Broker Toolkit: Antitrust

In the area of risk reduction, antitrust liability poses one of the greatest, yet least understood risks for brokers. Below is a summary of the basics on Antitrust.

Basic Prohibitions

 
Price Fixing
Boycotts
Tying Arrangements
Penalties

The Sherman Act prohibits any contact, combination or conspiracy in restraint of trade.

  • In order to establish a violation of the antitrust laws, it must be shown that two or more persons or business entities participated in a common plan or scheme and that the effect of that plan or scheme was to restrain trade.
  • Typically the required contract, plan, or scheme is proven by circumstantial evidence. That circumstantial evidence must exclude the possibility that the parties acted alone. If it is equally possible to conclude from the evidence that the parties acted alone (i.e., each made independent business decisions) then the circumstantial evidence is insufficient to establish an antitrust violation.
  • To violate the antitrust laws, the restraint of trade caused by the conspiracy or common plan must be unreasonable. The restraint will be considered unreasonable if its anti-competitive effects are not outweighed by any counteracting pro-competitive effects. This is referred to as the “Rule of Reason.”

Per Se Violations

  • Although the Rule of Reason is the primary test used to determine if a restraint is unlawful, some restraints are considered to be so destructive that they are presumed to be anticompetitive under the Sherman Act. These are referred to as “per se” violations.
  • The per se violations that are most common in the real estate industry are:
    • Price fixing
    • Group boycotts
    • Certain tying arrangements