Chapter 3: Section 3: Anti-Trust Laws

Explain the United States anti-trust laws:

TRUST LAWS The United States anti-trust laws are a set of laws that prohibits anti-competitive behavior(monopolies)andunfairbusinesspractices. Thetermantitrustwasoriginally formulated to combat "corporate trusts," which were big businesses, and are intended to encouragecompetitioninthemarketplace. Thesecompetitionlawsmakeillegalcertain practices deemed to hurt both businesses and consumers, or to generally violate standards of ethical behavior. Government agencies known as competition regulators, along with private litigants, apply the antitrust and consumer protection laws in hopes of preventing market failure. Other countries use the term "competition law." Many countries, including most of the Western world, have antitrust laws of some form; the European Union has provisions under the Treaty of Rome to maintain fair competition, as does Australia under its Trade Practices Act 1974.

List the laws that affect the granting of Credit by Real Estate Lenders?

The Equal Credit Opportunity Act (ECOA). The Community Reinvestment Act (CRA). The Home Mortgage Disclosure Act (HMDA).

What is the National Do Not Call Registry?

The National Do Not Call Registry is managed by the Federal Trade Commission (FTC), the nation's consumer protection agency. It is enforced by the FTC, the Federal Communications Commission (FCC), and state law enforcement officials. The National Do Not Call Registry applies to any plan, program, or campaigntosellgoodsorservicesthroughinterstatephonecalls. Thisincludestelemarketers who solicit consumers, often on behalf of third party sellers. It also includes sellers who provide, offer to provide, or arrange to provide goods or services to consumers in exchange for payment. TheNationalDoNotCallRegistrydoesnotlimitcallsbypoliticalorganizations, charities,ortelephonesurveyors. TokeepfromviolatingDoNotCallregulations,acompany must maintain national and internal lists of customers and prospects and keep them updated regularly. The federal DNC list must beupdatedeverythreemonths,andtheinternalDNClist must be updated every 30 days. A consumer who receives a telemarketing call despite being on the registry is able to file a complaintwiththeFTC. Violatorscouldbefinedupto$16,000perincident.

What are the most common anti-trust violations in the real estate industry?

Themostcommonviolationsintherealestateindustryoccurinprice- fixing, allocations of customers or markets, and unreasonably excluding brokers from local professional organizations and multiple-listing arrangements.

If the fixed prices are a fair market price does it stil violate anti trust laws?

Under the Sherman Antitrust Act, it is immaterial whether the fixed prices are set at a maximum price, a minimum price, the actual cost, or the fair market price. It is also immaterial under the law whether the fixed price is reasonable.

How can you detetecion Conspiratorial Behavior?

While the ways in which malicious activities can damage your organization are plentiful, many of these activities share an important characteristic: participants know that they are doing something wrong, and are taking stepstoavoidhavingothersfindout. Thegoodnewsisthatsucheffortsatsecrecythemselves leave traces. Often, guilty parties will try to communicate without their co-workers being able to understand; they may speak in another language not understood by co-workers, or they may switch to un-recorded channels such as phone calls or face-to-face meetings. In these cases, we can often find requests to change the venue through a channel that is recorded, such as an email that says "Let's discuss this over lunch."

Explain an Established Business Relationship

A telemarketer or seller may call a consumer with whom it has an established business relationship (EBR) for up to 18 months after the consumer's last purchase, delivery, or payment, even if the consumer's number is on the National Do Not Call Registry. In addition, a company may call a consumer for up to three months after the consumer makes an inquiry or submits an application to the company. Obtaining the name, phone number, and signature from a consumer provides written consent that does not expire until rescinded. One warning: If a consumer has asked to be put on the company's internal do not call list, the company may not call, even if there is an EBR.

Define Allocation Schemes

ALLOCATIONSCHEMES: Allocationschemesormarketdivisionsareagreementsinwhich competitors divide markets among themselves. In such schemes, competing firms allocate specific customers, types of customers, products, or territories among themselves. Here are a few examples of how it works: One competitor will be allowed to sell to, or bid on contracts led by, certain customers or types of customers. In return, he or she will not sell to, or bid on contracts led by, customers allocated to the other competitors. In other schemes, competitors agree to sell only to customers in certain geographic areas and refuse to sell to, or quote intentionally high prices to, customers in geographic areas allocated to conspirator companies.

Define Price Fixing

An agreement between multiple brokers to inhibit competition by raising, depressing, fixing, or stabilizing prices is the most serious example of a violation under the Sherman Antitrust Act. Price fixing requires a conspiracy between sellers or buyers. The purpose is to coordinate pricing for the mutual benefit of the traders.

Define Group Boycotting

An illegal practice in which two or more brokers/agents conspire to refuse to cooperate with another broker (share listings, split commissions).

How is the Civil Rights Act of 1866 and Title VIII of the Cicil Rights act of 1968 relevant to Real Estate?

Fairandequitabletreatmentinhousingandrealestatetransactionsisarightbylaw. Thetwo federal anti-discrimination statutes that have the greatest impact on real estate transactions are the Civil Rights Act of 1866 and Title VIII of the Civil Rights Act of 1968, commonly referred to as the Fair Housing Act.

Tying Arrangements

Occurs when, through a contractual or technological requirement, a seller conditions the sale or lease of one product or service on the customer's agreement to take a second product or service. The term"tying"ismostoftenusedby economists when the proportions the customer purchases of the two products is not fixed or specified at the time of purchase. A bundled sale typically refers to a sale in which the products are sold only in fixed proportions (e.g., one pair of shoes and one pair of shoe laces or a newspaper, which can be viewed as a bundle of sections, some of which may not be read at all bythecustomers). CaselawintheUnitedStatessometimesusestheterms"tying"and "bundling" interchangeably.

What are the penalties for violations of the antitrust laws?

Penalties for violations of the antitrust laws can include a maximum fine of $100,000 and three years in prison for individuals. For corporations, the fine canbeupto$1,000,000.

What are examples o price fixing from Sellers?

Sellers might agree to sell at a common target price, set a common minimum price, set a minimum list price, engage in cooperative price advertising, standardize financial credit terms offered to purchasers, use uniform trade-in allowances, limit discounts, discontinue a free service or fix the price of one component of an overall service, establish uniform costs and markups, impose mandatory surcharges, purposefully reduce output or sales in order to charge higher prices, or purposefully share or pool markets, territories, or customers. Under the Sherman Antitrust Act, it is immaterial whether the fixed prices are set at a maximum price, a minimum price, the actual cost, or the fair market price. It is also immaterial under the law whether the fixed price is reasonable.