U.S. May Sue Realtors Over Internet Rule

The trade group representing U.S. real estate brokers could face a lawsuit over an industry rule antitrust authorities fear could hurt online competitors and stifle commission discounts, a source familiar with the matter said Monday.

Lawyers from the Justice Department (search) and the National Association of Realtors (search) (NAR) are scheduled to meet Wednesday to try to settle a long-simmering dispute over a new NAR bylaw that would allow brokers to bar some discount rivals from displaying their property listings on the Internet.

The dispute could ultimately provoke a lawsuit by the Justice Department, but there was no indication officials had decided to file suit just yet, the source said.

The NAR's bylaws determine the rules governing regional multiple listing services — central repositories of information on homes that are for sale in each market.

The NAR is holding its annual meeting in Washington, D.C., this week. A spokesman for the organization, Steve Cook, said it had not been told of any impending government lawsuits.

"We're meeting with them. We're still negotiating. As far as we're concerned, we have issues to discuss," Cook said. "We feel our rule is critically important for the industry, as well as legally sound."

The department has been investigating the rule on Internet listings for more than a year.

The association has postponed the effective date of the disputed rule several times because of the department's concerns. It is currently scheduled to take effect in July.

"It's highly likely we would delay (implementing the new rule) again if the issue is unresolved," Cook said.

The new rule has been supported by companies such as Cendant Corp. (CD), owner of the Century 21 (search), Coldwell Banker (search) and ERA (search) real estate brands.

Cendant spokesman Mark Panus said the dispute is an industry-wide matter and declined further comment.

The department has interviewed a number of brokers in connection with the investigation, according to Patrick Lashinsky, a spokesman for 5-year-old discount real estate company ZipRealty Inc. (ZIPR), a critic of the NAR rule.

Lashinsky said the rule would allow other brokers to stifle innovative competitors by barring them from showing some online listings. "It's really anti-consumer," he said.

The antitrust investigation into the new rule is part of a broader effort by authorities to ensure competition in U.S. real estate markets.

Antitrust officials have also voiced opposition to rules adopted by some states that insulate full-service real estate agents from discount competition.

The Justice Department recently filed an antitrust suit against a Kentucky real estate commission, saying a ban on rebate payments was anti-competitive.

Justice Department spokeswoman Gina Talamona reiterated a previous statement from the department, saying it is investigating rules "involving the display of residential real estate listing data over the Internet."