DOJ weighs in on ‘super hot’ topic of data sharing
A new statement from the agency suggests that when information is shared only among competitors — like trade group members — it sets off antitrust alarm bells.
Key points:
- The DOJ filed a statement of interest in an antitrust case involving the pork industry, but it has applications to real estate.
- AI has supercharged the way information is shared, making “rigorous analysis” easier — and increasing risk.
- MLSs, associations and others need to make sure they are not accidentally creating a situation that enables price-fixing.
For those in the real estate world, the Department of Justice's opinion in a case involving the pork industry isn't likely to attract much notice.
But not so fast: When it comes to antitrust and trade associations, it's good to know what the DOJ is saying.
Brian Schneider, an attorney who represents dozens of MLSs, broke down a DOJ statement of interest made earlier this month in a class-action lawsuit that accuses major pork producers of using shared data to "control supply and price."
The concept of sharing data is "super hot" right now, Schneider told Real Estate News. The rentals side of the residential real estate world has been feeling most of the data-related heat: This summer, the DOJ filed suit against RealPage, accusing the company's software of going beyond merely providing information by setting rents and stifling competition.
But associations and MLSs need to watch out as well. Schneider highlighted this quote from the DOJ: "When competitors agree to exchange competitively sensitive information only among each other, it suggests that the information sharing will benefit only the competitors at the expense of consumers, workers, or other market participants."
AI adds risk
And what makes data sharing so hot? AI.
"It used to be that to share information, you had to go out and conduct a survey, or maybe you get to a meeting and everyone would sort of talk about their pricing policies," Schneider said. "Now with artificial intelligence, you can do some pretty rigorous analysis of pricing." And if you're using the same software everyone else is using, "it can start to become an antitrust risk."
What makes this even more scary is that the Department of Justice removed "safety zones" for information exchange, so now it's harder to know if what you're sharing will get you into trouble.
This is, of course, in addition to the DOJ's continued scrutiny of buyer agent compensation, its POV on litigation involving Zillow and its ongoing interest in the policies of the National Association of Realtors.
What should real estate organizations be watching out for?
When a real estate association or MLS is doing "any activity to collect data on actual transactions, they really need to think about whether they could be facilitating a price-fixing arrangement inadvertently," Schneider said.
The key is how that data is used. A survey on, say, the topic of commissions or buyer and seller price sensitivities only becomes a problem when competitors are keeping that information to themselves. That's what could trigger DOJ concern about harm to consumers.
Here's another example. ALTA forms — the industry-standard documents created by the American Land Title Association and used by nearly everyone — contain a ton of data that could potentially be an issue: pricing, commissions, parties involved.
"If you have a database that shows exactly what each broker was paid … and it's pretty recent data, and it's pretty active data, and you're sharing that with competing companies, that is a seriously problematic information-sharing platform" in the eyes of the DOJ, Schneider said.
Ironically, the industry's relatively low-tech business practices may be its saving grace. All that data is collected in PDFs and in some cases paper, Schneider said, which means it's not transparent enough to be a problem. At least not yet.