PSI New Jersey Real Estate State Practice Exam

Which antitrust law might be suspected to be violated if two brokers discuss commission rates in a public setting?

1. Robinson-Patman Act

2. Sherman Antitrust Act

3. Clayton Act

4. Federal Trade Commission Act

The correct answer is: Sherman Antitrust Act

The Sherman Antitrust Act would likely be the law suspected to be violated in the scenario where two brokers discuss commission rates in a public setting. This act, originally passed in 1890, is designed to prevent anticompetitive practices and promote fair competition. It prohibits activities that restrain trade or commerce, including collusion among competitors to set prices, which is essentially what the brokers are doing by discussing commission rates. When brokers discuss their commission rates, especially in a public setting where others can overhear, it can be perceived as an attempt to fix prices, which would be a direct violation of the Sherman Act. Such discussions can lead to uniform pricing among the brokers, which undermines competitive market pricing, harming consumers by potentially leading to higher costs. In contrast, the other laws, while relevant to various facets of trade practices and competition, do not specifically address the issue of price-fixing in the same direct manner as the Sherman Antitrust Act. The Robinson-Patman Act deals more with price discrimination, the Clayton Act focuses on specific anti-competitive practices like mergers and acquisitions, and the Federal Trade Commission Act establishes the Federal Trade Commission to enforce antitrust laws broadly but does not focus specifically on the collusion in pricing that the Sherman Act