BAM Key Details:
- The Department of Justice (DOJ) filed a Statement of Interest in the Sitzer/Burnett vs. NAR case, raising concerns about antitrust compliance.
- The DOJ also flagged issues with buyer agent agreements and warned that the settlement may not prevent ongoing antitrust violations or address harmful practices in the real estate industry.
- The DOJ urged the court to clarify that approving the settlement doesn’t grant immunity for future antitrust enforcement actions against NAR.
On Sunday, November 24, the Department of Justice (DOJ) filed a statement of interest in the class-action settlement of Sitzer/Burnett vs. National Association of Realtors (NAR). This came just two days before the final hearing, which is scheduled for Tuesday, November 26.
While the DOJ has not taken an official stand on the settlement, its filing highlights concerns regarding antitrust issues, particularly regarding buyer broker agreements.
DOJ’s Concerns with the Settlement
The DOJ’s filing addresses specific provisions in the proposed settlement between NAR and home sellers. Although the agency has taken no position on the settlement’s fairness under Rule 23(e), it emphasized its main concerns:
1. Antitrust Immunity Concerns
The DOJ noted that the proposed settlement does not ensure that NAR’s practices and policies comply with antitrust laws. It may allow anticompetitive practices to persist or even provide a potential shield for defendants in future enforcement actions.
The filing states:
“Thus, while the Court may ultimately find that the proposed settlement achieves important concessions in the interests of the private actors in this litigation and satisfies Rule 23(e), such determination does not mean that the proposed settlement effectively prevents or restrains ongoing antitrust violations or remedies past violations, or itself contemplates practices that fully comply with the antitrust laws.”
The DOJ asked the court to clarify that even if the settlement is approved, it doesn’t give NAR or others a free pass in the future.
“For this reason, the United States respectfully requests that if the Court approves the settlement, it should clarify that such approval does not address whether the proposed settlement prevents and restrains current antitrust violations, remedies past violations, or contains revised policies and practices that comply with the antitrust laws.”
2. Issues with Buyer Agent Agreements
The DOJ also expressed concerns about a new rule from the settlement, which went into effect for the industry in August. With this rule, buyers and brokers must sign written agreements before any home tours. The DOJ flagged this as potentially harmful to buyers and competition, saying it could limit how brokers attract clients.
“In addition, the new provision that requires buyers and brokers to make written agreements before home tours may harm buyers and limit how brokers compete for clients. It bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings and could limit — rather than enhance — competition for buyers among buyer brokers.”
Law Professor Weighs In
Law Professor Tanya Monestier, who has been vocal about industry practice changes, and even filed a lengthy objection to the settlement in October, took note of the DOJ’s “last-minute twist” on LinkedIn:
What’s Next
Tomorrow, we should learn what happens in the final hearing of the Sitzer/Burnett case. After that, it’s hard to say with certainty what will happen. Jared James shared his take on social:
The DOJ’s filing makes it clear it wants to be part of the conversation. And it t could be just the beginning of broader efforts to make changes to real estate industry practices. The DOJ offers suggestions for addressing the concerns:
“The parties could (i) eliminate the provision or (ii) disclaim that the settlement creates any immunity or defense under the antitrust laws. Alternatively, the Court could clarify that approval of the settlement affords no immunity or defense for the buyer-agreement provision.”
The filing wraps up with a statement showing the DOJ is willing to engage further during Tuesday’s final hearing:
“As discussed above, there are multiple ways that this restriction on competition for buyers could be addressed in the context of the proposed settlement.
“The United States stands ready to appear or otherwise participate at the final settlement hearing on November 26 to answer questions or further assist the Court.”
Read the filing in full here.
