(CN) – The 9th Circuit rejected an antitrust lawsuit accusing Boise realtors of illegally tying the sale of undeveloped lots to their commissions on the sale of newly built homes.
In four consolidated cases, buyers claimed they agreed to buy developed lots, or land plus a newly constructed home, in different subdivisions.
Each developer used an exclusive realty agent, which in turn received a flat fee from the developer and a referral fee for the sale of new homes. The money for the referral fee came from the buyer’s contract with the builder.
Buyers accused realtors of illegally tying their commissions on new homes to the sales of undeveloped lots. As a result, buyers had to pay realtors a commission based on the cost of the land plus the actual or estimated cost of the house in order to buy a lot.
Applying the “zero foreclosure” doctrine, the district court ruled for the realtors, saying the plaintiffs were not harmed by the tying practice, because there was no competition in the tied market.
“Zero foreclosure exists where the tied product is completely unwanted by the buyer,” the 9th Circuit explained.
Because people who buy newly built homes don’t need listing and referral services, there is no market for the tied product, the court added.
“Without a market for the tied product,” Judge Rymer wrote, “there can be no per se unlawful tying arrangement because there is ‘zero foreclosure’ of competition.”
The appellate panel in Portland, Ore., affirmed summary judgment for the realtors.