People v. Colorado Springs BOR: Colorado Supreme Court Determines Membership-Based MLS Access Unlawfully Restricts Trade
In People v. Colorado Springs Board of REALTORS®, the Colorado Supreme Court addressed the reasonableness of Board membership criteria as it related to MLS access. The court held that membership criteria which gave a Board the means to restrict access to the MLS were potentially anti-competitive and constituted an impermissible group boycott under Rule of Reason analysis.
The Colorado Springs Board of REALTORS® (Board) operated a MLS in El Paso County, Colo. To become a member of the Board, an applicant was required to satisfy the following: (1) possess a valid real estate license; (2) operate a place of business in the county; (3) have a favorable business reputation in the community; and (4) have a sound credit rating. The State of Colorado filed suit to enjoin the Board from further application of its membership requirements. It and alleged that the practices of the Board, mainly requirements (3) and (4), constituted a group boycott in violation of the state antitrust act.
The Colorado Supreme Court stated that the central question in this case was whether certain membership requirements which granted the Board discretion to restrict access to membership (and thereby access to the MLS) constituted a group boycott or unwarranted refusal to deal in violation of the state antitrust act. The court held that the practices in question were not per se violations, but should be examined under the Rule of Reason. Under that analysis, the supreme court affirmed the lower court's holding that the Board's sound credit and favorable business reputation criteria were overly subjective and, therefore, had the potential to exclude otherwise qualified real estate brokers from access to Board benefits and services (including the MLS). The supreme court also stated that the anti-competitive effects of the two criteria outweighed any pro-competitive results related to their adoption. Thus, the court held the membership criteria violated the state antitrust act, and enjoined further enforcement of the offensive criteria. In doing so, the court implicitly accepted the principle that as long as Board membership is available on reasonable and non-discriminatory terms, Board services, including a MLS, can be restricted to Board members.
People v. Colorado Springs Board of REALTORS®, 780 P.2d 494 (Colo. 1989).