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The Sherman Antitrust Act regulates all kinds of businesses within the United States, preventing them from forming monopolies and infringing on consumer rights.
But what does that have to do with the real estate industry? The Sherman Antitrust Act plays a vital role in regulating the housing industry just like any other. Any real estate professionals who violate federal antitrust law could find themselves in a whole lot of trouble. Let's talk about that!
Here are the chapters for this video. Feel free to jump around accordingly:
0:00 Introduction
0:33 What Is the Sherman Antitrust Act?
1:26 What are the Antitrust Laws?
1:55 The Sherman Antitrust Act and Real Estate
2:37 Antitrust Law Violations
4:55 Penalties for Antitrust Law Violations
5:40 What Is the Clayton Act?
6:17 What Is the Federal Trade Commission Act?
7:09 What Do You Need to Know for the Exam?
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0:00
the Sherman Antitrust Act regulates all
0:02
kinds of businesses within the United
0:04
States preventing them from forming
0:06
monopolies and infringing on consumer
0:08
rights but what does that have to do
0:10
with the real estate industry well the
0:12
Sherman Antitrust Act plays a vital role
0:14
in regulating the Housing Industry just
0:16
like any other any real estate
0:18
professionals who violate Federal
0:20
antitrust law could find themselves in a
0:22
whole lot of trouble hello everybody
0:23
it's Zach here from Real Estate
0:24
licensewizard.com today we're talking
0:27
about the Sherman Antitrust Act we're
0:30
going to be covering what you need to
0:31
know its definition and give some
0:32
examples let's get started so what is
0:35
the Sherman Antitrust Act well the
0:37
Sherman Antitrust Act is the First
0:38
Federal Law prohibiting contracts
0:41
conspiracies or agreements that restrain
0:43
trade this act also prohibited
0:45
businesses from forming monopolies or
0:48
trusts a monopoly is when one seller in
0:50
the market is offering a commodity
0:51
service or good the seller has no
0:54
competition so they can raise their
0:55
prices to any rate they see fit the
0:58
consumer has no choice but to buy from
1:00
the Monopoly and is entirely at their
1:02
Mercy regarding pricing luckily
1:04
colluding or merging to form a monopoly
1:07
is now considered unlawful thanks to the
1:09
Sherman Antitrust Act and other
1:11
antitrust laws now while the Sherman
1:13
Antitrust Act created an important
1:16
precedent we should note that it has
1:19
since been replaced with new Federal
1:20
Acts that better uphold antitrust
1:22
legislation which don't worry we'll talk
1:25
about in this video so what are the
1:27
antitrust laws specifically well
1:28
antitrust laws are a collection of
1:30
federal and state government laws that
1:32
regulate the conduct and organization of
1:34
business corporations these laws
1:37
typically aim to promote Fair
1:38
competition for the benefit of consumers
1:41
the three major Anti-Trust laws are the
1:44
Sherman Antitrust Act The Clayton Act
1:46
and the Federal Trade Commission act so
1:48
let's start with the Sherman Antitrust
1:50
Act why exactly was that pass and where
1:52
does that fit into everything so
1:54
originally the Sherman Antitrust Act was
1:56
passed in 1890 to break up big
1:59
monopolies dominating their markets at
2:01
the time some of those were Standard Oil
2:03
American Tobacco JP Morgan they were all
2:06
single sellers of their goods in the
2:08
United States Market the Sherman
2:10
Antitrust Act broke up these trusts
2:12
which helped regulate the prices of
2:14
goods and gave consumers more power now
2:16
you might be wondering what does this
2:17
have to do with real estate right well
2:19
the Sherman Act prohibits several
2:21
behaviors that compromise a fair housing
2:23
market so one of which is price fixing
2:25
big riving group boycotting Market
2:28
allocation tie-in agreements I'll put
2:30
those on the screen for you now these
2:32
are all examples of antitrust violations
2:34
in real estate but what exactly do they
2:36
each do let's talk about that so first
2:39
price fixing price fixing is a practice
2:41
of setting the price of a good or
2:43
service to make a particular price a
2:45
standard any agreement even if it's just
2:48
implied with other brokerages to set a
2:51
standard commission rate violates
2:53
Anti-Trust law one example of price
2:55
fixing would be two Brokers getting
2:57
together and agreeing to off their their
2:59
clients the same price or commission
3:01
rate this interferes with the fair
3:03
market and means that clients will have
3:05
to pay higher prices next is Bid rigging
3:09
bid rigging is an illegal practice where
3:11
competitors agree in advance on who will
3:13
win a bid on a property this creates
3:16
higher pricing than what would have
3:18
normally naturally occurred in a free
3:20
market effectively cheating consumers
3:22
into paying more for example if two
3:24
competing real estate agents agree to
3:26
take turns being the lowest bidder to
3:29
drive up the price of the home sale that
3:31
would be considered big rigging or bid
3:34
rigging next would be group boycotting
3:36
this is when two or more people conspire
3:39
against another business by no longer
3:41
supporting or working with it for
3:43
example if two Brokers agreed never to
3:45
conduct business with a third broker to
3:48
have less competition that's a clear
3:50
your violation of the Sherman Antitrust
3:52
Act another one is Market allocation
3:55
that is when real estate brokers divide
3:58
the market amongst themselves so they
3:59
don't have to compete with each other
4:00
this behavior is considered engaging in
4:03
monopolistic practices and it violates
4:06
antitrust law one example of Market
4:09
allocation is if Brokers decided to
4:11
split up their area into different
4:12
regions designating a different real
4:14
estate agent for each spot this means
4:16
that within each region there is no
4:18
competition and home sellers will end up
4:20
having to pay more and then finally tie
4:23
in Arrangements a tie-in Arrangement is
4:25
when sellers require the purchase of
4:28
another separate product or service for
4:30
the sale of the first an example of a
4:32
tie-in agreement would be if a real
4:33
estate agent agreed to sell a property
4:35
only if the buyer agrees to list the
4:37
property with their firm so that's
4:40
pretty much the ones that you need to
4:42
know that have to pertain to the Sherman
4:43
Antitrust Act and I actually am going to
4:45
go in details on this channel with each
4:48
one of those as well so keep your eyes
4:50
out for that if you fully didn't
4:51
understand this when I went through them
4:53
so what are the penalties then for
4:55
violating the Sherman Antitrust Act well
4:57
the penalties for breaking these laws
5:00
include Hefty fines and even jail time
5:02
in some cases many people normally don't
5:05
pursue legal action against offenders as
5:08
the cost and time that went into these
5:11
court cases were normally not deemed
5:13
fully worth it but that has since
5:16
changed the government and specifically
5:18
the Supreme Court has changed kind of
5:21
how these things work nearly making
5:23
these original Anti-Trust laws obsolete
5:25
but many consumers didn't feel they
5:28
could win originally these Anti-Trust
5:30
law cases against big businesses which
5:33
is why they came up with these new ones
5:35
these new acts which brings us up to The
5:38
Clayton Act so what is The Clayton Act
5:41
well like the Sherman Antitrust Act The
5:43
Clayton Act of 1914 was designed to
5:45
break up monopolies and ensure Fair
5:47
competition in the market so what does
5:49
that have to do with the Anti-Trust law
5:52
originally that the you know Sherman
5:54
Antitrust Act maybe didn't include well
5:57
The Clayton Act strengthened the
5:58
original antitrust law explicitly
6:01
listing business practices that would
6:03
compromise a fair market so no longer
6:05
could businesses find loopholes around
6:07
the Sherman Act these new antitrust laws
6:10
were clear and Final in fact we still
6:12
operate under these laws today
6:13
additionally there was the Federal Trade
6:16
Commission act which is the Federal
6:18
Trade Commission Act of 1914 which
6:20
enforces The Clayton Act and ensures
6:22
Fair practices in all markets including
6:25
housing any real estate business must
6:27
ensure they're meeting the legal
6:29
standards of the FTC by not breaking
6:31
antitrust laws the FTC act also declared
6:34
strikes boycotts and labor unions were
6:36
legal under Federal antitrust laws this
6:39
gave consumers even more power as big
6:41
businesses couldn't take advantage of
6:43
them without the threat of those
6:45
repercussions that they originally did
6:46
face now if a company were unethical and
6:50
pretty much any way consumers could stop
6:52
buying its goods and can support the
6:54
competition instead if a business wasn't
6:56
treating its employees well it could
6:58
organize within itself a labor union and
7:01
go on strike essentially acts like The
7:03
Clayton Act and the Federal Trade
7:05
Commission act are the new and approved
7:07
versions of the Sherman Antitrust Act so
7:09
what do you need to know for the real
7:11
estate exam well for the real estate
7:12
exam it's essential you're aware of what
7:14
antitrussels are and their history
7:16
remember Anti-Trust laws are the
7:18
collection the federal and state
7:19
government laws that regulate the
7:21
conduct and organization of business
7:23
corporations antitrust laws help a
7:25
healthy real estate economy and as a
7:27
real estate professional you must be
7:29
aware of them and of course follow them
7:30
and it all started with the Sherman
7:32
Antitrust Act so remember that coming
7:35
exam day if you want more videos about
7:37
this specifically about antitrust laws
7:40
or even fair housing in general click
7:42
the video here for more and click here
7:44
to subscribe thank you guys so much for
7:46
watching I'll see you guys next time bye
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