National Real Estate Exam (PSI)Practice of Real EstateMedium
Several brokers in a city are found guilty of colluding to fix commission rates. Under the Sherman Antitrust Act, which of the following consequences could the brokers face?
- AAutomatic loss of real estate license with no other penalties
- BCivil penalties only, since antitrust violations in real estate are never criminal
- COnly a warning letter from the state real estate commission
- DCriminal prosecution, substantial fines, and civil liability including treble (triple) damages to injured parties
Show answer & explanationAnswer & explanation
Correct answer: D. Criminal prosecution, substantial fines, and civil liability including treble (triple) damages to injured parties
Violations of the Sherman Antitrust Act, such as price fixing, can result in both criminal prosecution (fines and potential imprisonment) and civil lawsuits where injured parties may recover treble damages — three times their actual losses — plus attorney's fees.
Why the other options are wrong
- A. License revocation may occur through state action, but it isn't the primary or only Sherman Act penalty.
- B. Sherman Act violations like price fixing can be prosecuted as criminal felonies, not just civil matters.
- C. A mere warning letter drastically understates the severity of federal antitrust violations.
Sherman Antitrust Act Penalties
Violations of the Sherman Antitrust Act, such as price fixing or market allocation, can result in criminal prosecution, substantial fines, and civil suits allowing injured parties to recover treble damages.
- Price fixing and market allocation are per se illegal
- Criminal penalties can include fines and imprisonment
- Civil plaintiffs may recover three times actual damages plus legal fees
Memory trick: Fix prices, pay triple — and maybe do time.