Florida Real Estate Broker ExaminationReal Estate Brokerage ManagementHard
A Florida real estate broker operates a large brokerage with multiple sales associates. To encourage competition, the broker implements a policy where all sales associates must charge a minimum 6% commission rate on listings, and anyone found charging less will be penalized. Which anti-trust law concept is most directly violated by this policy?
- ABoycotting.
- BMarket allocation.
- CTie-in arrangements.
- DPrice-fixing.
Show answer & explanationAnswer & explanation
Correct answer: D. Price-fixing.
Price-fixing is an agreement between competitors to set the prices of their goods or services. Even within a single brokerage, mandating a minimum commission rate for all associates (who are often considered independent contractors and thus competitive entities in terms of services offered) can be seen as an illegal restraint of trade, especially if it influences market pricing.
Why the other options are wrong
- A. Boycotting involves competitors refusing to deal with a specific party, which is not occurring here.
- B. Market allocation involves competitors dividing up territories or clients, which is not described here.
- C. Tie-in arrangements involve conditioning the sale of one product on the purchase of another, which is not the scenario.
Price-Fixing (Antitrust)
Price-fixing is an illegal agreement among competitors to set prices at a certain level, or to establish minimum or maximum prices. It is a per se violation of antitrust laws.
- Agreement among competitors.
- Sets prices, or minimum/maximum prices.
- Per se illegal under antitrust laws.
- Discourages competition.
Memory trick: Fix the price, face the law's bite.