A federal law prohibiting anti-competitive practices such as price fixing between competing real estate brokerages.
Why Sherman Antitrust Act matters on the exam
This term belongs to Practice of Real Estate. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Sherman Antitrust Act
Every Freehold question shows why the right answer is right — and cites its source.
Two competing brokerages agree to charge the same minimum commission rate. This is:
A lawful industry custom
Illegal price fixing under antitrust law
Permitted if disclosed to clients
Allowed with board approval
Show answer & explanation
Illegal price fixing under antitrust law — Agreements between competing brokerages to set commission rates constitute price fixing, a per se violation of the Sherman Antitrust Act. Each brokerage must set its fees independently, and rates are always negotiable.
Source: Sherman Antitrust Act (15 U.S.C. §1)
Which of the following brokerage practices is a per se violation of the Sherman Antitrust Act?
A broker independently setting a 6% commission rate
A broker offering a reduced commission to attract sellers
A broker advertising a limited-time discount on listing fees
Two competing brokers agreeing on the commission rate they will each charge
Show answer & explanation
Two competing brokers agreeing on the commission rate they will each charge — Agreements between competing brokers to fix commission rates are per se illegal price fixing under the Sherman Act, regardless of intent, because they eliminate price competition between rivals.
Source: Sherman Antitrust Act (15 U.S.C. §1)
Two competing brokerages secretly agree that one will only take listings north of Main Street and the other only south of Main Street. This arrangement is an example of:
A legitimate franchise territory agreement
Market allocation, a per se antitrust violation
Redlining
A permissible referral arrangement
Show answer & explanation
Market allocation, a per se antitrust violation — Competitors agreeing to divide up markets or territories to avoid competing with each other is market allocation, which is illegal per se under the Sherman Antitrust Act.
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