After months of silence—and some indications that it was backing off its most aggressive positions—the Department of Justice (DOJ) under President Donald Trump is again addressing what it describes as “anticompetitive rules, policies and practices in the residential real-estate industry” as it intervened in yet another commission case last week.
In a 23-page “statement of interest” signed by Assistant Attorney General Gail Slater and filed last Friday, the DOJ wrote to Judge Wendy Beetlestone, who is overseeing one of the buyer commission cases, to say that commissions are still possibly inflated and urging a judge to view “unreasonable” association rules as inherently unlawful.
“This case presents another opportunity for a court to assess purportedly anticompetitive agreements infecting the real-estate industry,” the DOJ wrote.
The filing comes after a long-running investigation and DOJ interventions in more than half a dozen private lawsuits over half a decade seemingly faded after Trump’s inauguration, as new personnel came into the Antitrust Division and political priorities shifted. The buyer cases, including this one based in the Eastern District of Pennsylvania, plaintiffs have argued that the same conduct and rules at issue in Burnett also harmed buyers, seeking further damages for a new class-action.
And while this latest move by federal law enforcement stops short of some of the stronger positions taken under Biden, it also appears to show that the DOJ is still scrutinizing the same real estate practices that have long been the focus of both private class-actions and regulators.
“The United States has a critical interest in promoting competition among real-estate brokers, which directly affects consumers’ pocketbooks. Competition ensures low commissions and promotes high-quality brokerage services aimed at helping buyers find and afford their ideal home,” the filing reads.
In Trump’s first term, the DOJ launched a major investigation into the National Association of Realtors® (NAR), which was seemingly settled in late 2020, but then revived by President Joe Biden, resulting in a court battle that lasted essentially for Biden’s entire term. The status of that investigation is unclear—very notably, the DOJ refers to it in the past tense in this most recent filing, writing that it “has investigated” real estate policies, and citing court documents in that case.
But this latest filing shows that federal law enforcement is still very much concerned about policies and practices endemic to the industry, even after the settlement.
“When parties enter into an inherently anticompetitive agreement, the agreement is per se unlawful whether it takes the form of an association rule or something else,” the DOJ wrote. “For that reason, the Supreme Court has repeatedly applied the per se rule in cases involving association rules, including real-estate association rules.”
An NAR spokesperson declined to comment on the filing.
The stakes
The DOJ’s statement was made in one of the splintered lawsuits that came when a handful of brokerages named in the main buyer suit (known as Batton) successfully argued that the Illinois-based court did not have jurisdiction over them. Plaintiffs, representing recent homebuyers, refiled identical allegations in other federal courts.
The case is known as Davis v. Howard Hanna, with Howard Hanna the only defendant. Representatives of the brokerage could not immediately be reached for comment.
Notably, in this latest filing the DOJ stops short of arguing that the case should go one way or another, only seeking to write to the judge on what it describes as “erroneous” claims by Howard Hanna regarding whether antitrust law can apply to the type of allegations plaintiffs have made—mostly centering on the alleged conspiracy and “concerted action” involving brokerages, associations and NAR.
Howard Hanna, along with many other defendants in other cases, have argued these allegations are flimsy and mostly center on entirely above-board trade association interactions that provide pro-competitive impacts.
The DOJ disagreed, writing that Howard Hanna and other brokerages cannot duck responsibility by claiming that “unreasonable” policies or agreements were part of association rules, saying these policies and “concerted action” can violate antitrust laws even if made through a trade association.
The question of what antitrust analysis to use for this and similar cases was also something the DOJ addressed. Howard Hanna and other defendants have urged judges to use the so-called “rule of reason,” which allows the consideration of pro-competitive effects of rules or practices weighed against anticompetitive ones. The separate “per se” analysis (which was applied in the Burnett case) assumes that the rules are inherently illegal regardless of other positive effects or business interests, with the DOJ urging the judge to apply this analysis to Howard Hanna’s case.
“The rules—just like any other form of concerted action—are subject to challenge under (relevant laws) and are unlawful if unreasonable,” the DOJ wrote. “Hanna’s attempts to heighten the legal standards applicable to trade-association rules find no support in the (landmark federal antitrust law) Sherman Act or the case law interpreting it. And those attempts, if successful, would undermine the Congressional policy favoring competition and hurt the homebuyers whom this policy protects.”
Much of the DOJ’s letter focuses on this alleged harm to consumers created by higher prices or inflated commissions—which the filing blames at least partially on real estate policies. The filing cites a Federal Reserve report from earlier this year that found commission rates holding steady even after the settlement.
This broader interest in costs reflects a growing spotlight on affordability issues as the Trump administration has promised to bring down costs, with housing continuing to grow more unaffordable this year, according to NAR data.
Also, the fact that a leaner DOJ under Trump is still talking time to intervene in real estate commission cases indicates the federal government still has an eye on real estate. Notably, the latest filing makes no mention of the government’s previous position under Biden, which appeared to be total opposition to so-called “cooperative compensation,” in which seller agents compensate buyer agents.
Under Trump, the DOJ previously dropped its objections to a settlement in the MLS PIN commission lawsuit once the parties in that case aligned their new policies with the NAR settlement—something the Biden DOJ had declined to do.
In that statement, filed back in June, the DOJ wrote that it still opposed “blanket, upfront offers of buyer compensation.”
