Opinion ID: 214064
Heading Depth: 4
Heading Rank: 3

Heading: Procompetitive Justifications

Text: Realcomp might still prevail, despite evidence of actual or likely anticompetitive effects, by demonstrating some countervailing procompetitive virtuesuch as, for example, the creation of efficiencies in the operation of a market or the provision of goods and services. Ind. Fed'n, 476 U.S. at 459, 106 S.Ct. 2009. Giving some deference to the Commission's conclusion, In re Detroit Auto Dealers, 955 F.2d at 469, we conclude that the Commission properly rejected Realcomp's proffered justifications as not legitimate, plausible, substantial and reasonable. Id. at 470. The ALJ concluded that, without the website restrictions, home sellers with EA agreements would free ride on the Realcomp members who invest and participate in the MLS through the payment of dues and who otherwise undertake to support the cooperative endeavor of the MLS. Pet'r App. Vol. II at 182 (Dec. at 121). However, as the Commission found, the circumstances of this case do not establish free-riding. EA home sellers making use of the Realcomp MLS still must employ a listing broker who is a paying Realcomp member. Realcomp charges equal membership fees to all users. Therefore, Realcomp's services to EA home sellers are compensated through payments of the EA seller to her listing broker, who in turn pays Realcomp for the benefit of participation in the MLS. Realcomp also erroneously argues that the EA home seller free-rides specifically on Realcomp cooperating agents because the EA home seller may act as her own cooperating broker. By not employing a cooperating broker, the argument goes, the EA home seller compensates Realcomp only through her payment to the listing broker, which does not cover all of Realcomp's costs. These costs are shared by cooperating brokers who pay dues to Realcomp in order to benefit from the business generated by the MLS. Thus, Realcomp asserts, cooperating brokers subsidize the cost that property owners would otherwise incur to procure buyers who do not use cooperating brokers. Pet'r Br. at 52. Cooperating brokers are compensated, however, for whatever services they do provide to the EA home seller, and the EA home seller receives no free services. If an EA home seller does choose to transact with a cooperating buyer, which the EA home seller does in 80% of EA listing transactions, compensation is provided for the cooperating broker by the terms of the EA listing contract, of which the cooperating broker is aware before the sale. Moreover, the free-riding justification fails because a home seller may contract with an unrepresented buyer regardless of the type of listing contract, and under either EA or ERTS listing agreements, there is no compensation provided to cooperating brokers when the home seller chooses not to employ their services. ERTS listings include no requirement for the involvement of cooperating brokers, and, like EA listing agreements, flat-fee ERTS listings do not incorporate a cooperating broker's commission into the listing broker's compensation. Although there may be incentives for an EA home seller to transact with an unrepresented buyer in order to avoid additional payment to a cooperating broker, listing brokers in ERTS transactions also benefit from selecting an unrepresented buyer and retaining the commission that would otherwise be divided. Thus, Realcomp has not demonstrated a connection between the website policy and the prevention of free-riding. [16] The website policy also purportedly eliminates a bidding disadvantage faced by a buyer represented by a cooperating broker when bidding against an unrepresented buyer in an EA transaction. Pet'r Br. at 56. But rather than enhance competition, such a policy insulates cooperating brokers' commissions from competitive pricing pressure. As the Commission found, the bidding-disadvantage justification reinforces the conclusion that [the policies] have an anti-competitive effect by deliberately protecting established commissions and preventing the reduction in the cost of selling a home. Pet'r App. Vol. I at 39 (Comm'n Op. at 33). Even if there are financial incentives for a home seller to contract with an unrepresented buyer over a cooperating broker, Realcomp offers no meritorious procompetitive justification for protecting cooperating brokers from pressure to lower costs. [17] And, as with the free-riding justification, Realcomp fails to demonstrate how EA listings give rise to a greater bidding disadvantage than do ERTS listings given that a listing broker in an ERTS agreement presumably prefers to retain the cooperating broker's commission for herself by transacting with an unrepresented buyer.