What federal legislation prohibits real estate firms from agreeing to charge the same commission rate?

What federal legislation prohibits real estate firms from agreeing to charge the same commission rate?

• A. Fair Housing Act
• B. Clayton Antitrust Act
• C. The Sherman Antitrust Act of 1890
• D. Real Estate Settlement Procedures Act

Answer: (C)

The Sherman Antitrust Act of 1890 is a critical piece of federal legislation aimed at promoting competition and preventing monopolistic practices in the marketplace. One of the key principles established by this act is the prohibition of agreements between businesses to set prices, including commission rates. This means that real estate firms cannot collaborate to fix commission rates, as such actions would reduce competition and could potentially harm consumers by keeping prices artificially high. The act targets practices that restrain trade, and price-fixing is a clear violation of this principle. In the context of real estate, if firms were to agree on the same commission rates, it would limit the choices available to consumers and restrict the natural fluctuations in pricing that occur in a competitive market. Therefore, when it comes to commissions for real estate transactions, adherence to the Sherman Antitrust Act is vital to ensure a fair and functioning market. In contrast, the other options pertain to different aspects of real estate and consumer protection laws. The Fair Housing Act focuses on preventing discrimination in housing; the Clayton Antitrust Act expands on the provisions of the Sherman Antitrust Act but specifically addresses issues like price discrimination and corporate mergers; and the Real Estate Settlement Procedures Act primarily deals with the disclosures and practices related to real estate settlement services.

The Sherman Antitrust Act of 1890 is a critical piece of federal legislation aimed at promoting competition and preventing monopolistic practices in the marketplace. One of the key principles established by this act is the prohibition of agreements between businesses to set prices, including commission rates. This means that real estate firms cannot collaborate to fix commission rates, as such actions would reduce competition and could potentially harm consumers by keeping prices artificially high.

The act targets practices that restrain trade, and price-fixing is a clear violation of this principle. In the context of real estate, if firms were to agree on the same commission rates, it would limit the choices available to consumers and restrict the natural fluctuations in pricing that occur in a competitive market. Therefore, when it comes to commissions for real estate transactions, adherence to the Sherman Antitrust Act is vital to ensure a fair and functioning market.

In contrast, the other options pertain to different aspects of real estate and consumer protection laws. The Fair Housing Act focuses on preventing discrimination in housing; the Clayton Antitrust Act expands on the provisions of the Sherman Antitrust Act but specifically addresses issues like price discrimination and corporate mergers; and the Real Estate Settlement Procedures Act primarily deals with the disclosures and practices related to real estate settlement services.