Antitrust PowerPoint Presentation

Jim Peters, RCE, CAE, e-PRO
Association Consultant
15 years as the CEO of the Realtor Association of Greater Ft. Lauderdale, and
13 years as the CEO of the South Carolina Association of Realtors
[email protected]
Firstly, the Federal antitrust laws that provide
both criminal penalties, as well as civil penalties
with triple damages:
1. The Sherman Antitrust Act
2. The Robinson Patman Act
3. The Federal Trade Commission Act
In addition, each state has its own antitrust
1. The Antitrust laws are designed to encourage
competitiveness and collaboration.
2. The Antitrust laws specifically prohibit:
 Price Fixing of commissions or commission
 Boycotts
 Non-co-operation
 Denial of access, or restrictions on access, to
market services such as MLS or Lockboxes
Triple damages are automatically awarded in all
Federal antitrust cases.
This means that if a plaintiff can show that over
a course of, say two years, they suffered losses
amounting to $500,000 then the court will
award them three times the amount of proven
damages making the total award $1,500,000
Typically errors and omissions insurance will
cover defense costs in antitrust lawsuits, but not
any actual damages awarded by the courts. That
is why so many defendants go bankrupt!
In 1985 the El Paso Association of REALTORS®
and 67 Brokerage firms were sued because of
alleged anti-competitive practices.
The complainant, a Discount Broker, tested
brokerage companies and taped their
conversations when they would not cooperate
with him.
The Broker filed a complaint with his Realtor
The association took no action when
complaints were lodged because many of
those named in the complaint served in
leadership positions at the association
The El Paso Association was forced into
Bankruptcy defending its position
The Executive Officer had a heart attack, had
open heart surgery and then resigned.
16 Brokerage firms closed their doors
Over 100 Realtors declared bankruptcy
The case was finally settled after five years
Jack Foley was the incoming President of the
Baltimore Maryland Association of REALTORS®
He held a reception for incoming Directors at
his house to build his Leadership Team
He decided to share his reasons for raising the
commission rate charged sellers, quoting
market forces and the need to maintain his
bottom line
Two years passed
Two other Realtors who had been present at the
reception also raised their commission rates
A complaint was filed by local citizens concerned
about the high rate of commissions charged
Jack Foley was arrested and handcuffed at his
house - in front of his children
Headline in the Baltimore News “REALTORS® Conspire to Rip Off Public”
Sentenced to 3 months in jail and fine of $100,000
Spent over $750,000 in defense costs, most of
which were not covered by insurance
Being handcuffed in front of your children
Three months in jail is no fun
Plus a $100,000 fine
$750,000 in defense costs
No wonder Jack Foley went out of business
Antitrust has once again become a hot issue as
new business models emerge in markets across
the country.
Frustrated Brokers, Boards of Directors, and
Agents, have to understand that the antitrust
laws, and our own Code of Ethics, mandate a
competitive climate.
Failing real estate firms are looking for excuses,
and who to blame for their failure.
Complaints may sometimes be filed years after
the boycott or non-cooperation occurred—
damages mount up.
Examples of Realtor association violations
 A local Board of Directors wrote a letter to a
REALTOR® and retired legislator who had a
FSBO Internet Billboard telling him that this
was unethical.
 A local Association wants to proceed with
ethics complaint against REALTOR®/Attorney
advertising on television as a flat fee broker.
Brokers telling Agents not to cooperate with
discount brokers or show their listings.
Agents talking to Agents in other companies
and suggesting they not show the listings of
MLS entry only or flat fee companies.
Listing Agents telling sellers that other Agents
will not show the listings of MLS entry only or
flat fee listed properties.
Examples of typical violations today:
 Four Realtors on a golf course discussing why
they did not like doing business with a discount
broker—won’t show her listings.
 Realtors in a bar disparaging the practices of a
flat fee broker who had just opened his new
In 2014 a number of Realtor Agents were
unhappy with changes in the policy of a local
newspaper that would increase the cost of
advertising and limit access to online
These Agents decided that a boycott of the
local newspaper would force the newspaper to
change its policy. This is an absolute ‘No No’ as
newspapers, like Realtors, have the right to
make business decisions. Boycotts are a
violation of the antitrust laws.
In the 1980s MLSs were targeted by the Federal
Trade Commission concerned about limitations
on “Exclusive Agency” listings
Recently the Justice Department audited 37
MLSs in North Carolina, South Carolina and
Florida to determine whether their pricing
structures, rules and rebate policies were anticompetitive
Two MLSs were found in violation, heavily
fined, and the investigation resulted in class
action lawsuits to recover damages which are
still being paid
Not since the early 80s has real estate and the
MLS faced so much scrutiny by:
1. Department of Justice
2. Federal Trade Commission
3. General Accounting Office
4. Banks and Treasury
The oversight of the real estate industry continues,
and both Realtors and Realtor Associations need to
conduct themselves in accordance with the law and
our own Code of Ethics

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