Opinion ID: 382054
Heading Depth: 3
Heading Rank: 1

Heading: Competitive Harms of Exclusion

Text: 65 When a group of competitors like the members of RML join together to cooperate in the conduct of their business, there naturally arise antitrust suspicions. As Adam Smith, the archangel of the free enterprise system, observed, People of the same trade seldom meet, even for merriment or diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices. 34 While, as we have shown, a trade group like a multiple listing service may create significant competitive advantages both for its members and for the general public, there exists the potential for significant competitive harms when the group, having assumed significant power in the market, also assumes the power to exclude other competitors from access to its pooled resources. One may isolate two factors whose presence indicates the greatest danger of this type. First, one can access the degree to which the association is involved in the actual business activities of its members. The more directly the association is involved in its member's business, the more likely it is that exclusion from membership will produce concrete anticompetitive effects. Austin, Real Estate Boards and Multiple Listing Systems as Restraints of Trade, 70 Colum.L.Rev. 1325, 1345 (1970). Since a multiple listing service like RML is directly engaged in the buying and selling process, its duplicatory connection with the business interests of individual brokers is manifest. Id. Second, one may determine whether the association possesses sufficient economic power to shape and influence the economic environment of particular field involved. Id. at 1345-1346. This determination will, of course, turn on the facts of the case at hand. See generally Marin County Board of Realtors, supra, 1976-1 Trade Cases at 68,901; Bodner, Antitrust Restrictions on Trade Association Membership and Participation, 54 A.B.A.J. 27 (Jan. 1968). 66 Thus, when the association possesses the requisite market power, membership in the listing service becomes essential to a broker's ability to compete effectively, and the unreasonable (in competitive terms) exclusion of a broker may create unjustified harm to the broker and the public. The harm to the excluded broker is the mirror image of the benefits to members. Whereas members gain wide exposure of their listings, with numerous potential sellers, the nonmember remains dependent upon his individual efforts to find a buyer. Similarly, the nonmember will have only those listings which he has personally procured to sell. He has only a limited supply of 'shoes on the shelves.'  Oates v. Eastern Bergen County Multiple Listing Service, Inc., 113 N.J.Super. 371, 273 A.2d 795, 800 (1971). Denial of access to the service may thus directly and indirectly 35 impair a nonmember broker's ability to compete effectively with members. As one court has observed, (u)nder these circumstances, one does not need an advanced degree in economics to predict whose services a buyer or seller of a home is likely to engage. Marin County Board of Realtors, supra, 1976-1 Trade Cases at 68,900. 67 Buyers and sellers are also harmed by unjustified exclusions. Even though member brokers still compete with each other to procure listings 36 and to sell any listing in the pool, the public is denied the incentive to competition that new entry may bring. Cf. Associated Press, supra, 65 S.Ct. at 1421 (harm to competition from wire service bylaws which tended to limit new entry into newspaper field); id. at 1424 (harm created by barriers to new entry not alleviated by fact that existing papers supplied AP news to public). A new entrant into the market might, for example, be more aggressive and willing to accept a lower commission rate. Exclusion of such a broker would tend to reduce the amount of price competition in the market. See Marin County Board of Realtors, supra, 1976-1 Trade Cases at 68,900-68,901. Moreover, consumer choice would be limited in another way: 68 A person wishing to sell or buy a home may believe that a particular nonmember is more competent than available members. But if the consumer wishes to have ready access to a large market in a short period of time, he may be forced to deal with a less desirable member broker or salesman. 69 Id. Thus, where a broker is excluded from a multiple listing service with the requisite market power without an adequate justification in the competitive needs of the service, both the broker and the public are clearly harmed. 37 The cases show that, in these circumstances, the exclusion from the association will be found to violate Section 1. See e. g., Silver, supra, 83 S.Ct. at 1252; United States v. St. Louis Terminal Railroad Association, 224 U.S. 383, 32 S.Ct. 507, 56 L.Ed. 810 (1912); 38 Gamco, Inc. v. Providence Fruit & Produce Building, Inc., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.S. 817, 73 S.Ct. 11, 97 L.Ed. 636 (1952); American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950); Blalock v. Ladies Professional Golf Association, 359 F.Supp. 1260 (N.D.Ga.1973); United States v. Southwestern Greyhound Lines, Inc., 1953 Trade Cases P 67,470 (N.D.Okl.1953). Cf. Deesen v. Professional Golfers' Association of America, 358 F.2d 165 (9th Cir.), cert. denied, 358 U.S. 846, 87 S.Ct. 72, 17 L.Ed.2d 680 (1966) (exclusion from PGA sponsored golf tours found competitively reasonable in light of necessity for some limitation of size of playing field). 70 After having identified some of the competitive benefits and dangers of an association like RML, the task of antitrust law is to define judgmental standards which will, insofar as is possible, minimize the latter and not interfere with the former. It will, as we shall show, be possible in many cases to determine the reasonableness of an association's rule on its face by gauging its justification in terms of the competitive needs of the association and by examining the rule itself to determine if it is drawn in such a manner as to further that need without unnecessarily trampling competitive opportunities. It is under this analysis that we must determine whether the district court correctly upheld RML's rules.