Realcomp II, Ltd. v. Federal Trade Commission, 635 F.3d 815

Background

Realcomp II, Ltd. is an association of southeastern Michigan real-estate boards whose MLS is central to brokerage services.
Realcomp's website policy barred distribution of Exclusive Agency and other nontraditional listings to public advertising websites via MLS feeds.
A separate search-function policy excluded EA and other nontraditional listings from default MLS search results until 2007.
Commission alleged these policies, and a minimum-service requirement, restrained competition in residential real-estate brokerage in Realcomp's market.
ALJ found likely anticompetitive effects but the Commission reversed, finding real restraint and actual effects, and ordered cessation of the challenged policies.
Realcomp challenged only the website policy, while other challenged policies were repealed and not appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Realcomp's website policy unreasonably restrain trade?	Realcomp asserts standard rule-of-reason analysis with insufficient market power proof.	FTC contends the policy is inherently suspect and, alternatively, analyzed via full rule-of-reason with market-power and actual effects.	Yes; policy unreasonably restrained competition under full rule-of-reason.
What standard of review applies to FTC findings?	Review should defer to ALJ findings if supported by evidence.	FTC findings are conclusive if supported by substantial evidence, even if different from ALJ.	Substantial-evidence standard governs, with deference to the Commission's inferences.
Did Realcomp possess market power in the relevant markets?	Realcomp disputes market-power findings and effects.	Realcomp had substantial market power in both residential brokerage and MLS input markets.	Yes; substantial market power found in both markets.
Were there actual adverse effects from the website policy?	Realcomp contends no proven actual effects; econometric results were inconclusive.	The record shows reduced exposure of EA listings and econometric support for adverse effects.	Yes; demonstrated actual adverse effects were supported by evidence.
Do Realcomp's procompetitive justifications overcome the restraint?	Procompetitive aims could justify restrictions if credible.	Justifications (free-riding, bidding disadvantage) lack sufficient connection to consumer benefit.	No; procompetitive justifications failed to overcome the adverse impact.

Key Cases Cited

Indiana Federation of Dentists v. FTC, 476 U.S. 447 (U.S. Supreme Court, 1986) (market-power surrogate for detrimental effects; framework for rule-of-reason analysis)
Cal. Dental Ass'n v. FTC, 526 U.S. 756 (U.S. Supreme Court, 1999) (abbreviated quick-look versus full rule-of-reason; antitrust restraint inquiry)
NCAA v. Board of Regents of Univ. of Oklahoma, 468 U.S. 85 (U.S. Supreme Court, 1984) (antitrust restraints judged by impact on competition; framework for restraint analysis)
Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (U.S. Supreme Court, 1985) (per se versus rule-of-reason analysis and market definitions)
Realty Multi-List, Inc. v. Realty Multi-List Corp., 629 F.2d 1351 (5th Cir. 1980) (MLS rules and restraint on membership/exchange of listing data)
Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566 (11th Cir. 1991) (restrictions on dissemination reduce price competition in MLS contexts)
Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (U.S. Supreme Court, 1979) (per se antitrust presumptions for certain restraints)
Denny's Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217 (7th Cir. 1993) (informational restraints and market effects in a venue-specific context)
Polygram Holding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2005) (quick-look framework for evaluating competitive impact)
California Dental Ass'n v. FTC, 526 U.S. 756 (U.S. Supreme Court, 1999) (inherently suspect restraints and detailed market analysis balance)