Two brokers secretly agree to charge identical commissions and divide service territories. These practices violate:
Audio Lesson
Duration: 2:15
Question & Answer
Review the question and all answer choices
Federal Equal Credit Opportunity Act
The Equal Credit Opportunity Act prohibits discrimination in credit transactions, not anticompetitive practices among real estate brokers. This option tests whether students confuse consumer protection laws with antitrust regulations.
Federal Sherman Antitrust Act
California Attorney-Broker Professional Conduct Act
While California has professional conduct regulations, there is no specific 'Attorney-Broker Professional Conduct Act.' This option represents a distractor using incorrect terminology to test knowledge of actual California regulatory bodies.
California Fair Employment and Housing Act
The Fair Employment and Housing Act prohibits discrimination in housing based on protected characteristics, not anticompetitive business practices among brokers. This option tests whether students confuse fair housing laws with antitrust regulations.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests understanding of antitrust laws in real estate, a critical concept for California licensees. The scenario describes two brokers engaging in price-fixing (charging identical commissions) and market division (dividing service territories), both clear violations of antitrust laws. Understanding this matters because violations can result in severe penalties including fines and license revocation. The question requires recognizing that while all options are real laws, only one specifically addresses anticompetitive practices among businesses. California brokers must understand that agreeing on pricing or dividing markets with competitors is illegal under federal antitrust laws, not just state-specific regulations. This question is challenging because it tests knowledge beyond California-specific real estate laws to include federal business regulations that apply to real estate brokerage.
Knowledge Background
Essential context and foundational knowledge
The Sherman Antitrust Act of 1890 is a landmark federal law that prohibits anticompetitive business practices. In real estate, this applies to broker agreements on commission rates, territory divisions, or other practices that reduce competition. California Business and Professions Code § 10100-10240 also prohibits certain anticompetitive practices specifically within real estate brokerage. These laws exist to protect consumers from artificially inflated prices and ensure fair market competition among brokers.
Think of real estate brokers as runners in a race - antitrust laws prevent them from agreeing beforehand who will win or what pace they'll all run at.
When encountering questions about broker agreements, visualize the race analogy to identify potential antitrust violations
When seeing questions about broker agreements on pricing or territories, immediately think 'antitrust violation' as these are classic examples of Sherman Act violations.
Real World Application
How this concept applies in actual real estate practice
Imagine two competing brokerage firms in the same neighborhood agreeing to both charge 6% commission and splitting the area east-west. This would eliminate price competition and consumer choice. If discovered, brokers could face federal antitrust violations, significant fines, and potential license suspension. In practice, brokers must independently set their commission rates based on market conditions and service value, not coordinate with competitors.
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