Realtors win again, antitrust violations ignored

Instead of action, the SBOE delivers a toothless tongue-lashing:

At issue Thursday was a narrower question: whether the N.C. Association of Realtors violated state statutes in requiring its members to pay an assessment to support the association's campaigns in 24 counties to fight local real estate transfer tax hikes. An agent had objected to paying the assessment in addition to her regular dues to the association, arguing that it forced her to contribute against her will. She said she was forced to do so in order to keep her access to the association's multiple listing service. She also argued that she had difficulty finding out what the association was spending on the local campaigns.

The board found itself in an uncomfortable position. As board chair and Buncombe County lawyer Larry Leake put it, the N.C. Association of Realtors committed a "moral wrong" by requiring members who needed access to multiple listings to, in effect, pay for referenda campaigns. But he said there was no legal peg the board could use to find that the association had violated the law.

For those readers not familiar with the history of NCAR's involvement in State politics and policy, understand that they are (by far) the largest contributing "entity" to election campaigns in North Carolina, heavily saturating candidates from both parties with dollars essential to victory at the polls. They also focus spending on local issues such as land transfer tax intiatives, and have successfully prosecuted their war against municipalities who have attempted to manage their needs by implementing these taxes.

This case in particular revolves around NCAR forcing its individual members to pay an additional $75 fee, the proceeds of which funded this targeted camapaign. The complaint in question was filed by a realtor who claims this additional fee was forced upon her unfairly, because the subsequent loss of her membership in NCAR would block her access to their Multiple Listing Service (MLS), which is critical to the success of her business.

Unfortunately, the SBOE's declaration that they could find "no legal peg" reflects either a painful lack of understanding of State statutes and/or the fractured nature of State government itself. The actions of NCAR plainly violate NC Statutes governing antitrust behavior:

Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal. Every person or corporation who shall make any such contract expressly or shall knowingly be a party thereto by implication, or who shall engage in any such combination or conspiracy shall be guilty of a Class H felony. (1913, c. 41, s. 1; C.S., s. 2559; 1981, c. 764, s. 2.)

Any act, contract, combination in the form of trust, or conspiracy in restraint of trade or commerce which violates the principles of the common law is hereby declared to be in violation of G.S. 75‑1. (1913, c. 41, s. 2; C.S., s. 2560.)

If you still haven't made the connection between NCAR's behavior and statutory antitrust regulation, here's a case our own Greg Flynn posted on the stopthehometicks blog:

In September 2005, the Department’s Antitrust Division filed a civil antitrust lawsuit in U.S. District Court in Chicago, against NAR challenging policies and related rules that obstructed real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers. The Department said that the policies prevented consumers from receiving the full benefits of competition, discouraged discounting, and threatened to lock in outmoded business models. The case was scheduled to go to trial in July 2008 before Judge Matthew F. Kennelly.

If approved by the court, the proposed settlement would require NAR to change policies and adhere to certain conduct remedies to resolve the Department’s competitive concerns.

Under the terms of the settlement, NAR will repeal its anticompetitive policies and require affiliated multiple listing services (MLSs) to repeal their rules that were based on these policies. NAR will enact a new policy that guarantees that Internet-based brokerage companies will not be treated differently than traditional brokers. Under the new policy, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office websites (VOWs). In addition, brokers will be able to use VOWs to educate consumers, make referrals, and conduct brokerage services. Such brokers will not be excluded from MLS membership based on their business model. NAR will report to the Department any allegations of noncompliance. NAR also has agreed to adopt antitrust compliance training programs that will instruct local Associations of Realtors about the antitrust laws generally and about the requirements of the proposed settlement specifically.

In closing, I want to make some observations about the previously noted "fractured" nature of our State government. As with any fracture, there are cracks. The thing about cracks is, things can slip through them. Time and again, we see various departments and divisions attempting to address issues that are not quite within their purview, and very often they are forced to step back and say, "I'd really like to help, but I don't see what I can do."

A little bit of this is good, right? We don't want State agencies to engage in inappropriate or contradictory rule-making. But whenever these gaps of responsibility show up, efforts need to be made to fill them. Issues need to be hand-carried to the proper authoritative body, so it doesn't fall through the cracks.

In this particular case, the SBOE should have recognized the distinct possibility that NCAR had violated antitrust statutes, and this case, or this issue, should have been presented to Justice with the recommendation to pursue it vigorously. Now, if the DOJ finds that said statute wasn't violated, no problem. It didn't fall through an administrative crack, it got dealt with by the proper authority.

The moral of my little diatribe? As a government official, even if you're not responsible for a particular problem, you are responsible for finding those who are responsible. If you want to act responsibly, of course.

Comments

The SBOE

is a toothless old GOP dog, in my view, incapable of even the illusion of oversight.

Great post. Keep it on the front page for a good long while.

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