ANTITRUST AND REALTORS Federal and state laws Designed

ANTITRUST AND REALTORS®

Federal and state laws Designed to: WHAT IS ANTITRUST? Regulate the conduct and organization of businesses Prohibit unreasonable restraints on trade Promote competition for the benefit of consumers

FEDERAL PROHIBITIONS Sherman Act Price Fixing Clayton Act FTC Act Market Allocation Exclusive Dealings Bid Rigging Tying Unfair methods of competition Unlawful Monopolies Unfair or deceptive acts or practices

STATE PROHIBITIONS: VIRGINIA ANTITRUST ACT Restraint of trade or commerce Attempts to monopolize or monopolization Discrimination in price or services

VIOLATIONS Per Se Violations Rule of Reason Violations Price/Commission Fixing Balancing Test (Intent and motive matter) Bid Rigging Market Allocations Group Boycotts Quick Look Analysis

Civil Automatic triple damages for actual damages. Virginia Antitrust Act: up to $100, 000 for each willful or flagrant violation. Injunctive relief. PENALTIES: CIVIL & CRIMINAL Court costs and attorneys’ fees. Note: E&O insurance may pay for legal defense, but not damages! Criminal Penalty of up to $1 million for individuals or $100 million for corporations. Up to 10 years in prison.

RISK MANAGEMENT Discuss business concerns or innovative business ideas with broker – not with members of other firms. Have a standard exit line when faced with uncomfortable situations. Be careful of what you post on social media. If faced with a risky situation: stop the conversation and loudly disassociate!

QUESTIONS AND ANSWERS

Q: If you post on a social media group that includes real estate professionals from your area, “I wanted to let you all know that I’m not working with ABC Home Inspection Group any longer, as they charge too much for poor quality services. ” Is this considered a violation of antitrust laws? Per se or rule of reason? A: Yes, most likely. Boycotts of other businesses is typically treated as a per se violation. A group boycott is a decision among competitors to cease doing business with a third party. Be careful with social media!

Q: I was really unhappy with how a contractor treated some of my clients. I was complaining to a real estate licensee who is part of a different firm about him, and she immediately said that she would make sure never to use him and would tell her colleagues not to use him either. What should I do if someone from another firm starts to complain about a contractor? A: When she suggested that she would boycott this contractor you should have told her not to do that because it was anti-competitive behavior. It is important to stop any discussions that could be violating antitrust law and disassociate yourself by voicing opposition.

Q: If you tell a client, “Our commission is fixed at x%. That’s what everyone in this area charges. ” Is this a violation of antitrust laws? Per se or Rule of Reason? A: Yes. If an agent indicates to a member of the public that firms in a geographical area have fixed commission rates, that is a per se violation of antitrust law (price fixing).

Trade Associations are organizations founded by businesses that operate in a specific industry. Competitors working together. Legitimate trade association function. NAR Code of Ethics: Improves industry performance or efficiency. Cannot discourage or eliminate competition. WHAT ABOUT REALTOR® ASSOCIATIONS?

QUESTIONS?