Compass—already engaged in a major lawsuit against listing giant Zillow—is continuing to aggressively push forward with a separate antitrust lawsuit against Northwest Multiple Listing Service (NWMLS), with arguments that could have implications for MLSs across the nation.
According to Compass, Seattle-area home sellers contracted with Compass earlier this year to premarket their properties under its three-phased marketing strategy, but this was abruptly put to a halt by NWMLS—effectively blocking them, and any other brokers offering premarketing, in the Seattle market.
In a 29-page court document filed Monday, Compass argues that NWMLS, and the brokers who own and control it, are boycotting any brokers who offer home sellers the option to market a property without submitting it to NWMLS.
“In every U.S. State outside of Washington, and in every other MLS outside of NWMLS, MLS rules allow homesellers and their brokers to use office exclusives to market properties outside of the MLS, lessen potential negative impacts of days-on-market and price changes on a homeseller by premarketing homes outside of the MLS and choose when and how to use the local MLS as a tool to market properties (as MLSs originally were intended),” reads the filing.
Further, Compass argues that all the other 49 states, as well as in every MLS outside of NWMLS, brokers compete by offering home sellers different marketing plans.
“The importance of premarketing is enshrined in federal antitrust agency statements criticizing mandatory submission policies, like NWMLS’s, and the antitrust policy of the real estate broker trade association, which protects office exclusives.”
Early on in the case, the parties are sparring over a temporary pause in discovery, as a judge decides whether to let Compass’ claims go forward. On July 24, NWMLS responded, mostly focused on the technical and procedural aspects of the case, arguing that Compass has misrepresented and misinterpreted federal rules, and urging the judge to allow a “temporary” pause in discovery until the case either moves forward, or is potentially dismissed.
“The core of the Court’s inquiry rests on the undue burden imposed by broad and costly antitrust discovery (as Compass seeks to impose on NWMLS) while a motion that could either dispose of the entire case or simplify the issues remains pending,” lawyers for NWMLS wrote.
But Compass appears focused on the picture. In its filing, Compass cites the Federal Trade Commission’s (FTC) 1983 Butter’s Report, which explains that “the ability for a homeseller to choose to market a property off the MLS was the only protection of consumers and competition from the anticompetitive mandatory submission rules.”
In the report, the FTC cites the National Association of Realtors®’ (NAR) antitrust policy that “requires that an MLS not prohibit or discourage a member from accepting a listing from a seller preferring to give an ‘office exclusive.’”
In a 2022 court case, the Ninth Circuit categorized a group as an anticompetitive boycott because it found “a group of competitors coercing a competitor’s suppliers to sell to that competitor only on ‘unfavorable terms’ constitutes a group boycott even if the competitors do not completely cut off the competitor’s access to inputs it needs.”
That lawsuit, filed in 2020 by a listing startup (which was at that time known as the PLS), was recently revived, targeting NAR over the Clear Cooperation Policy.
Compass argues that NWMLS—which is not affiliated with NAR—is doing the exact thing with its policies.
“It is owned and controlled by a group of competitors, and it is coercing all other brokers in the Seattle area to provide listings (supply of necessary inputs competitors need) to others only if they market properties in ways NWMLS dictates, such as not offering premarketing options to homesellers,” the filing reads.
Editor’s note: this story was updated at 1:18 p.m. eastern time with information from the latest court filing.
