Antitrust laws

Key Takeaways

• Antitrust laws protect competition by outlawing agreements that restrain trade, including price fixing, market allocation, and group boycotts.
• The federal Sherman Act prohibits agreements in restraint of trade, and Washington's Consumer Protection Act says the same at RCW 19.86.030, which declares every contract, combination, or conspiracy in restraint of trade or commerce unlawful.
• There is no standard or customary commission rate. Each firm sets its fees on its own, and an agreement with a competing firm about those fees is price fixing.
• The violation is the agreement itself. RCW 19.86.030 declares the contract, combination, or conspiracy unlawful, so no client has to prove an overcharge for the law to be broken.

What It Means

Antitrust laws are the federal and state rules that keep competitors competing. The federal Sherman Act prohibits agreements in restraint of trade, and the patterns it catches in real estate are short and specific.

Price Fixing is an agreement among competing firms about what to charge, whether that is a listing fee, a buyer broker fee, or how a fee gets split. Market allocation is an agreement to divide up territory, price ranges, or property types so the firms stop competing for each other's business. A Group Boycott is an agreement among firms to refuse to deal with a particular competitor, often a discount or flat fee brokerage, or to refuse to show its listings.

The common thread is agreement. A firm may set any fee it likes, decline any listing it likes, and work any territory it likes, so long as it decides on its own. The moment that decision is made jointly with a competitor it becomes a restraint of trade, and in real estate the competitor is usually the broker sitting across the table at a networking lunch.

How It Works in Washington

In Washington, the state hook is the Consumer Protection Act, chapter 19.86 RCW. RCW 19.86.030 declares unlawful every contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce. RCW 19.86.020 sits beside it and declares unlawful unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. RCW 19.86.010 defines trade and commerce to include the sale of assets or services and any commerce directly or indirectly affecting the people of the state of Washington, which is wide enough to cover brokerage services.

Enforcement is not only the attorney general's job. RCW 19.86.090 lets an injured person bring a civil action in superior court to enjoin further violations and to recover actual damages, together with the costs of the suit and a reasonable attorney's fee. The court may increase the award up to three times the actual damages, and for a violation of RCW 19.86.020 that increase may not exceed twenty-five thousand dollars.

The Nar Settlement is why this reached every listing appointment. It resolved antitrust class claims about offers of compensation. MLSs affiliated with the National Association of REALTORS put the practice changes in place on August 17, 2024, and the court granted final approval in late November 2024. Under those changes offers of compensation are no longer shared on the MLS, and NAR members working with buyers sign a written buyer agreement before touring a home.

Example

Kara Ostrander of Summit Pacific Realty and Devon Muir of Harbor Line Group sit together at a chamber lunch and agree that neither firm will quote a listing fee below 3 percent. Two months later Kara takes the Nguyen family's Everett listing at $650,000 and quotes 3 percent, or $19,500, telling them nobody in this market goes below three. Harbor Line had quoted the Nguyens 2.5 percent, or $16,250, the week before that lunch, and now declines to repeat the number.

The $3,250 difference is what the Nguyens can point to, but the violation happened at the lunch. RCW 19.86.030 declares the agreement itself unlawful, and neither broker had to sign anything to make one. Under RCW 19.86.090 the Nguyens can sue in superior court for their $3,250 in actual damages plus costs and a reasonable attorney's fee, and ask the court to increase the award up to three times that amount, which would be $9,750.

Common Mistakes and Exam Traps

• There is no standard, customary, or board-set commission rate. An answer that says the local board or the MLS sets the rate is describing price fixing.
• Acting alone is legal. One firm deciding on its own not to co-broke with a discount brokerage is a business decision, and two firms agreeing to it is a group boycott.
• Market allocation does not need a written contract or a map. An understanding between two managing brokers that one takes the north end and the other takes the south end is an agreement.
• The 2024 NAR settlement is an antitrust matter, not a licensing rule. It came out of class action litigation over offers of compensation, and the practice changes took effect for NAR affiliated MLSs on August 17, 2024.