October 6, 1978
Subject:
Antitrust; Real Estate Brokers and Agents.
Requested By:
Blanton Little, Secretary-Treasurer
N.C. Real Estate Licensing Board
Question:
May a local Board of Realtors, a private trade association, require a licensed real estate agent to become a member of the Board in order to be eligible to apply for membership in or association with a multiple listing service corporation established by the Board?
Conclusion:
No, if the multiple listing service is found to be an essential competitive tool in the real estate market it serves.
Real estate brokering is a "trade" within the meaning of the federal and state antitrust laws. United States v. National Association of Real Estate Boards, 339 U.S. 485, 70 S.Ct. 711, 94 LEd. 1007 (1950); Love v. Pressley, 34 N.C. App. App. 503, 239 S.E.2d 574 (1977). The business practices of real estate agents individually and jointly as members of a Board of Realtors are subject to antitrust enforcement.
Unreasonable restraints of trade are prohibited by G.S. 75-1 and 75-2, and § 1 of the Sherman Act. Where members of a trade band together for the purpose of advancing business interests the antitrust laws condemn group activities which restrain trade. The law prohibits businessmen from becoming associates in a common plan which has the purpose and effect of reducing their competitors’ opportunity to buy or sell the things in which the groups compete. Associated Press
v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 LEd. 2013 (1945).
In Associated Press, the court held that where a facility created by a combination of competitors became essential to effective competition in a particular market such that exclusion from membership in that facility placed an enterprise at a competitive disadvantage, exclusion was unlawful under the Sherman Act. This is true even if competing facilities exist or even if competition has not been completely prevented by the presence of the facility. See also American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950); Gamco, Inc. v. Providence Fruit and Produce Bldg., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.S. 817 (1952).
Denial of access to the listings of a multiple listing service reduces the "opportunity to buy or sell the things in which the groups compete" of non-members. Where a multiple listing service established by a Board of Realtors has become so dominant an economic force in a particular market that exclusion from membership places a broker at a competitive disadvantage, exclusion is unlawful under federal and state antitrust laws. It is not enough that Board membership is open to any licensed real estate agent. United States v. Terminal R.R. Association of St. Louis, 224 U.S. 383, 32 S.Ct. 507, 56 LEd. 810 (1912).
While your question has not been litigated in North Carolina, other jurisdictions have held that conditioning membership in a multiple listing service on membership in the Board of Realtors is an unreasonable restraint of trade. The court in Marin County Board of Realtors v. Palsson, 130 Cal. Rptr. 1, 549 P.2d 833, 843 (1976), said:
An association’s freedom to exclude non-members from its activities is not absolute. It must yield to antitrust laws when (1) its activities begin to correspond directly with and touch upon the business activities of its members; and (2) the association has the power to shape and influence the economic environment of its particular market.
The court held that for non-members to compete effectively access must be granted to all licensed real estate agents who choose to use the service. Accord, Pomanowski v. Monmouth County Bd. of Realtors, 152 N.J. Super. 100, 377 A.2d 791 (1977); Oates v. Eastern Bergen County Multiple List. Serv., Inc., 133 N.J. Super. 371, 273 A.2d 795 (1971); but see, Barrows v. Grand Rapids Real Estate Bd., 51 Mich. App. 75, 214 N.W.2d 532 (1974) (exclusion of non-members of real estate board from multiple listing service upheld where non-members were substantially able to complete and majority of sales in the area were not made through the service). Thus, where the multiple listing service is a vital competitive tool, requiring membership in the Board of Realtors is a violation of G.S. 75-1 and § 1 of the Sherman Act.
G.S. 75-2 prohibits any act in restraint of trade which violates the common law. Predicating MLS participation on Board membership where access to the multiple is an economic competitive necessity violates common law principles. See Collins v. Main Line Board of Realtors, 452 Pa. 342, 304 A.2d 493 (1973) (exclusion of non-members from multiple listing service held per se common law restraint of trade); Grillo v. Bd. of Realtors of Plainfield Area, 91 N.J. Super. 202, 219 A.2d 635 (1966) (denial of access to non-members found to be unreasonable restraint of trade under common law principles).
Rufus L. Edmisten Attorney General
Tiare Smiley Farris Associate Attorney General