The Department of Justice (DOJ) wants a federal court in Philadelphia to take a close look at real estate agent commissions. Last Friday, the DOJ filed a statement of interest in the Davis homebuyer commission lawsuit filed in May 2024 against Howard Hanna Real Estate Services.
The statement of interest was signed by Assistant Attorney General Gail Slater. In the filing, the DOJ urged the court to take a closer look at agent commissions, arguing that they are still possibly inflated due to “unreasonable” trade group rules that the department feels are inherently unlawful.
“This case presents another opportunity for a court to assess purportedly anticompetitive agreements infecting the real-estate industry,” the filing states.
For the first 11 months of this second Trump administration it appeared that the DOJ had decreased its scrutiny of the real estate industry and the National Association of Realtors (NAR), but that era appears to be over, as this latest filing indicates that the DOJ is still keeping a close eye on some of the same real estate industry practices.
“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 statement of interest reads.
While filed in the Davis suit, the DOJ does not opine on what it feels the outcome of the case should be, but it does claim that Howard Hanna has made “erroneous” claims in its filings, regarding the application of antitrust law and the allegations of “concerted action” to artificially inflate agent commissions.
In all of the commission lawsuits, including Davis, the brokerage defendants have argued that allegations of conspiracy cannot be substantiated because it centers on rules and conversations within Realtor associations, which they argue provide pro-competitive benefits for members and protect consumers’ homeownership rights.
In its filing, the DOJ pushed back against this notion, arguing that policies, even those promulgated by a trade association, can constitute concerted action and violate antitrust laws. Additionally, Howard Hanna has requested that the judge apply the “rule of reason” in this lawsuit, which considers the pro-competitive effects of the rule along with any anticompetitive effects. The DOJ also pushed back against this, asking the court to instead use a “per se” analysis, which was used in the Sitzer/Burnett suit, which assumes that the rule is inherently anticompetitive on face value.
“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 in the filing. “For that reason, the Supreme Court has repeatedly applied the per se rule in cases involving association rules, including real-estate association rules.”
“Hanna’s attempts to heighten the legal standards applicable to trade-association rules find no support in the Sherman [Antitrust] 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,” the DOJ added.
Howard Hanna did not return HousingWire’s request for comment on the DOJ’s filing and NAR did not wish to comment.
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