When you stop and think about it, all the recent actions by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) against real estate associations and commissions have one thing in common. Online operators are alleging violations of fair trade laws. In the last year, the FTC and DOJ have either chastised or filed several lawsuits against real estate organizations:

1. The DOJ sued the National Association of Realtors over its listing display policy.

2. The FTC sued the Austin Board of Realtors over a listing agreement requirement.

3. The DOJ and FTC sent threatening letters to a number of state commissions that are considering establishing minimum service levels for brokerage, including Texas, Oklahoma, and New Mexico.

4. The DOJ sued the Kentucky Real Estate Commission over restrictions on consumer rebates, prompting South Dakota, West Virginia and other state commissions to cancel their rebate and gift restrictions to consumers.

(That last one isn't an online stretch -- it's mostly online companies that offer rebates to consumers, in exchange for their doing much of the footwork in a real estate transaction themselves.)

While there's nothing wrong with that, there is something wrong with the fact that MLSs were created as a means to facilitate cooperation among competing brokers for consumers' benefit, and that is being squarely ignored by the law enforcement agencies to defend business models who don't enter into cooperation in the spirit it was intended -- to directly sell homes for sellers.

MLS cooperation was never intended to give marketing advantages to third-parties or to turn the MLS into a public utility to drive down brokerage prices by encouraging limited service; it was only meant to make it easier for co-brokers to sell homes.

In fact, it looks as if the FTC and DOJ aren't going to be happy until every MLS is a public utility, open to third-party service providers to use in lead generation/referral fee business models and consumers who really don't want to hire an agent, but grudgingly pay them a pittance in order to have their homes in the local MLS.

But the FTC says that's not what it wants at all. Patrick Roach, deputy assistant director for the Bureau of Competition in the Austin Board of Realtors investigation, says, "That's certainly not what this case is about. The MLS is not a public utility, open to the world. You have homesellers who enter into contracts with real estate agents, and these were not homesellers who want access to MLS without a real estate agent. These home sellers were required to state the terms on which they would cooperate, and provide compensation, like any other listing. There are a lot of internal rules that govern these things, but this Board had a rule that certain types of contracts aren't treated like other contracts that they like better. That's an action by a Board representing 5000 competitors in a local marketplace, and that presents antitrust implications. There was a difference of views, and we have a resolution of a dispute."

Roach continues, "The Commission does not remotely think that MLSs are bad things, there is a clear recognition of how valuable they are because they promote cooperation among brokers and promote service that brokers can provide to put together buyers and sellers. One problem that comes with a cooperative venture is that care has to be taken that objectives are furthered that are pro-competitive. That is the context of the Commission's concern about this rule."

Just this week the FTC sued and settled with the Austin Board of Realtors, reminds Oliva. Realty Times learned that the FTC had known that a listings policy put into effect over a year ago and rescinded 90 days later was the reason for the suit.

The Austin Board's attorneys had been in negotiations for months with the FTC because the FTC wanted the consent agreement, an agreement with no admission of guilt, to say that the policy was to prevent discount brokers from listing in the Board's AustinHomeSearch.com. Austin attorneys fought for and won an exclusion of the defamatory clauses, but they say the FTC betrayed the agreement by putting the accusations into a press release, which it says is usual, and by holding a press conference, which is highly unusual.

Explains Roach, "Our understanding of the circumstances of the rule is that the people in Austin will move forward to carry out the terms of the agreement, but there was a question about the rescission of the rule. That has some nuances that may not be fully understood. After our interest in investigating the rule, the Board considered what was going on. In September they reached a resolution that if they reached an agreement with the FTC they would rescind the rule. What they may mean is that they stopped blocking the feeds of the listings at that time."

Roach says that while the rule may not have been enforced, the FTC had no evidence that members were told it had been rescinded nearly a year ago or since, and the rule was not removed from the Board's website until the suit was settled on Thursday, July 13, 2006, and that was why the FTC moved forward with the suit.

But others say the FTC is known for using litigation to get its way, and humiliating companies and organizations it moves against by publicly castigating them, even though consent agreements do not include admissions of guilt. It's guilt by accusation, and few, less than one percent, have the stomach to contest the FTC in court because of the huge legal fees involved.

According to Skip Oliva, founder of The Voluntary Trade Council , a grassroots research and education free market group highly critical of FTC and DOJ tactics, the FTC and DOJ are targeting the online real estate industry for a reason -- to gain control of online access. He says real estate listing sites are only the beginning.

Careful to say that there are plenty of things that Realtors do that he doesn't approve of, and that the Voluntary Trade Council doesn't "blindly defend industries," Oliva says, "They are on their own, but on this issue, it was a gross abuse of power by the FTC."

Oliva explains that there are two sets of issues. "One is when the real estate industry does conspire to expand their own monopoly at the state and national levels," says Oliva, "but you also have Realtors getting together to invest in a cooperative. They have property rights. If your problem is with the licensing regime that restricts entry into the profession, that's one thing, but the FTC and DOJ are targeting a peripheral issue and saying it's a huge victory. Realtors exercise huge political clout. I worked on a case where Realtors were using licensing laws to put an Internet startup out of business, but that's distinct from a website that Realtors invest in. Websites aren't public utilities."

He says you can look at Realtors and be critical of their practices, but also look at the precedent it sets for other industries if the FTC can come in and tell you what to allow or not allow on your website because it would be better for consumers. "That's not a precedent I think should be set," says Oliva. "What the FTC is doing will discourage cooperation. What's the point of investing in time and service, and if it's successful, the FTC is going come along and tell you to open it up to competitors."

Oliva points to a similar case happening in France -- where the government decides the rules of access by insisting that Apple open the iPod to other players. "That reduces Apple's incentive to innovate their product," says Oliva.

The same could happen here as some Realtors may force their boards to eliminate public listing sites in order to reduce liability.

Some MLSs have closed or are in the process of dismantling their public sites, due to broker member pressure, including Dallas-Fort Worth's NTREIS, and others in the nation. Large brokers, such as members of The Realty Alliance, are dismayed by the lawsuits against their industry and are looking at alternative ways to cooperate.

Large franchise organizations, such as RE/MAX International and Realogy (formerly Cendant), are building their broker-supplied Internet Data Display systems in case local public MLS systems prove too counterproductive for their associates.

These are the unintended consequences of forcing competition that can hardly benefit consumers if online listings are splintered or withheld because of anti-trust fears.

"It is easy to look at real estate and to focus on specific, abusive practices, and conclude that every practice is wrong, but the FTC broke their own consent agreement," claims Oliva. "There is no finding or admission of guilt, the FTC said the Austin Board was guilty which was the tone of their public statement, and the Board said that's not what we agreed to.

"The FTC pulls that stunt a lot, and says they're guilty. The FTC can act with impunity, there's not a lot of oversight for them. At least the Justice Department acts through a court," says Oliva. "There's a clear political agenda where cases are selectively brought for the interests of the FTC. The FTC issued a press release in advance, and gave the press advance warning, that this is orchestrated with the DOJ for maximum political clout."

Oliva says he tracks the FTC and DOJ and less than 1 percent of cases are ever contested, a finding that an FTC spokesperson didn't dispute when Realty Times called to confirm the number. "NAR's a big group, but it can be brought to the settlement table with enough pressure," says Oliva.

What is the FTC really after? Is it as simple as getting people to cooperate? The FTC says so, but Oliva disagrees.

"The objective seems to be they want to use antitrust enforcement to create a de facto regulatory regime for these websites," muses Oliva. "They want to centralize control of market in their hands, so they can say what they can and can not do. They target an industry and use litigation to gain control. This is a long-term policy."

"When you read the press statements, the rhetoric is about empowering consumers," says Oliva, "as if it takes nothing for Realtors to do what they do, and that nobody takes a risk. The FTC says it's for the consumer, what about the producer?"

He concludes, "The trend is consumer protection groups target where the pricing policies are known to the public, prices are posted on the street. A lot of trouble would go away if it weren't known what the commissions are. It's out in the open and that's a tempting target for regulators, and it's an easy target for regulators. In health insurance, you don't see attacks, and you can't find out where prices come from. The FTC goes for the easy stuff."

"The Austin case is a classic FTC prosecution to divert attention from the real issue," says Oliva. "The fact that Realtors are so overregulated at the state level, that's what is creating the barrier to entry into the MLSs, not because Realtors won't allow a certain type of listing. But they can't go after licensing issues, because that's under state control, so they attack the website."

Regardless of who's right, the pursuit of the real estate industry will continue.

"There other types of behaviors we have under investigation," says Roach.