section 11 unit 5: Antitrust Violations and Penalties

Which of the following is true of discussing the business model of competitor A with competitor B in order to determine a joint course of action against competitor A? a. It's an example of a tie-in arrangement and an antitrust violation. b. It's an example of group boycotting and an antitrust violation. c. its and example of price fixing and an antitrust violation d. it's permissible

It's an example of group boycotting and an antitrust violation.

In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last? a. 10 years b. one month c. one week d. one year

a. 10 years

Which of the following describes the price fixing antitrust violation? a. A conspiracy between competitors to set prices b. A conspiracy between consumers to not pay above a certain price c. An agreement between a business and consumer to purchase at a specific price

a. A conspiracy between competitors to set prices

which one of the following is an example of group boycotting? a. Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide not to show any of Acme's listings and prohibit showings to Acme buyers to drive Acme out of business. b. Jamie purchases billboards in Peyton Heights and Crestview, but not in Sandlot Valley. c. Penny Printing produces business cards. Unhappy with the quality it received, Beta Brokerage has decided to no longer purchase their business cards from Penny Printing. d. Tara isn't happy with the service she received when placing ads in a local publication. She decides to no longer advertise with it.

a. Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide not to show any of Acme's listings and prohibit showings to Acme buyers to drive Acme out of business.

Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur? a. An agreement between competing firms to standardize commission rates b. An agreement between individual licensees in a single firm to fix commission rates c. An offer of a cooperating brokerage commission d. A public announcement of commission rates charged

a. An agreement between competing firms to standardize commission rates

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not? a. No. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values. b. No. The similarities between commission rates may be suspect, but the similarity between commission splits doesn't matter. c. Yes. The fact that the firm's commission rates and splits are so similar is a restraint of trade. d. Yes. The firms' internal commission splits can be the same, but they can't all charge the same commission rate.

a. No. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.

Which of the following is a tie-in arrangement? a. Providing a service that's dependent on the client obtaining another recommended service b. Offering certain services to customers, but additional services to clients c. Representing a client on both the sale of an existing home and purchase of a new home

a. Providing a service that's dependent on the client obtaining another recommended service

Unhappy with some of the fees a local mortgage company charges her clients, Renee decides to not do business with that company and convinces buyer agents showing her listings to not do business with this company, either. What is this an example of? a. group boycotting b. market allocation c. price fixing d. tie-in arrangement

a. group boycotting

Which of the following is true of the practice of basing the length of a listing term on how long it takes in your market to sell similar properties? a. It's an example of a tie-in arrangement and an antitrust violation. b. It's an example of market allocation and an antitrust violation. c. It's an example of price fixing and an antitrust violation. d. it's permissible

a. it's permissible

Base the length of a listing agreement term on market conditions. a. permissable b. not permissable

a. permissable

Refuse to use a specific printer for your marketing materials. a. permissable b. not permissable

a. permissable

Tell a client that your commission rate is the standard rate at your brokerage. a. permissable b. not permissable

a. permissable

Met Realty and Sox Properties agree to begin charging 6% commissions starting on the first of next month. a. price fixing b. not price fixing

a. price fixing

The Antitrust Division of the U.S. Department of Justice prosecutes antitrust violations. What are the possible penalties it may impose on violators?

a. prison sentence b. Restitution to victims c. fines d. monetary damages Yes, any of these penalties are possible. Antitrust violations are serious, and the consequences can be severe. Additionally, felony convictions may impact your ability to keep your real estate license.

Bill tells a client that if she chooses to finance her mortgage through Alamo Bank & Trust, he'll take 1% off her commission rate. a. tie-in b. not a tie-in

a. tie-in

Susan agrees to work with a client, but only if he agrees not to do business with Peak Mortgage. a. tie-in b. not a tie-in

a. tie-in

group boycotting Local licensees agree not to show listings from a new limited service firm. a. yes b. no

a. yes

group boycotting The licensees with Maize Realty and Spartan Homes agree to refuse to show their clients any properties listed with Scarlet Realty Group. a. yes b. no

a. yes

Which of the following is the best example of a tie-in arrangement? a. A business offers add-on services for its best customers. b. A business requires its clients to also purchase services from another business. c. Competing businesses agree to similar pricing strategies. d. Competing companies agree to not do business with a third.

b. A business requires its clients to also purchase services from another business.

Which of these is an example of group boycotting? a. licensees dont socialize with one another b. Two or more licensees or brokerages refuse to cooperate and split commissions with another licensee or brokerage. c. all licensees agree to follow the law d. A full service brokerage cooperates with a limited service brokerage firm.

b. Two or more licensees or brokerages refuse to cooperate and split commissions with another licensee or brokerage.

Deb, a licensee, is unhappy with the marketing materials a local company produced. While having coffee with Irving, a licensee with another firm, she tells him about her troubles and recommends he not do business with this company. Irving agrees and even volunteers to spread the word among his colleagues. What's this an example of? a. a tie-in arrangement b. group boycotting c. market allocation d. price fixing

b. group boycotting

A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's this an example of? a. group boycotting b. market allocation c. price fixing d.tie-in arrangement

b. market allocation

Which type of antitrust violation occurs when real estate firms agree to divide their market so they don't compete with one another? a. group boycotting b. market allocation c. price fixing d. tie-in arrangements

b. market allocation

group boycotting A licensee refuses to work with buyers who are obtaining financing through a questionable lender. a. yes b. no

b. no

Devin tells a buyer that his commission rate is 2%, but the buyer won't have to pay this out of pocket if the seller's agent pays a commission to cooperating agents. a. tie-in b. not a tie-in

b. not a tie-in Devin is explaining how he'll be paid for his services.

Claire tells a prospective buyer that she will only negotiate on his behalf if he signs an agency agreement to be a client. a. tie-in arrangement b. not a tie-in

b. not a tie-in This isn't a tie-in arrangement because the service of negotiating isn't dependent on the buyer engaging in business with another company.

A local realty firm is seeking to bring on an agent who will focus only on properties priced above $1 million. a. market allocation b. not market allocation

b. not market allocation

An agent has a client who would like to purchase a home in a neighboring county. Unfamiliar with the area, the agent refers the buyer to another agent with the firm who is more knowledgeable. a. market allocation b. not market allocation

b. not market allocation

Instead of competing in each other's territories, agents with one firm agree to segment the marketplace and refer clients to one another who are outside of their assigned market area. a. market allocation b. not market allocation

b. not market allocation Agents within a single firm are permitted to divide territories up; agents from competing firms may not.

Convince other agents in the area not to use a specific printer for their marketing materials. a. permissable b. not permissable

b. not permissable

Tell a client that 120-day listings are the industry standard. a. permissable b. not permissable

b. not permissable

Tell a client that there's not an agent in the area who will work for less. a. permissable b. not permissable

b. not permissable

Yankee Group and Met Realty both charge 5% commissions. a. price fixing b. not price fixing

b. not price fixing

All licensees with Max Realty charge a 4% commission split evenly with the cooperating licensee. a. price fixing b. not price fixing

b. not price fixing All licensees within a single firm charging the same commission isn't an example of price fixing since the agreement isn't between competitors.

Which of the following statements could indicate a price fixing violation? a. "My contract length is non-negotiable." b. "My listing agreements are generally 90-day contracts." c. "The MLS requires us to have at least 90-day listings." d. "With today's market conditions, we could expect the house to take two months to sell. Let's set a term of four months for our listing contract."

c. "The MLS requires us to have at least 90-day listings."

What is market allocation? a. An increase in competition occurs in a single sector of the market. b. A licensee refers business in a specific market outside her area of expertise to other licensees. c. A group of licensees from separate firms agree not to compete for business with each other in specific markets, and they divide the markets accordingly.

c. A group of licensees from separate firms agree not to compete for business with each other in specific markets, and they divide the markets accordingly.

Which of the following is true about discussing or implying a standard commission for the industry? a. It's an example of a tie-in arrangement and is an antitrust violation. b. It's an example of market allocation and is an antitrust violation. c. It's an example of price fixing and is an antitrust violation. d. it's permissible

c. It's an example of price fixing and is an antitrust violation.

Which of the following is a possible outcome if a brokerage is found guilty of violating antitrust law? a. The brokerage may be required to place 10% of its profits in the Sherman Act Foundation for a period of three years. b. The brokerage may have to sell its assets to its nearest competitor at below-market rates. c. The brokerage may have to undergo court-ordered supervision for up to 10 years. d. The brokerage's listing fees may be limited to 80% of its former charges.

c. The brokerage may have to undergo court-ordered supervision for up to 10 years.

Which of the following is a true statement about federal antitrust penalties? a. Real estate brokers are immune from prosecution. b. the first offense results in a warning only c. The maximum fine may be increased to twice the gain or loss involved. d. They cannot involve prison sentencing.

c. The maximum fine may be increased to twice the gain or loss involved.

Two competing firms are found guilty of illegal market allocation. Which of the following scenarios must be true? a. The two firms are located in different parts of the state. b. The two firms are owned by the same umbrella company. c. The two firms have agreed not to compete in one another's markets. d. The two firms have agreed to set commission rates and/or co-op fees at a specific amount.

c. The two firms have agreed not to compete in one another's markets.

Which of the following is true about tie-in arrangements? a. they involve market allocation b. They involve price fixing. c. they're an antitrust violation d. They're a type of mortgage fraud.

c. they're an antitrust violation

Which of the following statements could indicate a price fixing violation? a. "I base my price on my services." b. "My price is non-negotiable." c. "This is the price my brokerage requires me to charge." d. "This is the standard price for a full-service listing."

d. "This is the standard price for a full-service listing."

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Shakira should leave the discussion because _______. a. She needs to get to work developing this model for herself b. The group seems bent on creating a tie-in arrangement c. This conversation seems to be turning into a discussion of market allocation d. This conversation sounds like it might become an antitrust violation

d. This conversation sounds like it might become an antitrust violation

A licensee is trying to drum up business for a friend's mortgage company. She offers to discount her commission rate if her clients use her friend's mortgage company for their financing. What is this an example of? a. group boycotting b. market allocation c. price fixing d. Tie-in arrangement

d. Tie-in arrangement

When working with a developer who's purchasing undeveloped land for a new subdivision, ABC Realty stipulates in the contract that in order to purchase the undeveloped land, the developer must purchase grading services from Bulldozers-R-Us. Which antitrust violation is this? a. group boycotting b. market allocation c. price fixing d. Tie-in arrangement

d. Tie-in arrangement

Which of the following is an example of price fixing? a. A brokerage requires all licensees to offer a fair cooperative brokerage fee. b. Three brokerages agree to purchase office supplies together to obtain a bulk discount. c. Twelve brokerages discuss compensation of associated independent contractor licensees. d. Two brokerages determine a standard commission rate.

d. Two brokerages determine a standard commission rate. Collusion must occur on pricing for the public in order for price fixing to occur.

Which of the following is an example of an illegal tie-in arrangement? a. ABC Realty requires that all buyers who work with their company be qualified by ABC Mortgage company, an affiliated business. b. MNQ Realty offers the services of an affiliated business, with full disclosure of its business relationship. c. TUV Realty offers a variety of financing providers to potential clients. d. XYZ Realty requires all buyers who work with their company to obtain financing through XYZ Mortgage company.

d. XYZ Realty requires all buyers who work with their company to obtain financing through XYZ Mortgage company.

Which type of antitrust violation occurs when the providing of one service is made dependent on the customer or client obtaining another recommended service? a. group boycotting b. market allocation c. price fixing d. tie-in arrangement

d. tie-in arrangement