Federal Antitrust Laws, Violations, and Penalties
What are the possible penalties that may be imposed on antitrust law violators?
- Prison time -Fines -Monetary damages -Restitution to the victims
Enforcement of antitrust law occurs at various levels. Which three of these parties are involved in the enforcement of antitrust law?
-Federal trade commission -Department of justice -State attorney general
Antitrust Violations (real estate indus)
-Price fixing -Group boycotts -Market allocation agreements -Tie-in arrangements
As monopolies began taking over entire industries, antitrust laws were enacted. Which two of these were goals of these laws?
-Protect consumers by promoting competition in the marketplace. -Outlaw unfair methods of competition.
Which two of these situations are examples of group boycotting?
-The agents with Maize Realty and Sparta Homes agree to refuse to show their clients any properties listed with Scarlet Group -Local agents agree not to show listings of a new limited service firm
Your resource defines and provides a few examples of price fixing. Which one of the following is a description of this antitrust violation?
A conspiracy between competitors to set prices
One factor must exist for an action to become a violation. Which of the following must take place for a violation to occur?
Agreement
Furthered other acts by prohibiting mergers that create monopolies or reduce competition
Clayton Act
The Federal Trade Commission Act (1914)
Created the Federal Trade Commission (FTC), an agency with the purpose of preventing unfair methods of competition in commerce.
Per se guilt
Determined when there is agreement between competing entities to do or not do an activity that has the effect of always or nearly always restricting competition.
Created an agency to investigate and stop unfair competitive practices
FTC Act
Which act created an agency to investigate antitrust practices?
Federal Trade Commission Act
Penalties for antitrust violation may include ______.
Fines and/or prison sentences
Acme Realty offers discounted services. Berringer Realty and Hawthorne Real Estate Group decide to not show any of Acme's listings and to prohibit showings from Acme buyers to drive Acme out of business. What is this an example of?
Group boycotting
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?
Group boycotting
They're guilty, so what do we need to prove? It's all a matter of per se. What does per se mean?
Guilt is established on the face of the circumstances.
Group boycotting
Involves two or more businesses conspiring against another
Which of these is NOT an example of price fixing?
Jake's firm agrees to charge all clients a listing commission of between 2% and 2.5%.
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?
Market allocation
Instead of competing in each other's territories, agents in two brokerage firms agree to segment the marketplace and refer clients to one another who are outside of their assigned market area.
Market allocation
A local realty firm is seeking to bring on an agent who will focus only on properties priced above one million dollars.
NOT Market allocation- developing market niche does not restrict competition
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.
NOT Market allocation- developing market niche does not restrict competition
Maize Realty offers most cooperating agents a commission of 2.5%. However, they only offer a commission of 2% to Scarlet Agents.
Not price fixing
Yankee Group and Met Realty both charge commissions of 5%.
Not price fixing- just happen to charge same commission
Market allocation
Occurs when real estate professionals from competing firms agree to divide their market by geography, price range, property type, etc.—and then refrain from competing for business
Antitrust law violations
Practices that interfere with a fair and competitive marketplace
According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation?
Price fixing
Met Realty and Sox Properties agree to charge commissions of 6%.
Price fixing- they both agree!
While networking at a real estate industry event, agents from several firms agree to start writing listing contracts for terms of three months.
Price fixing- they both agree!
The Sherman Act (1890)
Prohibits monopolies and collusive actions that result in unreasonable restraint of trade, such as price fixing.
Any agreement between competing firms that restricts trade, discourages competition, or _______ is a violation of antitrust law.
Restricts choices for consumers
Prohibits monopolies and actions that cause an unreasonable restraint of trade
Sherman Act
The Clayton Act (1914)
Supports the Sherman Act by prohibiting mergers or acquisitions that would unreasonably reduce competition or create monopolies.
Which of these statements most accurately represents existing federal antitrust legislation?
The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly.
tie-in arrangement
The providing of one service is made dependent on the customer or client obtaining another.
Price/term fixing
This is when two or more firms agree to offer exactly the same terms in their agency agreements.
Definition of market allocation
When a brokerage firm and its agents agree not to compete for business with another firm or firms and the associated agents in specific markets and divide the markets accordingly
A central element of an antitrust violation is _______.
contract
price fixing
is a conspiracy or agreement between business competitors to set their prices to buy or sell goods or services at a certain price point
Illegal per se
practices are deemed automatically unlawful
Per se
that guilt is established on the face of the circumstances—no need to prove intent
Absent per se circumstances
the court looks at the entire situation to determine guilt or lack thereof
