Can a local Board of Realtors, which is a private trade association, require a licensed real estate agent to first join the Board (and pay Board membership fees) before that agent can apply for access to the multiple listing service that the Board operates?
Plain-English summary
The Secretary-Treasurer of the N.C. Real Estate Licensing Board asked the AG a sharp antitrust question about local Boards of Realtors. The pattern in many North Carolina markets in 1978 was this: a local Board of Realtors (a private trade association) operated a multiple listing service (MLS) corporation; the Board required any real estate agent who wanted to access the MLS to first become a member of the Board and pay Board dues. The question was whether this Board-membership-as-MLS-prerequisite arrangement violated the antitrust laws.
The 1978 AG said yes, conditionally. The condition matters: the violation hinges on the MLS being an "essential competitive tool" in the relevant real estate market. The full answer requires walking through the antitrust framework.
Real estate brokering is a "trade." The first step is jurisdictional. Real estate brokering counts as a "trade" within the meaning of both federal antitrust law (Sherman Act) and North Carolina antitrust law (G.S. 75-1 and 75-2). The AG cites United States v. National Association of Real Estate Boards, 339 U.S. 485 (1950), and Love v. Pressley, 34 N.C. App. 503 (1977), for that proposition. Once the activity is a trade, the antitrust laws are applicable to both individual broker conduct and joint conduct by Board members.
Unreasonable restraints are forbidden. G.S. 75-1 and Section 1 of the Sherman Act both prohibit unreasonable restraints of trade. Group conduct that has the purpose and effect of reducing competitors' opportunity to buy or sell things in which the group competes is condemned, citing Associated Press v. United States, 326 U.S. 1 (1945). The Realtors-MLS arrangement is exactly that pattern: Board members band together to operate a competitive facility, and condition non-member access on Board membership.
Essential facilities doctrine: the key analytical move. Associated Press and its progeny established that when a facility created by a combination of competitors becomes essential to effective competition in a particular market, exclusion from that facility is unlawful. The 1978 AG calls out that this is true (1) even if competing facilities exist, and (2) even if competition has not been completely prevented by the presence of the facility. Other circuit decisions follow the same line: American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950); Gamco, Inc. v. Providence Fruit and Produce Bldg., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.S. 817 (1952); United States v. Terminal R.R. Association of St. Louis, 224 U.S. 383 (1912).
Application to MLS access. A multiple listing service is a competitive tool because it gives participants access to listings (the inventory of homes for sale) and visibility to potential buyers. A broker without MLS access is competitively disadvantaged in selling and acquiring listings. Where the MLS has grown to be a dominant force in the local market, the disadvantage rises to the level of unlawful restraint. The AG cites four state-court decisions that have reached this conclusion specifically about MLSs: Marin County Board of Realtors v. Palsson, 549 P.2d 833 (Cal. 1976); Pomanowski v. Monmouth County Bd. of Realtors, 377 A.2d 791 (N.J. Super. 1977); Oates v. Eastern Bergen County Multiple List. Serv., Inc., 273 A.2d 795 (N.J. Super. 1971); and (under common law restraint of trade) Collins v. Main Line Board of Realtors, 304 A.2d 493 (Pa. 1973) and Grillo v. Bd. of Realtors of Plainfield Area, 219 A.2d 635 (N.J. Super. 1966).
The AG acknowledges one contrary case: Barrows v. Grand Rapids Real Estate Bd., 214 N.W.2d 532 (Mich. App. 1974), which upheld exclusion of non-Board members from an MLS where non-members were "substantially able to compete" without the MLS and the majority of sales in the area were not made through the service. Barrows recognizes a market-by-market inquiry: when the MLS is not actually essential, the antitrust theory fails.
Common law restraint of trade doubles the basis. G.S. 75-2 prohibits any act in restraint of trade that violates the common law. The AG cites Collins v. Main Line Board of Realtors (treating exclusion from an MLS as a per se common law restraint of trade) and Grillo v. Bd. of Realtors of Plainfield Area (treating denial of access as an unreasonable restraint of trade under common law principles) to make the second prong of the state law basis.
The standard. Bringing it together, the AG distills the rule from the Marin County case: a private association's freedom to exclude non-members "must yield to antitrust laws when (1) its activities begin to correspond directly with and touch upon the business activities of its members; and (2) the association has the power to shape and influence the economic environment of its particular market." Where the MLS satisfies both prongs, requiring Board membership for MLS participation is unlawful.
So the answer to the Real Estate Licensing Board's question: the practice is unlawful in markets where the MLS is an essential competitive tool, and lawful (under the Barrows analysis) only in markets where the MLS is not in fact essential to effective competition.
Currency note
This opinion was issued in 1978. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Federal and state antitrust doctrine on multiple listing services and the essential facilities doctrine has continued to evolve, and the National Association of Realtors entered a 2008 federal consent decree affecting MLS access rules. The DOJ also revisited NAR practices in subsequent enforcement actions. Anyone advising a Board of Realtors or an MLS operator today should consult current federal and state antitrust enforcement guidance.
Historical context: what the AG concluded
This opinion applies the essential-facilities framework that the U.S. Supreme Court developed in cases such as Terminal R.R. Association and Associated Press to the question of MLS access. By the late 1970s, the MLS had become the central inventory and communication tool of residential real estate brokerage in most metropolitan areas. State courts had begun to recognize that when a private trade association controlled the MLS, the association's exclusion rules functioned as a structural barrier to competition.
The AG's reasoning has four pillars.
First, the trade jurisdiction. Real estate brokering is a "trade" within the meaning of antitrust law, foreclosing any argument that the brokerage industry is somehow outside the reach of Sherman Act and Chapter 75. United States v. National Association of Real Estate Boards and Love v. Pressley settled that point.
Second, the group conduct framework. Associated Press established that competitors who jointly create a competitive tool cannot wield that tool to disadvantage outsiders if the tool is essential. The case law applies whether the joint enterprise is a wire-service news cooperative, a terminal railroad, or a fruit and produce building.
Third, the essential-facility test. The AG follows the multi-element test that Justice Black articulated in Associated Press and that state courts applied to MLSs in Marin County and its successors: the joint facility's activities must correspond with and touch on the business activities of its members, and the association must have the power to shape and influence the economic environment of its particular market.
Fourth, the state-law double basis. G.S. 75-1 and Section 1 of the Sherman Act are direct parallels; G.S. 75-2 adds a separate state-law claim by prohibiting acts that violate common law restraint of trade. So a Board of Realtors that conditions MLS access on Board membership in a North Carolina market where the MLS is essential faces three doctrinal grounds for liability: federal Sherman Act, state G.S. 75-1, and state G.S. 75-2.
The opinion is careful about the limiting principle. The Michigan Barrows decision is acknowledged, not dismissed: where the MLS is not in fact essential (non-members can compete effectively without it, the MLS is not the channel for most sales), the analysis does not condemn exclusion. The result therefore depends on a market-by-market inquiry. A Board of Realtors operating in a market where the MLS is dominant is in different antitrust territory than one operating where the MLS is one of several competing tools.
For the Real Estate Licensing Board in 1978, the opinion supplied a clear caution: even though licensure issues are separate from antitrust, the Board could not avoid considering whether its members' practices comply with G.S. 75-1 and 75-2. Local Boards of Realtors and their MLS corporations needed to evaluate the essentiality of their MLS in the markets they served and open access where exclusion would create antitrust exposure.
Common questions
Can a Board of Realtors charge a fee for MLS access?
The opinion does not address fees. It addresses the requirement that an applicant first become a Board member (and pay Board dues, accept Board codes of conduct, etc.). A reasonable, non-discriminatory access fee directly tied to the MLS service is a different question and is not condemned by this opinion.
What is an "essential competitive tool"?
The opinion uses the test articulated in Associated Press v. United States and applied to MLSs in Marin County Board of Realtors v. Palsson: a facility whose activities correspond directly with and touch on the business activities of its members, and over which the association has the power to shape and influence the economic environment of its particular market. In practical terms, if exclusion places a competitor at a real competitive disadvantage, the facility is essential.
What if non-Board brokers can still compete by other means?
Whether competing facilities exist or competition has not been "completely prevented" is not dispositive, the AG explains. The essential-facility test does not require monopoly; it requires that exclusion impose a meaningful competitive disadvantage. The Michigan Barrows decision shows the other side: where the MLS is not the primary channel, the disadvantage may not be meaningful enough to support a violation.
What state and federal laws are at play?
G.S. 75-1 (unreasonable restraints of trade), G.S. 75-2 (acts in restraint of trade violating common law), and Section 1 of the Sherman Act. Each provides an independent basis for the antitrust claim, so a single violation can be analyzed under all three.
Are the cited cases North Carolina cases?
Mostly not. The only North Carolina case in the citation list is Love v. Pressley, 34 N.C. App. 503 (1977), for the proposition that real estate brokering is a trade. The substantive MLS-specific decisions are from California (Marin County), New Jersey (Pomanowski, Oates, Grillo), Pennsylvania (Collins), and Michigan (Barrows). The AG noted that the question had not been litigated in North Carolina; the conclusion was based on extending the federal essential-facility framework and the persuasive value of other states' decisions to the North Carolina antitrust statutes.
Background and statutory framework
The opinion sits on several statutory and case-law layers.
State antitrust. G.S. 75-1 declares unreasonable restraints of trade unlawful. G.S. 75-2 prohibits any act in restraint of trade or commerce that violates the common law. Together, the two statutes give the state two parallel theories: a statutory unreasonable-restraint claim and a common-law incorporated claim.
Federal antitrust. Section 1 of the Sherman Act parallels G.S. 75-1, prohibiting contracts, combinations, and conspiracies in restraint of trade.
The jurisdictional anchor for real estate brokering. United States v. National Association of Real Estate Boards, 339 U.S. 485 (1950), confirmed that real estate brokering is a trade within the meaning of the Sherman Act. Love v. Pressley, 34 N.C. App. 503 (1977), did the same for Chapter 75.
The essential-facilities cases. Associated Press v. United States, 326 U.S. 1 (1945); United States v. Terminal R.R. Association of St. Louis, 224 U.S. 383 (1912); American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950); Gamco, Inc. v. Providence Fruit and Produce Bldg., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.S. 817 (1952).
The MLS-specific cases. Marin County Board of Realtors v. Palsson, 549 P.2d 833 (Cal. 1976); Pomanowski v. Monmouth County Bd. of Realtors, 377 A.2d 791 (N.J. Super. 1977); Oates v. Eastern Bergen County Multiple List. Serv., Inc., 273 A.2d 795 (N.J. Super. 1971); Barrows v. Grand Rapids Real Estate Bd., 214 N.W.2d 532 (Mich. App. 1974) (contrary); Collins v. Main Line Board of Realtors, 304 A.2d 493 (Pa. 1973); Grillo v. Bd. of Realtors of Plainfield Area, 219 A.2d 635 (N.J. Super. 1966).
Citations
- G.S. 75-1
- G.S. 75-2
- Sherman Act, § 1
- United States v. National Association of Real Estate Boards, 339 U.S. 485 (1950)
- Love v. Pressley, 34 N.C. App. 503 (1977)
- Associated Press v. United States, 326 U.S. 1 (1945)
- American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950)
- Gamco, Inc. v. Providence Fruit and Produce Bldg., 194 F.2d 484 (1st Cir.) (cert. denied 344 U.S. 817 (1952))
- United States v. Terminal R.R. Association of St. Louis, 224 U.S. 383 (1912)
- Marin County Board of Realtors v. Palsson, 549 P.2d 833 (Cal. 1976)
- Pomanowski v. Monmouth County Bd. of Realtors, 377 A.2d 791 (N.J. Super. 1977)
- Oates v. Eastern Bergen County Multiple List. Serv., Inc., 273 A.2d 795 (N.J. Super. 1971)
- Barrows v. Grand Rapids Real Estate Bd., 214 N.W.2d 532 (Mich. App. 1974)
- Collins v. Main Line Board of Realtors, 304 A.2d 493 (Pa. 1973)
- Grillo v. Bd. of Realtors of Plainfield Area, 219 A.2d 635 (N.J. Super. 1966)
Source
Original opinion text
Requested By: Blanton Little, Secretary-Treasurer
N.C. Real Estate Licensing Board
Question: May a local Board of Realtors, a private trade association, require a licensed real estate agent to become a member of the Board in order to be eligible to apply for membership in or association with a multiple listing service corporation established by the Board?
Conclusion: No, if the multiple listing service is found to be an essential competitive tool in the real estate market it serves.
Real estate brokering is a "trade" within the meaning of the federal and state antitrust laws. United States v. National Association of Real Estate Boards, 339 U.S. 485, 70 S.Ct. 711, 94 LEd. 1007 (1950); Love v. Pressley, 34 N.C. App. 503, 239 S.E.2d 574 (1977). The business practices of real estate agents individually and jointly as members of a Board of Realtors are subject to antitrust enforcement.
Unreasonable restraints of trade are prohibited by G.S. 75-1 and 75-2, and § 1 of the Sherman Act. Where members of a trade band together for the purpose of advancing business interests the antitrust laws condemn group activities which restrain trade. The law prohibits businessmen from becoming associates in a common plan which has the purpose and effect of reducing their competitors' opportunity to buy or sell the things in which the groups compete. Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 LEd. 2013 (1945).
In Associated Press, the court held that where a facility created by a combination of competitors became essential to effective competition in a particular market such that exclusion from membership in that facility placed an enterprise at a competitive disadvantage, exclusion was unlawful under the Sherman Act. This is true even if competing facilities exist or even if competition has not been completely prevented by the presence of the facility. See also American Federation of Tobacco Growers v. Neal, 183 F.2d 869 (4th Cir. 1950); Gamco, Inc. v. Providence Fruit and Produce Bldg., 194 F.2d 484 (1st Cir.), cert. denied, 344 U.S. 817 (1952).
Denial of access to the listings of a multiple listing service reduces the "opportunity to buy or sell the things in which the groups compete" of non-members. Where a multiple listing service established by a Board of Realtors has become so dominant an economic force in a particular market that exclusion from membership places a broker at a competitive disadvantage, exclusion is unlawful under federal and state antitrust laws. It is not enough that Board membership is open to any licensed real estate agent. United States v. Terminal R.R. Association of St. Louis, 224 U.S. 383, 32 S.Ct. 507, 56 LEd. 810 (1912).
While your question has not been litigated in North Carolina, other jurisdictions have held that conditioning membership in a multiple listing service on membership in the Board of Realtors is an unreasonable restraint of trade. The court in Marin County Board of Realtors v. Palsson, 130 Cal. Rptr. 1, 549 P.2d 833, 843 (1976), said:
An association's freedom to exclude non-members from its activities is not absolute. It must yield to antitrust laws when (1) its activities begin to correspond directly with and touch upon the business activities of its members; and (2) the association has the power to shape and influence the economic environment of its particular market.
The court held that for non-members to compete effectively access must be granted to all licensed real estate agents who choose to use the service. Accord, Pomanowski v. Monmouth County Bd. of Realtors, 152 N.J. Super. 100, 377 A.2d 791 (1977); Oates v. Eastern Bergen County Multiple List. Serv., Inc., 133 N.J. Super. 371, 273 A.2d 795 (1971); but see, Barrows v. Grand Rapids Real Estate Bd., 51 Mich. App. 75, 214 N.W.2d 532 (1974) (exclusion of non-members of real estate board from multiple listing service upheld where non-members were substantially able to complete and majority of sales in the area were not made through the service). Thus, where the multiple listing service is a vital competitive tool, requiring membership in the Board of Realtors is a violation of G.S. 75-1 and § 1 of the Sherman Act.
G.S. 75-2 prohibits any act in restraint of trade which violates the common law. Predicating MLS participation on Board membership where access to the multiple is an economic competitive necessity violates common law principles. See Collins v. Main Line Board of Realtors, 452 Pa. 342, 304 A.2d 493 (1973) (exclusion of non-members from multiple listing service held per se common law restraint of trade); Grillo v. Bd. of Realtors of Plainfield Area, 91 N.J. Super. 202, 219 A.2d 635 (1966) (denial of access to non-members found to be unreasonable restraint of trade under common law principles).
Rufus L. Edmisten
Attorney General
Tiare Smiley Farris
Associate Attorney General