• On October 4, the Antitrust Division amended the complaint in its antitrust lawsuit against the National Association of Realtors (“NAR”), charging that the group’s modified policy continues to prevent Internet-based real estate brokers from offering better services and lower costs to consumers. The lawsuit challenges NAR rules that limit competition from brokers who use Internet tools to serve their customers. The new complaint addresses how NAR’s changes to its rules still obstruct competition, threaten to lock in outmoded business models and inflate prices in the industry. On the same day, NAR announced a modification of its policy. The Antitrust Division states that the modified policy continues to provide “brick-and-mortar” brokers with the power to inhibit the growth of Internet-based business models. The amended complaint asks the court to prevent NAR from using either the initial policy or the modified policy. Specifically, the modified policy contains a provision, the “blanket opt-out,” that allows brick-and-mortar brokers to prevent an innovative broker from providing over the Internet the same Multiple Listing Service (“MLS”) information that other brokers can provide in their offices. NAR’s initial policy contained a similar provision. NAR’s modified policy specifically exempts its own official website, Realtor.com, from the blanket opt out.
  • On September 26, the Antitrust Division, at the request of the FTC, filed a civil antitrust lawsuit against Scott R. Sacane, a hedge fund manager, for violating the Hart-Scott-Rodino Antitrust Improvements Act of 1976. At the same time, the Division filed a proposed consent decree whereby Mr. Sacane agrees to pay a $350,000 civil penalty to settle charges that he violated premerger reporting requirements. According to the complaint, Mr. Sacane failed to comply with the premerger notification and waiting period requirements before making substantial acquisitions of two companies through an investment fund that he controlled, Durus Life Science Master Fund. Allegedly, Mr. Sacane ultimately held more than 50 percent of the voting securities of Aksys Ltd. and more than $100 million of voting securities of Esperion Therapeutics Inc. without complying with the Act. The complaint alleges that Mr. Sacane was in violation of the HSR Act from February 24, 2003 through May 2, 2005. The action demonstrates the FTC and DOJ’s willingness to enforce the technical requirements of the HSR Act.
  • On September 13, 2005, the Antitrust Division and the FTC announced that they will host a joint workshop entitled “Competition Policy and the Real Estate Industry.” The workshop will cover such topics as new and innovative brokerage business models, multiple listing services, and the implications of state-imposed minimum-service requirements. The event, which is open to the public and the press, will be held on October 25, 2005 at the FTC’s Satellite Building Conference Center located at 601 New Jersey Avenue, N.W., Washington, D.C.
  • On September 8, the Antitrust Division filed a lawsuit against the NAR for allegedly suppressing competition for real estate broker services. Participation in the local MLS makes it possible for a broker to provide customers with listings for virtually all properties for sale in the community, which is critical to compete in the local market. Some brokers have recently begun offering brokerage services to their customers over the Internet, using so-called virtual office websites, or “VOWs”. VOWs are password-protected Internet sites that allow the broker’s customers to search the MLS database on their own, using their home computers to obtain the same information that would be available in a broker’s brick-and-mortar office. Delivering listings over the Internet gives web-savvy consumers more control over their search for a home, allowing them to educate themselves about their options at their own pace and on their own time. This allows brokers to reduce the time that their agents spend searching the MLS database or showing homes the customer dislikes. The Division says that because the Internet can be used to deliver brokerage services more efficiently — resulting in better service and lower costs to consumers — brokers who utilize the Internet represent a competitive challenge to traditional brokers. In its complaint, the Division alleges that NAR’s policy restrains competition by requiring NAR-affiliated MLSs to adopt rules that will allow brokers to withhold their clients’ listings from other brokers’ websites by means of an “opt out.” On the same day of the lawsuit, the NAR amended its policy, but the Division did not withdraw its lawsuit.
  • On September 2, 2005, the Antitrust Division filed an antitrust lawsuit challenging a non-compete arrangement between two digital jukebox companies–NSM Music Group Ltd. (“NSM”) and Ecast Inc. (“Ecast”). The Antitrust Division also filed a proposed consent decree along with the lawsuit that requires the two companies to terminate the alleged illegal agreement under which NSM agreed not to enter the U.S. market with a digital jukebox to compete with Ecast. According to the complaint, NSM, already a manufacturer of CD jukeboxes, planned to begin offering a digital jukebox powered by its own platform in the United States in late 2002. At that time, digital jukebox purchasers had only two choices of digital jukebox products, one of which used Ecast’s platform. A digital jukebox platform consists of a library of songs that have been licensed from U.S. copyright holders and the software necessary to access and play the songs. When installed in jukeboxes, a platform allows consumers to play any song in the music library. Allegedly, NSM abandoned its plans to enter the U.S. market with its own platform once it reached an agreement with Ecast that it would only manufacture digital jukeboxes incorporating Ecast’s platform. The Antitrust Division believes that NSM’s release of a third competing digital jukebox platform would have stimulated competition and resulted in better products at lower prices.
  • On September 1, Thomas O. Barnett, acting Assistant Attorney General for the Antitrust Division, announced that Gerald F. Masoudi has been appointed to serve as the Deputy Assistant Attorney General in charge of International, Policy, and Appellate Matters for the Division. Mr. Masoudi was serving as Deputy Chief Counsel at the United States Food and Drug Administration.
    Masoudi earned his B.A. in economics from Amherst College in 1990. In 1993, he graduated with high honors from the University of Chicago Law School, where he served as an editor of the University of Chicago Law Review and was a John M. Olin Fellow in Law and Economics. Masoudi clerked for Judge Frank H. Easterbrook of the U.S. Court of Appeals for the Seventh Circuit.

Authored by:
Andre P. Barlow