For those who might question whether Congress is doing anything useful, look no further than the housing market.
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This summer, the House antitrust subcommittee asked two real estate companies to explain whether their agreement could reduce competition and raise prices for consumers. A few days later, the ranking member of the Senate housing committee did the same. Given the importance of affordable housing to all Americans, Congress should continue to bring transparency to this market.
At issue is a private listings database. Compass, the nation’s largest brokerage firm, is often hired by both homeowners and buyers to represent their sides of a real estate purchase. Midwest Real Estate Data (MRED) manages one of the nation’s largest Multiple Listing Services, a (typically) public database that allows both sellers and buyers to view available inventory.
This spring, Compass and MRED announced that they are working together to create a private listings database. Under this arrangement, brokers would have to pay to see private listings, and both buyers and sellers would have to work with one of these brokers to see the available inventory.
The problem, of course, is that this type of exclusive arrangement may carry the potential to harm consumers. A region’s Multiple Listing Service often faces little competition and can exercise control over what properties people see. A private listing service could, in theory, wall off large swaths of the public from seeing available properties, ultimately reducing choice as well as raising costs for both sellers and buyers.
Enter Congress. In letters to each company, the House subcommittee explained that the arrangement “could limit competition by fragmenting inventory, weakening price competition, and creating ‘velvet ropes’ around certain properties that limit access to a select group of potential buyers, potentially limiting consumer choice.” The Senate letter expressed similar concerns that the arrangement could “harm consumers by driving up housing costs.”
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To be sure, these firms should have every opportunity to explain why their arrangement fosters, rather than harms, competition. Depending on the circumstances, exclusive contracts can promote competition by, say, providing companies with stability in terms of their supply chains. Moreover, antitrust law does not condemn companies for becoming large or successful. The question is whether firms are competing on the merits or using their position in ways that unlawfully restrain competition.
In this instance, however, numerous lawmakers are raising legitimate questions about the arrangement and its effect on competition and consumers. As the inquiries continue, Congress should summarize its findings and disclose what can properly be made public. If important questions remain unresolved, Congress should use its other tools, including the possibility of a public hearing, to study the topic fully. Ultimately, if the evidence reveals a competitive problem, the antitrust agencies could get involved as well.
Although the federal government should not redesign the housing market, in this instance, Congress is fulfilling its proper role in studying a vital market on behalf of consumers and the American people. It should finish the job.
Asheesh Agarwal is a legal analyst. He served in the first Trump Administration and has held senior roles in state and federal government, including at the Department of Justice and Federal Trade Commission.
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