People For the American Way Foundation

Biden Judge Allows Justice Department to Reopen Antitrust Probe Concerning Real Estate Commissions and Housing Prices

Biden Judge Allows Justice Department to Reopen Antitrust Probe Concerning Real Estate Commissions and Housing Prices

Judge Florence Pan, nominated by President Biden to the DC Circuit Court of Appeals, wrote a 2-1 decision reversing a lower court and allowing the Justice Department to reopen an antitrust probe concerning high real estate commissions and housing prices. Both the dissenting judge and the lower court judge were nominated by Donald Trump. The April 2024 decision was in National Association of Realtors v US.


What is the background of this case?

In 2018, the Justice Department opened an antitrust investigation concerning “potentially anticompetitive practices in the real estate industry” implemented by the National Association of Realtors (NAR).  Two practices drew particular attention. These included the “Participation Rule,” under which brokers must offer the same commission to all other brokers when listing a property on a multiple listing service (MLS) . DOJ contends that the rule “restrains competition” among brokers  and causes them to “steer customers to commission listings.”

The DOJ probe also focused on the “Clear Competition Policy”, which requires listing brokers to “post a property on an MLS within one day of when they begin” to market it. DOJ  believes that the policy “restricts home-seller choices and precludes competition from new listing services.”

NAR sought to reach a settlement with DOJ. In November 2020, they reached an agreement that addressed four other NAR policies, although not the two that DOJ had recently focused on. DOJ wrote a 2020 letter stating it was “closing” its investigation and that at least for now, NAR need not respond to its investigative demands on the “clear competition” and “participation” policies.

In 2021, however, disputes led DOJ to exercise its option to withdraw the proposed consent judgment, notify the court and all parties, and file another investigative demand on the two NAR rules and several other matters. NAR went to federal court to try to stop the investigation, claiming that it contradicted what it maintained was a “binding” settlement agreement and the 2020 letter. District judge Timothy Kelly, nominated by Donald Trump, agreed and quashed the investigation. DOJ appealed to the DC Circuit.


How did Judge Pan and the DC Circuit Rule and Why is it Important?

 Judge Pan wrote a 2-1 opinion, joined by conservative judge Karen LeCraft Henderson, that reversed the lower court and allowed DOJ’s investigative demand to go forward. The “plain language” of the 2020 letter, Judge Pan explained, “permits DOJ to reopen its investigation.” In particular, she went on, the letter stated simply that DOJ was “closing” its “then-pending investigation,” and contained “no commitment” not to reopen it.  Indeed, the letter specifically stated that “no inference” should be drawn from DOJ’s decision to then close the investigation, such as “prohibiting a reopened investigation.” Despite the dissent by Trump judge Justin Walker, Pan noted that the majority’s decision was consistent with standard principles of interpretation and the government’s practice of “routinely” closing investigations and then later reopening them.

In sum, Judge Pan wrote, the 2020 letter “unambiguously permits” DOJ to reopen its investigation into the two disputed NAR practices that DOJ contends lead to anti-competitive effects and higher home prices. She sent the case back to the lower court so that the investigation can proceed.

Judge Pan’s decision is obviously important to allow DOJ to go forward with its claims that significant anti-competitive housing practices and higher prices are harming consumers. Coupled with the results of private lawsuits concerning high commissions, a DOJ official expressed hope for real relief for consumers as a result of the ruling, which “restores the Antitrust Division’s ability to investigate potentially unlawful conduct by NAR.” The decision also reinforces important precedent concerning reopening government investigations, and serves as a reminder of the significance of promptly confirming fair-minded nominees like Judge  to our federal courts