Antitrust for Associations

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Local and state REALTOR® associations must ensure that their leaders and members understand antitrust laws and the importance of compliance. Antitrust laws promote fair competition and prevent anti- competitive behavior, which can harm consumers and competitors. Violating antitrust laws can result in treble damages, hefty fines and legal penalties, not to mention damage to the association’s reputation. Associations must be mindful of antitrust compliance in all their activities, including board of choice practices, association meetings, professional standards hearings and decisions, operating or participating in an MLS, and mergers with other associations.

Three significant antitrust issues associations must avoid are price fixing, group boycotts and market allocation. It’s important to remember that associations are competitors and act accordingly. This means associations must make decisions unilaterally and independently and should never confer or agree about the dues and fees they charge for membership and other services. Associations must avoid collectively agreeing to boycott or blacklist a particular competitor, supplier or customer. There also cannot be an agreement to allocate among themselves the exclusive right to recruit or accept members in specific geographic areas, to recruit or accept particular members, or to offer particular products or services. Therefore, it’s imperative to set expectations and make the association’s commitment to compliance with antitrust laws clear, and to take measures to immediately stop any meeting, discussion or other efforts to engage in any of the above activities.

Failure to take appropriate actions can result in liability. The U.S. Supreme Court held that a trade association will be liable under antitrust laws for the actions of its volunteers acting with apparent authority of the association, even where those actions are contrary to the association’s established rules and policies. Therefore, associations must establish and enforce best practices to avoid antitrust liability. These best practices should include:

• Providing annual training. Associations should provide annual antitrust compliance training to staff, officers, directors and other volunteer leaders on how to spot—and respond to—potential issues. The pocket guide, “Antitrust and Real Estate Compliance Guide for Association and Board Leadership,” is a great starting point.
• Crafting clear policies. Have clear policies and guidelines in place that explicitly prohibit antitrust violations and provide guidance on appropriate conduct. Review the antitrust policy at the beginning of meetings and include a copy in meeting materials. In addition, REALTOR® association owned or -operated MLSs must adopt and enforce the MLS Antitrust Compliance Policy.
• Practicing prevention. Empower association leaders and staff to stop any potential antitrust discussions at meetings and events. Monitor the association’s social media pages; remove comments and discussions that are inconsistent with the association’s antitrust policy.
• Maintaining records. Set and follow an agenda for all meetings and take accurate and clear minutes to avoid misinterpretation. Consider having legal counsel review the minutes, particularly where legally sensitive matters are discussed.
• Asking counsel. Any proposed association activity that may impact competition should be reviewed by legal counsel to ensure compliance with antitrust laws.
• Encouraging reporting. Members should be encouraged to report any antitrust violations or concerns to association leadership or legal counsel.

The National Association of REALTORS® Insurance Program provides associations with coverage for antitrust claims, limited to defense costs only, up to $1 million per claim. Note that the claim limit is shared by all covered associations and MLSs named in a particular—or related—claim. For an added layer of protection, associations should consider purchasing excess coverage, which provides the option to purchase additional coverage of up to $1 million per claim each year.

Associations must be aware of antitrust laws and take proactive steps to avoid liability and ensure that the legitimate affairs of the association are not subject to misinterpretation. For association executives and others interested in learning more about how antitrust laws affect associations, NAR has a webinar as well as other important resources dedicated to the topic.