An illegal agreement between competing brokerages to set uniform commission rates.
Why Price Fixing matters on the exam
This term belongs to Practice of Real Estate. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Price Fixing
Every Freehold question shows why the right answer is right — and cites its source.
Two competing brokerages agree to charge the same minimum commission rate. This is:
A lawful industry custom
Illegal price fixing under antitrust law
Permitted if disclosed to clients
Allowed with board approval
Show answer & explanation
Illegal price fixing under antitrust law — Agreements between competing brokerages to set commission rates constitute price fixing, a per se violation of the Sherman Antitrust Act. Each brokerage must set its fees independently, and rates are always negotiable.
Source: Sherman Antitrust Act (15 U.S.C. §1)
Which of the following brokerage practices is a per se violation of the Sherman Antitrust Act?
A broker independently setting a 6% commission rate
A broker offering a reduced commission to attract sellers
A broker advertising a limited-time discount on listing fees
Two competing brokers agreeing on the commission rate they will each charge
Show answer & explanation
Two competing brokers agreeing on the commission rate they will each charge — Agreements between competing brokers to fix commission rates are per se illegal price fixing under the Sherman Act, regardless of intent, because they eliminate price competition between rivals.
Source: Sherman Antitrust Act (15 U.S.C. §1)
In antitrust law, why are practices like price fixing and market allocation treated as 'per se' illegal rather than judged under a 'rule of reason' analysis?
They are considered so inherently harmful to competition that no justification excuses them
They require proof of actual harm to consumers before being punished
They only apply to publicly traded companies
They are illegal only if a written agreement exists
Show answer & explanation
They are considered so inherently harmful to competition that no justification excuses them — Per se violations are conduct courts deem so consistently harmful to competition that they are condemned automatically, without requiring proof of actual anticompetitive effect or intent.
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