The Antitrust Division of the Department of Justice has filed a statement of interest in the U.S. District Court for the Eastern District of Pennsylvania in the case of Davis et al. v. Hanna Holdings Inc.
The lawsuit, brought by homebuyers, alleges that real-estate brokerages and their trade association, the National Association of Realtors, entered into anticompetitive agreements that inflated broker commissions and raised home prices for Americans.
The statement of interest explains that competition among real estate brokerages is critical to protecting American homebuyers and that trade association rules are subject to antitrust scrutiny in several ways.
“Purchasing a home is the single biggest purchase most Americans make in a lifetime,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division. “Today’s soaring housing prices make competition in real estate brokerage more important than ever. Antitrust laws are key to safeguarding competition, which reduces prices and improves services for homebuyers.”
Americans spend about a third of their budgets on housing and housing-related costs. Yet real estate broker commissions in the United States have remained at five per cent to six per cent for decades, two to three times higher than in other developed economies.
Trade association rules that artificially inflate broker commissions and increase the burden on American consumers must be closely scrutinised under antitrust laws.
U.S. courts have long recognised that trade associations violate the antitrust laws when they unreasonably restrict competition among their members.
While taking no position on the ultimate disposition of the case, the statement of interest explains that competition among real-estate brokerages is critical for protecting American homebuyers and that the antitrust laws provide a remedy when real-estate brokers agree to stop competing with one another, whatever form that agreement takes.
When plaintiffs challenge trade association rules that embody agreements among competitors, those rules are subject to Section 1 of the Sherman Act.
In addition, the statement of interest explains that association rules are not automatically exempt from the per se rule prohibiting horizontal price fixing.
The Antitrust Division routinely files statements of interest and amicus briefs in federal court where doing so helps protect competition and consumers, including by encouraging the sound development of the antitrust laws.
