTOR[supreg] principals, irrespective of where primary or 
secondary membership is held. This does not preclude an MLS from 
assessing REALTORS[supreg] not holding primary or secondary 
membership locally fees, dues, or charges that exceed those or, 
alternatively, that are less than those charged Participants holding 
such memberships locally or additional fees to offset actual 
expenses incurred in providing MLS services such as courier charges, 
long distance phone charges, etc., or for charging any Participant 
specific fees for optional additional services. (Amended 11/96)
    None of the foregoing shall be construed as requiring a Board to 
grant MLS participatory rights, under Board of Choice, where such 
rights have been previously terminated by action of that Board's 
Board of Directors.'' (Adopted 11/95)

(Model MLS rules)

    Section 3--Participation: Any REALTOR[supreg] of this or any 
other Board who is a principal, partner, corporate officer, or 
branch office manager acting on behalf of a principal, without 
further qualification, except as otherwise stipulated in these 
bylaws, shall be eligible to participate in Multiple Listing upon 
agreeing in writing to conform to the rules and regulations thereof 
and to pay the costs incidental thereto.* However, under no 
circumstances is any individual or firm, regardless of membership 
status, entitled to Multiple Listing Service ``membership'' or 
``participation'' unless they hold a current, valid real estate 
broker's license and are capable of offering and accepting offers or 
accept compensation to and from other Participants or are licensed 
or certified by an appropriate state regulatory agency to engage in 
the appraisal of real property.** Use of information developed by or 
published by a Board Multiple Listing Service is strictly limited to 
the activities authorized under a Participant's licensure(s) or 
certification and unauthorized uses are prohibited. Further, none of 
the foregoing is intended to convey ``participation'' or 
``membership'' or any right of access to information developed by or 
published by a Board Multiple Listing Service where access to such 
information is prohibited by law. (Amended 11/96)

    Note: Mere possession of a broker's license is not sufficient to 
qualify for MLS participation. Rather, the requirement that an 
individual or firm `offers or accepts cooperation and compensation' 
means that the Participant actively endeavors during the operation 
of its real estate business to list real property of the type listed 
on the MLS and/or to accept offers of cooperation and compensation 
made by listing brokers or agents in the MLS. ``Actively'' means on 
a continual and on-going basis during the operation of the 
Participant's real estate business. The ``actively'' requirement is 
not intended to preclude MLS participation by a Participant or 
potential Participant that operates a real estate business on a part 
time, seasonal, or similarly time-limited basis or that has its 
business interrupted by periods of relative inactivity occasioned by 
market conditions. Similarly, the requirement is not intended to 
deny MLS participation to a Participant or potential Participant who 
has not achieved a minimum number of transactions despite good faith 
efforts. Nor is it intended to permit an MLS to deny participation 
based on the level of service provided by the Participant or 
potential Participant as long as the level of service satisfies 
state law.
    The key is that the Participant or potential Participant 
actively endeavors to make or accept offers of cooperation and 
compensation with respect to properties of the type that are listed 
on the MLS in which participation is sought. This requirement does 
not permit an MLS to deny participation to a Participant or 
potential Participant that operates a Virtual Office Website 
(``VOW'') (including a VOW that the Participant uses to refer 
customers to other Participants) if the Participant or potential 
Participant actively endeavors to make or accept offers of 
cooperation and compensation. An MLS may evaluate whether a 
Participant ``actively endeavors during the operation of its real 
estate business'' to ``offer or accept cooperation and 
compensation'' only if the MLS has a reasonable basis to believe 
that the Participant or potential Participant is in fact not doing 
so.
    The membership requirement shall be applied on a 
nondiscriminatory manner to all Participants and potential 
Participants.

United States District Court for the Northern District of Illinois 
Eastern Division

United States of America, Plaintiff,


[[Page 36113]]


v.

National Association of Realtors[supreg], Defendant.

Civil Action No. 05 C 5140
Judge Kennelly.

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant 
to section 2(b) of the Antitrust Procedures and Penalties Act 
(``APPA'' or ``Tunney Act''), 15 U.S.C. l6(b)-(h), files this 
Competitive Impact Statement relating to the proposed Final Judgment 
submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceedings

    Overview. The United States brought this lawsuit against 
Defendant National Association of Realtors[supreg] (``NAR'') on 
September 8, 2005, to stop NAR from violating section 1 of the 
Sherman Act, 15 U.S.C. 1, by its suppression of competition from 
real estate brokers who use the Internet to deliver real estate 
brokerage services. NAR's policies singled out these innovative 
brokers and denied them equal access to the for-sale listings that 
are the lifeblood of competition in real estate markets. The 
settlement will eliminate NAR's discriminatory policies and restore 
even-handed treatment for all brokers, including those who use the 
Internet in innovative ways.
    Virtual Office Websites (``VOWs ''). The brokers who have been 
restrained by NAR's policies operate password-protected websites 
through which they deliver brokerage services to consumers. NAR has 
referred to these websites as ``virtual office websites'' or 
``VOWs.'' As discussed below and in the United States' October 4, 
2005, Amended Complaint, brokers who use VOWs (``VOW brokers'') can 
operate more productively than other brokers, providing high quality 
brokerage services efficiently to consumers.
    Defendant NAR and MLSs. NAR is a trade association whose 
membership includes both traditional, bricks-and-mortar real estate 
brokers and innovative brokers, such as those who operate VOWs. NAR 
promulgates rules for the operation of the approximately 800 
multiple listing services (``MLSs'') affiliated with NAR. MLSs are 
joint ventures of virtually all real estate brokers in each local or 
regional area. MLSs aggregate information about all properties in 
the areas they serve that are offered for sale through brokers.
    NAR's Challenged Policies. On May 17, 2003, NAR adopted its 
``VOW Policy,'' which contained rules that obstructed brokers' 
abilities to use VOWs to serve their customers, as described below 
in Section II. After an investigation, the United States prepared to 
file a complaint challenging this Policy.
    On September 8, 2005, NAR repealed its VOW Policy and replaced 
it with its Internet Listings Display Policy (``ILD Policy''). NAR 
hoped that this change would forestall the United States' challenge 
to its policies. NAR's ILD Policy, however, continued to 
discriminate against VOW brokers. As part of its adoption of the ILD 
Policy, NAR also revised and reinterpreted its MLS membership rule, 
which would have excluded sonic brokers who used VOWs, as detailed 
below in Section II. (NAR's VOW and ILD Policies, including its 
membership rule revision and reinterpretation, are referred to 
collectively in this Competitive Impact Statement as NAR's 
``Challenged Policies.'')
    As an association of competitors with market power, NAR's 
adoption of policies that suppress new and efficient competition to 
the detriment of consumers violates section 1 of the Sherman Act, 15 
U.S.C. 1.
    The Complaint. On September 8, 2005, the day NAR adopted its ILD 
Policy, the United States filed its Complaint. The United States 
filed an Amended Complaint on October 4, 2005, that explicitly 
addressed the ILD Policy and membership rule revision and 
reinterpretation. The Amended Complaint alleges that NAR's adoption 
of the Challenged Policies constitutes a contract, combination, and 
conspiracy by and between NAR and its members which unreasonably 
restrains competition in brokerage service markets throughout the 
United States, in violation of section 1 of the Sherman Act, 15 
U.S.C. 1.
    In the Amended Complaint, the United States asks the Court to 
order NAR to stop violating the law. The United States did not seek 
monetary damages or fines; the law does not provide for these 
remedies in a case of this nature.
    Motion to Dismiss. NAR filed a motion to dismiss the case, 
claiming that, because NAR did not restrain brokers by compelling 
them to use the ``opt-out'' provisions of the Challenged Policies 
(discussed below in section IIC), those provisions did not 
constitute actionable restraints of trade. NAR also sought dismissal 
on two procedural grounds. On November 27, 2006, the Court issued an 
opinion denying NAR's motion. The Court found that the appropriate 
analysis under Section 1 is not whether individual market actors are 
restrained but instead whether competition is restrained.\1\ The 
Court also rejected NAR's procedural arguments.\2 \
---------------------------------------------------------------------------

    \1\ See United States v. NAR, No. 05-C-5140, 2006-2 Trade Cas. ] 
75,499, 2006 WL 3434263, at *12-14 (N.D. Ill. Nov. 27, 
2006).
    \2\ Id. at *6-11 & 15.

    Course of the Litigation. Discovery began in December 2005 and 
continued through 2006 and 2007. The case was scheduled for trial on 
July 7, 2008.
    Proposed Settlement. On May 27, 2008, six weeks before trial was 
scheduled to begin, the United States and NAR reached a settlement. 
The United States filed a Stipulation and proposed Final Judgment 
that are designed to eliminate the likely anticompetitive effects of 
NAR's Challenged Policies. The proposed Final Judgment, which is 
explained more fully below, requires NAR to repeal its VOW Policy 
and its ILD Policy and to adopt and apply new rules that do not 
discriminate against brokers who use VOWs to provide brokerage 
services to their customers.
    The United States and NAR have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA, unless 
the United States withdraws its consent. Entry of the proposed Final 
Judgment would terminate this action, except that this Court would 
retain jurisdiction to construe, modify, and enforce the proposed 
Final Judgment and to punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation of 
the Antitrust Laws

A. Description of Competition and Innovation Enabled by VOWs

    In many respects, most VOW brokers operate just like their more 
traditional competitors. They hold brokers' licenses in the states 
in which they operate, they ordinarily are Realtor members of NAR, 
they participate in their local MLS, they tour homes with potential 
buyer customers and guide those customers through the negotiating, 
contracting, and closing process, and they derive revenues from 
commissions earned in connection with real estate transactions.\3\
---------------------------------------------------------------------------

    \3\ The real estate licensing laws of most states allow real 
estate professionals to be licensed as either brokers or as agents 
or sales associates. To offer real estate brokerage services, a 
person licensed as an agent or sales associate must affiliate with 
and be subject to the supervision of a person who holds a broker's 
license. See, e.g., 225 ILCS 454/1-5.
---------------------------------------------------------------------------

    These VOW brokers differ from other brokers in how they use the 
Internet to provide brokerage services. VOW brokers use primarily 
their Web sites, rather than the efforts of their agents, to educate 
potential buyers about the market. This service necessarily 
involves--as it does with brokers who operate in a more traditional 
fashion--providing those MLS listings to buyer customers that meet 
their expressed needs and interests. NAR's MLS rules permit brokers 
to ``reproduce from the MLS compilation and distribute to 
prospective purchasers'' information about properties in which the 
purchaser might have an interest. See NAR, Handbook on Multiple 
Listing Policy, ``Model Rules & Regulations for an MLS Operated as a 
Committee of an Association of Realtors[supreg],'' Sec.  12.2 (21st 
ed. 2008). Rather than providing this information to prospective 
buyers by hand delivery, mail, fax, or e-mail--the delivery methods 
historically used by brokers VOW brokers deliver listings over the 
Internet.\4\
---------------------------------------------------------------------------

    \4\ As the court found in Austin Board of Realtors v. E-Realty, 
Inc., No. 00-CA-154, 2000 WL 34239114, at *4 (W. D. Tex. Mar. 30, 
2000), ``all * * * methods of distribution'' of listings, including 
the Internet, ``are equivalent'' and should be treated equally under 
MLS rules. Until it began developing its VOW Policy, NAR agreed with 
this position. For instance, on January 29, 2001, a top NAR official 
stated in a letter to the president of eRealty (a VOW broker) that 
eRealty's distribution of MLS listings through its VOW was ``in 
compliance with'' MLS rules governing the provision of MLS listings 
to prospective buyers. NAR also published a white paper in December 
2001 in which it described VOWs as an ``emerging, authorized use of 
MLS current listing data,'' and stated that brokers using VOWs are 
subject to the same MLS rules governing the dissemination of 
listings to potential buyers that are applicable to all other 
brokers. The same official reiterated the point in a March 8, 2002, 
interview, stating that NAR's rules ``don't discriminate between 
methods of delivery.''
    VOWs help brokers operate more efficiently and increase the 
quality of services they provide. By enabling consumers to search 
for and retrieve relevant MLS listings, VOW brokers can operate more 
efficiently than other brokers. Because customers are educating 
themselves without the broker's expenditure of time, a VOW broker 
can expend less time, energy, and resources educating his or her 
customers. Operating a VOW can also enhance broker competitiveness 
in working with home seller clients by allowing the broker to 
provide detailed information to both potential and active seller 
clients about the apparent interests of buyers who are searching for 
homes in the seller's neighborhood. A study conducted in connection 
with this case showed that one sizeable VOW broker, for example, was 
able to generate many more transactions per agent (controlling for 
years of agent experience) than the traditional brokers it competed 
against.

---------------------------------------------------------------------------

[[Page 36114]]

    With lower costs and increased productivity, some VOW brokers 
have offered discounted commission rates to their seller clients and 
rebates to their buyer customers.\5\ VOW brokers have already 
delivered tens of millions of dollars in financial benefits directly 
to their customers. Another study conducted in connection with this 
case revealed evidence consistent with a finding that the growth of 
a VOW broker that offered discounts led a sizeable traditional 
competitor to reduce its commissions to consumers.
---------------------------------------------------------------------------

    \5\ Prospective buyers frequently do not enter contractual 
relationships with the broker from whom they receive brokerage 
services and, as such, are considered ``customers,'' rather than 
``clients,'' of the broker.
---------------------------------------------------------------------------

    Innovative brokers with VOWs have enhanced the consumer 
experience by offering tools and information that allow consumers to 
approach the purchase of a home well informed about all aspects of 
the markets they are considering. VOW brokers not only provide their 
customers access to up-to-date MLS listings information, but also 
offer mapping and property-comparison tools and provide school 
district information, crime statistics, and other neighborhood 
information for consumers to consider as they educate themselves 
regarding the most important purchase in the lives of most 
Americans. Many VOW brokers also allow customers to maintain a 
personal portfolio of properties they are monitoring, with the VOWs 
automatically updating those listings as their price or status 
changes.
    Of course, many traditional brokers provide neighborhood and 
other similar information to their customers, and some even provide 
such information on Internet Web sites. VOWs can differ, however, in 
the quantity and quality of information that they provide. VOW 
brokers offer their customers complete and up-to-date information 
and often focus on information most valuable to prospective buyers, 
identifying price reductions and the number of days a property has 
been on the market and providing information about comparable recent 
sales. Customers of VOW brokers can obtain information at their own 
pace, on their own time, and in the form in which they are most 
interested in receiving it.
    Some VOW brokers have established brokerage businesses that 
focus solely on the high technology aspects of brokerage services 
that can be delivered over the Internet. Like other VOW brokers, 
these ``referral VOWs'' educate prospective buyers about the market 
in which they are considering a purchase by providing buyers MLS 
listings and other information on a VOW. When the buyer is ready to 
tour a home, the referral VOW broker can direct the buyer to brokers 
or agents who specialize in guiding the buyer on tours of homes and 
advising them during the negotiating, contracting, and closing 
process. In some instances, referral VOW brokers have obtained a 
referral fee (contingent on closing) for delivering educated buyer 
customers to the brokers or agents who received the referrals. Some 
referral VOW brokers have offered commission rebates or other 
financial benefits to their customers.

B. Description of the Defendant and Its Activities

    Chicago-based MAR is a trade association that establishes and 
enforces policies and professional standards for its over one 
million real estate professional members and 1,400 local and state 
Boards or Associations of Realtors[supreg] (``Member Boards''). NAR 
promulgates rules governing the operation of the approximately 800 
MLSs that are affiliated with NAR through their ownership or 
operation by NAR's Member Boards.\6\ In order to encourage adherence 
to its policies, NAR can deny coverage under its errors and 
omissions insurance (i.e., professional liability insurance) policy 
to any Member Board that maintains MLS rules not in compliance with 
NAR's policies.
---------------------------------------------------------------------------

    \6\ There are approximately 1,000 MLSs in the United States, 
approximately 800 of which are affiliated with NAR and subject to 
NAR's rules. The rules of the remaining approximately 200 MLSs are 
not at issue in this lawsuit, although, as a practical matter, many 
MLSs that are not affiliated with NAR adopt rules that confirm 
substantially to NAR's. Some non-NAR MLSs, such as the MLS serving 
the Columbia, South Carolina, area and the MLS serving the Hilton 
Head, South Carolina, area, adopted and maintained rules that have 
been the subject of antitrust enforcement. On May 2, 2008, the 
United States brought an antitrust action against the MLS in 
Columbia alleging that its rules restrain competition among real 
estate brokers in that area and likely harm consumers. See Complaint 
in United States v. Consolidated Multiple Listing Service, Inc., No 
3:08-cv-0l786-SB (D.S.C. May 2, 2008), available at http://www.usdoj.gov/atr/cases/f232800/232803.htm. The United States 
challenged similar allegedly anticompetitive rules imposed by the 
MLS in Hilton Head, South Carolina, also not affiliated with NAR. 
See Complaint in United States v. Multiple Listing Service of Hilton 
Head Island, Inc., No. 9:07-cv-03435-SB (D.S.C. Oct. 16, 2007), 
available at http://www.usdoj.gov/ atr/cases/f226800/226869.htm. The 
MLS in Hilton Head agreed to settle the case by repealing the 
challenged rules and agreeing to other conduct restrictions, and the 
court entered the Final Judgment in the case on May 28, 2008. See 
Final Judgment in United States v. Multiple Listing Service of 
Hilton Head Island, Inc., No. 9:07-cv-03435-SB (D.S.C. May 28, 
2008), available at http://www.usdoj.gov/atr/cases/f233900/233901.htm.
---------------------------------------------------------------------------

    MLSs are joint ventures among virtually all real estate brokers 
operating in local or regional areas.\7\ MAR's MLS rules require its 
members to submit to the MLS, generally within two to three days of 
obtaining a listing, information about each property listed for sale 
through a broker member. By doing so, the broker promotes his or her 
seller client's listing to all other brokers in the MLS, who can 
provide information about the listing to their buyer customers. 
Listing brokers create incentives for other MLS members to try to 
find buyers for their listed properties by submitting with each new 
listing an ``offer of cooperation and compensation,'' identifying 
the amount (usually specified as a percentage of the listing 
broker's commission) that the listing broker will pay to any other 
broker who finds a buyer for the property.
---------------------------------------------------------------------------

    \7\ Many MLSs draw brokers and their listed properties from a 
single local community. Others are substantially larger, with some 
covering entire states and others--such as Metropolitan Regional 
Information Systems, Inc., which serves the District of Columbia, 
and parts of the states of Maryland, Virginia, West Virginia, and 
Pennsylvania--serving multi state regions. As the Amended Complaint 
alleges, the relevant geographic markets in which brokers compete 
are local and normally no larger than the service area of the MLS or 
MLSs in which they participate.

    Brokers regard participation in their local MLS to be critical 
to their ability to compete with other brokers for home sellers and 
buyers. By participating in the MLS, brokers can promise their 
seller clients that the information about the seller's property can 
be immediately made available to virtually all other brokers in the 
area. Brokers who work with buyers can likewise promise their buyer 
customers access to the widest possible array of properties listed 
for sale through brokers. An MLS is thus a market-wide joint venture 
of competitors that possesses substantial market power: To compete 
successfully, a broker must be a member; and to be a member, a 
broker must adhere to any restrictions that the MLS imposes.

C. Description of the Alleged Violation

1. The Challenged Policies

    NAR's Challenged Policies discriminate against and restrain 
competition from brokers who use VOWs. In its Challenged Policies, 
NAR denied VOW brokers the ability to use their VOWs to provide 
customers access to the same MLS listings that the customer could 
obtain from all other brokers by other delivery methods. NAR did so 
by allowing a listing broker to ``opt out'' and keep his or her 
client's listings from being displayed on a competitor's VOW.
    On May 17, 2003, NAR adopted its ``VOW Policy.'' As the Amended 
Complaint alleges, the VOW Policy, most significantly, allowed 
brokers to opt out of VOWs, withholding their seller-clients' 
listings from display on VOWs. The opt-out provisions discriminated 
against VOW brokers because NAR's rules do not otherwise permit one 
broker to dictate how competitors can convey his or her listings to 
customers. The VOW Policy permitted opt out either against all VOW 
brokers (``blanket'') or against a particular VOW broker 
(``selective'').
    The Amended Complaint also alleges that the VOW Policy's ``anti-
referral'' rule restrained competition by prohibiting VOW brokers 
from receiving any payment for referring prospective buyer customers 
to other brokers. The prospect that brokers

[[Page 36115]]

could use VOWs to support referral-based businesses was a source of 
industry antipathy to VOWs, and NAR's rules singled out VOW brokers 
for a ban on referring customers for a fee.
    NAR's VOW Policy, as alleged in the Amended Complaint, also 
restrained competition from VOW brokers by prohibiting them from 
selling advertising on pages of their VOWs on which the VOW broker 
displayed any listings, and by permitting MLSs to degrade the data 
they provide to VOWs, thus preventing the use of popular 
technological features offered by many VOW brokers.
    NAR repealed its VOW Policy and replaced it with its ILD Policy 
on September 8, 2005, the day the United States filed its initial 
Complaint. As alleged in the Amended Complaint, NAR's ILD Policy 
continued to discriminate against VOW brokers by permitting their 
competitors a blanket opt out where they could withhold their 
listings from display on all VOWs.\8\ Although the ILD Policy did 
not include an explicit anti-referral rule, NAR revised and 
reinterpreted its rule on MLS membership to prevent brokers who 
operate referral VOWs from becoming members of the MLS and obtaining 
access to MLS listings. The Amended Complaint also alleges that the 
ILD Policy continued to permit MLSs to downgrade the data they 
provide to VOWs and to restrict VOW brokers' co-branding or 
advertising relationships with third parties.
---------------------------------------------------------------------------

    \8\ NAR did delete from its ILD Policy its rule allowing brokers 
to selectively opt out against particular VOW brokers.
---------------------------------------------------------------------------

2. Effects of the Challenged Policies

    As discussed above, NAR's rules permit brokers to show 
prospective buyers all MLS listings in which the buyers might have 
an interest. For most brokers, this means that they can respond to a 
request from a buyer customer by delivering responsive listings by 
whatever delivery method the broker and customer choose. NAR's opt-
out provisions deny this right only if the method of delivery 
selected by the broker and the customer is a VOW. Thus, NAR's rules 
restrain VOW-operating brokers from competing in a way that is 
efficient and desired by many customers.
    Even if no broker uses the opt-out device, its existence renders 
a VOW broker unable to promise customers access to all relevant MLS 
listings, materially disadvantaging brokers who use a VOW to 
compete. When opt out occurs, a VOW broker is further disadvantaged 
because it cannot deliver complete MLS listings to customers through 
its VOW. Finally, with the threat of opt outs constantly hanging 
over it, any VOW broker contemplating a pro-consumer initiative 
would have to weigh the prospect of an angry response from its 
incumbent competitors.
    Opt outs were an empirical reality. Although the United States' 
investigation became public just a few months after NAR adopted its 
VOW Policy, the United States discovered over fifty instances of 
broker opt outs under a wide variety of circumstances in fourteen 
diverse markets. Brokers opted out of VOWs in large markets (e.g., 
Detroit and Cleveland), medium markets (e.g., Des Moines), and small 
markets (e.g., Emporia (Kansas), Hays (Kansas), and York 
(Pennsylvania)). In some markets (Emporia and Hays), virtually all 
brokers opted out. In others, only one or a few opted out (e.g., 
Detroit, York, Maine). Opt outs occurred in a market with one 
dominant broker (Des Moines), in markets with only a small number of 
broker competitors (Emporia and Hays), and in markets with hundreds 
of brokers (Detroit). In some markets (e.g., Des Moines, Detroit, 
Cleveland, York, and Jackson (Wyoming)), large brokers opted out. In 
others (e.g., Marathon (Florida) and Hudson (New York)), only 
relatively small brokers opted out. Brokers opted out in markets in 
which price competition is highly restricted by the state (Kansas, 
which prohibits brokers from providing commission rebates to home 
buyers), as well as in markets in which the state does not restrict 
such price competition (Michigan). Opt outs occurred in 
circumstances that imply they were independent business decisions by 
the opting-out brokers (e.g., Detroit) and in circumstances in which 
opt-out forms were filled out by almost all brokers in the same room 
at the same time (Emporia).
    NAR's Challenged Policies also obstruct the operation of 
referral VOWs. NAR's VOW Policy prohibited referral fees explicitly 
and directly. NAR's 2005 modification to the requirements of MLS 
membership denied MLS membership and of greatest significance to a 
referral VOW access to MLS data to any broker whose business focused 
exclusively on educating customers on a VOW and referring those 
customers to other brokers to receive other in-person brokerage 
services. Each of these policies prevents two brokers from working 
together in an innovative and efficient way, with a VOW broker 
attracting new business and educating potential buyers about the 
market, and the other broker guiding the buyer through home tours 
and the negotiating, contracting, and closing process.
    As discussed above, NAR's Challenged Policies also permit MLSs 
to downgrade the MLS data feed provided to VOW brokers, which limits 
the consumer-friendly features VOW brokers could provide through 
their VOWs. The Challenged Policies also allow MLSs to prohibit VOW 
brokers from establishing some advertising or co-branding 
relationships with third parties, limiting the freedom of VOW 
brokers to operate their businesses as they desire and enabling MLSs 
(which are controlled by a VOW broker's competitors) to micromanage 
the appearance of brokers' VOWs.

3. The Challenged Policies Violate the Antitrust Laws

    NAR's Challenged Policies violate section 1 of the Sherman Act, 
which prohibits unreasonable restraints on competition. The 
Challenged Policies were the product of an agreement among a group 
of competitors (the members of NAR) mandating how brokers could use 
VOWs to compete and unreasonably restraining competition from VOW 
brokers. Competition from VOW brokers had posed a threat to the 
established order in the real estate industry. Yet it was clear from 
prior litigation that antitrust law would not allow incumbent 
brokers simply to prevent VOW brokers from providing any listings to 
customers through their VOWs. See Austin Board of Realtors v.  e-
Realty, Inc., No. 00-CA-154, 2000 WL 34239114 (W.D. Tex. Mar. 30, 
2000). Instead, NAR's Challenged Policies restrained competition 
from VOW brokers by denying them full access to MLS listings and 
restricting how VOW brokers could do business.
    While an MLS, like other joint ventures with market power, can 
have reasonable membership restrictions related to a legitimate, 
procompetitive purpose, it cannot create rules that unreasonably 
impede competition among brokers and harm consumers. See United 
States v. Realty Multi-List, 629 F.2d 1351, 1371 (5th Cir. 1980). 
NAR's Challenged Policies restrain competition because they dictate 
how the MLS's broker-members could compete specifically, restricting 
how they could compete using a VOW. See id, at 1383-85 (finding MLS 
rule precluding part-time brokerage to be unlawful); Cantor v. 
Multiple Listing Serv. of Dutchess County, Inc., 568 F. Supp. 424, 
430-31 (S.D.N.Y. 1983) (finding that MLS yard sign restriction 
violated section 1 of the Sherman Act because it ``substantially 
impair[ed] [the plaintiffs'] freedom to conduct their businesses as 
they see fit'' and ``vitiated any competitive advantage which 
plaintiffs endeavored to obtain'' through association with a 
national franchisor); see also National Soc'y of Prof'l Eng'rs, 435 
U.S. 679, 695 (1978) (condemning trade association ban on 
competitive bidding by members). Similarly, NAR's Challenged 
Policies restrain competition because they impede the operations of 
a particularly efficient class of competitors: VOW brokers. See 
Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1159 (3d 
Cir. 1993) (upholding verdict against railroads that ``block[ed] the 
entry of low cost competitors''); see also RE/MAX v. Realty One, 
Inc., 173 F.3d 995, 1014 (6th Cir. 1999) (upholding Sherman Act 
Sec.  1 claim where competitors ``impose[d] additional costs'' on 
innovative entrant). NAR's Challenged Policies also restrain 
competition by denying consumers the full MLS listings information 
(including valuable information such as sold data and data fields 
such as days on market) that consumers want. See FTC v. Indiana 
Fed'n of Dentists, 476 U.S. 447, 457, 462 (1986) (``The Federation's 
collective activities resulted in the denial of the information the 
customers requested in the form they requested it, and forced them 
to choose between acquiring that information in a more costly manner 
or forgoing it altogether * * *.The Federation is not entitled to 
pre-empt the working of the market by deciding for itself that its 
customers do not need that which they demand.'')
    Moreover, NAR's Challenged Policies constitute an unreasonable 
restraint on competition because they produced no procompetitive 
benefits that justified the restraints. Although NAR claimed that 
the Challenged Policies were essential to the continued existence of 
MLSs, those MLSs without the Challenged Policies functioned just as 
well without them. Given the market power of the MLS, brokers 
believe it would amount to economic suicide for them to leave the 
MLS.

[[Page 36116]]

D. Harm From the Alleged Violation

    Taken together, NAR's Challenged Policies obstruct innovative 
brokers' use of efficient, Internet-based tools to provide brokerage 
services to customers and clients. The Challenged Policies inhibit 
VOW brokers from achieving the operating efficiencies that VOWs can 
make available and likely diminish the high-quality and low-priced 
services offered to consumers by VOW brokers. The result is that the 
Challenged Policies, products of agreements among competitor 
brokers, likely would deter, delay, or prevent the benefits of 
innovation and competition from reaching consumers, and thus violate 
section 1 of the Sherman Act, 15 U.S.C. 1.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment embodies the fundamental principle 
that an association of competing brokers, operating an MLS, cannot 
use the aggregated power of the MLS to discriminate against a 
particular method of competition (in this case, VOWs). The proposed 
Final Judgment will end the competitive harm resulting from NAR's 
Challenged Policies and will allow consumers to benefit from the 
enhanced competition that VOW brokers can provide. The proposed 
Final Judgment requires NAR to repeal its VOW and ILD Policies and 
to replace them with a ``Modified VOW Policy'' (attached to the 
proposed Final Judgment as Exhibit A) that makes it clear that 
brokers can operate VOWs without interference from their rivals.\9\ 
With respect to any issues concerning the operation of VOWs that are 
not explicitly addressed by the Modified VOW Policy, the proposed 
Final Judgment's general nondiscrimination provisions apply.\10\
---------------------------------------------------------------------------

    \9\ See proposed Final Judgment, ]] V.A-V.D. Under the Modified 
VOW Policy, with the consent of their supervising broker, agents and 
sales associates are also expressly permitted to operate VOWs. 
Brokers cannot agree, by MLS rule or otherwise, to ban VOWs operated 
by agents or sales associates. See Modified VOW Policy, ] I.1.b.
    \10\ See proposed Final Judgment, ]] IV.A, IV.B, & IV.C; see 
also id., ] V.F (requiring NAR to deny insurance coverage to any 
Member Board that maintains rules at odds with ] IV of the proposed 
Final Judgment).

    The Modified VOW Policy does not allow brokers to opt out and 
withhold their clients' listings from VOW brokers.\11\ This change 
eliminates entirely the most egregious impediment to VOWs that was 
contained in the Challenged Policies.\12\ Under the Modified VOW 
Policy, the MLS must provide to a VOW broker for display on the VOW 
all MLS listings information that brokers are permitted to provide 
to customers by all other methods of delivery.\13\
---------------------------------------------------------------------------

    \11\ See Modified VOW Policy, ] I.4.
    \12\ The Modified VOW Policy does allow an individual home 
seller to direct that information about his or her own home not 
appear on any Internet Web sites, id., ] II.5.a, recognizing the 
legitimate interests of a seller to protect his or her privacy and 
not to expose information about his or her property or the fact that 
it is on the market to the public on the Internet. It also allows a 
home seller to request that a VOW broker who permits customers to 
provide written reviews of properties disable that feature as to the 
seller's listing. Id., ] II.5.c. Such comments--which can be 
anonymous--have no exact analogue in the bricks-and-mortar world. 
Unlike books, music, or other consumer goods, reviews of which can 
provide useful information to other potential purchasers of the same 
items, the uniqueness of each individual home creates an opportunity 
for an interested buyer (or his or her broker) to attempt to 
manipulate the market by providing a negative review in hopes of 
deterring other buyers from visiting or making an offer on the home. 
An individual home seller is also permitted under the Modified VOW 
Policy to request that an automated home valuation feature provided 
by a VOW broker be disabled as to the seller's individual property, 
although the VOW broker is permitted to state on the VOW that the 
seller requested that this type of information not be presented on 
the VOW about his or her property. See Id. Though such valuations 
might be provided in a bricks-and-mortar environment, they would not 
likely be provided without evaluation, comment, or input from an 
agent or sales associate. The Modified VOW Policy also provides a 
mechanism for sellers to correct any false information about their 
property that a VOW adds, id., ] II.5.d, consistent with the general 
responsibility of any broker (VOW or otherwise) to present accurate 
information.
    \13\ See id., ] III.2. The information that MLSs must provide to 
VOW brokers for display on their VOWs includes information about 
properties that have sold (except in areas where the actual sales 
prices of homes is not accessible from public records) and all other 
information that brokers can provide to customers by any method, 
including by oral communications. Id.
---------------------------------------------------------------------------

    The Modified VOW Policy that NAR must adopt under the proposed 
Final Judgment also permits brokers to operate referral VOWs. It 
expressly prohibits MLSs from impeding VOW brokers from referring 
customers to other brokers for compensation.\14\ It also provides 
two avenues by which a broker desiring to serve customers through a 
referral VOW may do so: As an ``Affiliated VOW Partner'' (``AVP'') 
and as a member who directly serves some customers.
---------------------------------------------------------------------------

    \14\ Id., ]III.11.

    Under the Modified VOW Policy, a broker who desires to operate a 
referral business can partner as an AVP with a network of brokers 
and agents to whom the AVP will ultimately refer educated buyer 
customers who are ready to tour homes and receive in-person 
brokerage services,\15\ The Modified VOW Policy requires MLSs to 
provide complete MLS listings information to a broker designated by 
another broker to be an AVP that will operate a VOW on the 
designating broker's behalf.\16\ The MLS must provide listings 
information to the AVP on the same terms and conditions on which the 
MLS would provide listings to the broker who designated the AVP to 
operate the VOW.\17\ This provision will allow referral VOWs to 
partner with brokers or agents, obtain access to MLS data to operate 
their referral VOWs, and provide the efficiencies that come from 
operating a VOW to the brokers and agents with whom they partner.
---------------------------------------------------------------------------

    \15\ Nothing in the Modified VOW Policy requires an AVP to hold 
a broker's license. An unlicensed technology company would be 
permitted under the Modified VOW Policy to host a VOW for a broker 
or brokers (or for one or more agents or sales associates, with the 
consent of their supervising brokers). When a licensed broker 
operates VOWs as an AVP in conjunction with other brokers (or their 
agents or sales associates), the AVP can perform services for which 
a broker's license may be required, including answering questions 
for customers who register on the VOW and referring customers to the 
brokers and agents or sales associates for whom the AVP operates the 
VOWs. See, e.g., 225 ILCS 454/1-10 (describing the activities for 
which a broker's license is required in Illinois, including 
``assist[ing] or direct[ing] in procuring or referring of 
prospects'').
    \16\ Modified VOW Policy, ]] I.1.a & III.10. An AVP's rights to 
obtain listings information from the MLS is derivative of the rights 
of the brokers for whom the AVP is operating VOWs. Id., ]III.10. The 
AVP would not itself be an MLS member entitled to MLS access 
directly.
    \17\ Id., ] III.10.

    Under the proposed Final Judgment, a broker who works directly 
with some buyers and sellers, but who also wants to operate a VOW 
and focus on referrals, can become a member of the MLS and use MLS 
data as a member, including for its referral VOW. The Final Judgment 
permits NAR's Member Boards to implement the new requirements for 
MLS membership that NAR originally adopted with its ILD Policy,\18\ 
but an interpretive Note (see Exhibit B to the proposed Final 
Judgment) explains that the new membership rule is not to be 
interpreted to restrain VOW competition.\19\
---------------------------------------------------------------------------

    \18\ Proposed Final Judgment, ] VI.A.
    \19\ Under the interpretative Note included in Exhibit B to the 
proposed Final Judgment, if a VOW broker actively endeavors to 
obtain some seller clients for whom it will market properties or 
some buyer customers to whom it will offer in-person brokerage 
services, that VOW broker will be permitted to operate a referral 
VOW and refer to other brokers the educated customers he or she does 
not serve directly.
---------------------------------------------------------------------------

    Finally, the Modified VOW Policy prohibits MLSs from using an 
inferior data delivery method to provide MLS listings to VOW brokers 
\20\ and from unreasonably restricting the advertising and co-
branding relationships VOW brokers establish with third parties.\21\ 
VOW brokers, under the Modified VOW Policy, will be free from MLS 
interference in the appearance and features of their VOWs.\22\
---------------------------------------------------------------------------

    \20\ See Modified VOW Policy, ] III.2 (``For purposes of this 
Policy, `downloading' means electronic transmission of data from MLS 
servers to a Participant's or AVP's server on a persistent basis'' 
(emphasis added)).
    \21\ See id., ] III.7.
    \22\ See Id., ]] III.8 & III.9.
---------------------------------------------------------------------------

    NAR is required by the Final Judgment to direct its Member 
Boards to adopt rules implementing the Modified VOW Policy within 
ninety days of this Court's entry of the Final Judgment.\23\ To 
ensure that its Member Boards adopt, maintain, and enforce rules 
implementing the Modified VOW Policy, NAR is required to deny errors 
and omissions insurance coverage to any Member Board that refuses to 
do so and forward to the United States any complaints it receives 
concerning the failure of any Member Board (or any MLS owned or 
operated by any Member Board) to abide by or enforce those 
rules.\24\ The proposed Final Judgment also broadly prohibits NAR 
from adopting any other rules that impede the operation of VOWs or 
that

[[Page 36117]]

discriminate against VOW brokers in the operation of their VOWs.\25\
---------------------------------------------------------------------------

    \23\ Proposed Final Judgment, ] V.D.
    \24\ Id., ]] V.E & V.H.
    \25\ Id., ]] IV.A & IV.B.

    Finally, the proposed Final Judgment, applicable for ten years 
after its entry by this Court,\26\ establishes an antitrust 
compliance program under which NAR is required to review its Member 
Board's rules for compliance with the proposed Final Judgment, to 
provide materials to its Member Boards that explain the proposed 
Final Judgment and the Modified VOW Policy, and to hold an annual 
program for its Member Boards and their counsel discussing the 
proposed Final Judgment and the antitrust laws.\27\ The proposed 
Final Judgment expressly places no limitation on the United States' 
ability to investigate or bring an antitrust enforcement action in 
the future to prevent harm to competition caused by any rule adopted 
or enforced by NAR or any of its Member Boards.\28\
---------------------------------------------------------------------------

    \26\ Id., ] X.
    \27\ Id., ] V.G.
    \28\ Id., ] IX.
---------------------------------------------------------------------------

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three 
times the damages the person has suffered, as well as costs and 
reasonable attorneys' fees. Entry of the proposed Final Judgment 
will neither impair nor assist the bringing of any private antitrust 
damage action. Under the provisions of section 5(a) of the Clayton 
Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie 
effect in any subsequent private lawsuit that may be brought against 
NAR.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and NAR have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding 
the proposed Final Judgment. Any person who wishes to comment should 
do so within sixty (60) days of the date of publication of this 
Competitive Impact Statement in the Federal Register, or the last 
date of publication in a newspaper of the summary of this 
Competitive Impact Statement, whichever is later. All comments 
received during this period will be considered by the United States, 
which remains free to withdraw its consent to the proposed Final 
Judgment at any time prior to the Court's entry of judgment. The 
comments and the response of the United States will be filed with 
the Court and published in the Federal Register.
    Written comments should be submitted to: John R. Read, Chief, 
Litigation Ill Section, Antitrust Division, United States Department 
of Justice, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.\29\
---------------------------------------------------------------------------

    \29\ Proposed Final Judgment, ] VIII.
---------------------------------------------------------------------------

VI. Alternatives to the Proposed Amended Final Judgment

    At several points during the litigation, the United States 
received from defendant NAR proposals or suggestions that would have 
provided less relief than is contained in the proposed Final 
Judgment. These proposals and suggestions were rejected.
    The United States considered, as an alternative to the proposed 
Final Judgment, proceeding with the full trial on the merits against 
NAR that was scheduled to commence on July 7, 2008. The United 
States is satisfied that the relief contained in the proposed Final 
Judgment will quickly establish, preserve, and ensure that consumers 
can benefit from the enhanced brokerage service competition brought 
by VOW brokers as effectively as any remedy the United States likely 
would have obtained after a successful trial.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.
    15 U.S.C.16(e)(l)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
United States is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States 
v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see 
generally United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 
(D.D.C. 2007) (assessing public interest standard under the Tunney 
Act).\30\
---------------------------------------------------------------------------

    \30\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(l) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of 
Columbia Circuit has held, under the APPA a court considers, among 
other things, the relationship between the remedy secured and the 
specific allegations set forth in the United States' complaint, 
whether the decree is sufficiently clear, whether enforcement 
mechanisms are sufficient, and whether the decree may positively 
harm third parties. See Microsoft, 56 F.3d at 1458-62. With respect 
to the adequacy of the relief secured by the decree, a court may not 
``engage in an unrestricted evaluation of what relief would best 
serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 
(9th Cir. 1988) (citing United States v. Bechtel Corp., 648 F.2d 
660, 666 (9th Cir. 1981)); see also Microsoft, 56F.3d at 1460-62; 
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001). 
Courts have held that:

``[t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.''

    Bechtel, 648 F.2d at 666 (emphasis added) (citations 
omitted).\31\ In determining whether a proposed settlement is in the 
public interest, a district court ``must accord deference to the 
government's predictions about the efficacy of its remedies, and may 
not require that the remedies perfectly match the alleged 
violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also 
Microsoft, 56 F.3d at 1461 (noting the need for courts to be 
``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland 
Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court 
should grant due respect to the United States' prediction as to the 
effect of proposed remedies, its perception of the

[[Page 36118]]

market structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \31\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be 
approved even if it falls short of the remedy the court would impose 
on its own, as long as it falls within the range of acceptability or 
is `within the reaches of public interest.' '' United States v. Am. 
Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations 
omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 
716 (D. Mass. 1975)), aff'd sub nom. Maryland v. United States, 460 
U.S. 1001 (1983); see also United States v. Alcan Aluminum Ltd., 605 
F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even 
though the court would have imposed a greater remedy). To meet this 
standard, the United States ``need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
    Moreover, the court's role under the APPA is limited to 
reviewing the remedy in relationship to the violations that the 
United States has alleged in its Complaint, and does not authorize 
the court to ``construct [its] own hypothetical case and then 
evaluate the decree against that case.'' Microsoft, 56 F.3d at 1459. 
Because the ``court's authority to review the decree depends 
entirely on the government's exercising its prosecutorial 
(prosecutorial by bringing a case in the first place), it follows 
that ``the court is only authorized to review the decree itself,'' 
and not to ``effectively redraft the complaint'' to inquire into 
other matters that the United States did not pursue. Id. at 1459-60. 
As the United States District Court for the District of Columbia 
recently confirmed in SBC Communications, courts ``cannot look 
beyond the complaint in making the public interest determination 
unless the complaint is drafted so narrowly as to make a mockery of 
judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to 
preserve the practical benefits of utilizing consent decrees in 
antitrust enforcement, adding the unambiguous instruction that 
``nothing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit 
anyone to intervene.'' 15 U.S.C. 16(e)(2). This language effectuates 
what Congress intended when it enacted the Tunney Act in 1974, as 
Senator Tunney explained: ``[t]he court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly 
settlement through the consent decree process.'' 119 Cong. Rec. 
24,598 (1973) (statement of Senator Tunney). Rather, the procedure 
for the public interest determination is left to the discretion of 
the court, with the recognition that the court's ``scope of review 
remains sharply proscribed by precedent and the nature of Tunney Act 
proceedings.'' SBC Commc'ns, 489 F. Supp.2d at 11.\32\
---------------------------------------------------------------------------

    \32\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Respectfully submitted,
David C. Kully,

Craig W. Conrath,

David C. Kully.

U.S. Department of Justice, Antitrust Division, 450 5th Street, NW; 
Suite 4000, Washington, DC 20530, Tel: (202) 307-5779, Fax: (202) 
307-9952.

Dated: June 12, 2008

Certificate of Service

    I, David C. Kully, hereby certify that on this 12th day of June 
2008, I caused a copy of the foregoing Competitive Impact Statement 
to be served by ECF on counsel for the defendant identified below.

Jack R. Bierig, Sidley Austin LLP, One South Dearborn Street, 
Chicago, IL 60603, (312) 853-7000, [email protected].

David C. Kully.

[FR Doc. E8-13902 Filed 6-24-08; 8:45 am]
BILLING CODE 4410-11-M