Conspiracy to boycott

Key Takeaways

• A conspiracy to boycott takes an agreement between two or more competitors. One firm deciding on its own not to work with a discounter is a lawful business decision.
• RCW 19.86.030 declares unlawful every contract, combination, or conspiracy in restraint of trade or commerce, so a boycott is reachable under Washington law as well as the federal Sherman Act.
• The Federal Trade Commission treats an agreement among competitors not to do business with targeted individuals or businesses as a possible illegal boycott, especially where the group has market power.
• A person injured by a violation of RCW 19.86.030 can sue in superior court, and the court may increase the award up to three times the actual damages under RCW 19.86.090.

What It Means

A conspiracy to boycott is an agreement among competitors to cut a particular firm, broker, or consumer out of the market. In real estate it usually looks like two or more brokerages quietly agreeing not to show a discount firm's listings, not to cooperate with a new flat fee competitor, or not to send business to a particular vendor.

What makes it a conspiracy is the agreement, not the refusal. Any single firm is free to decide on its own which listings it shows and who it will work with, and the Federal Trade Commission says plainly that a company may, on its own, refuse to do business with another firm. The moment competing firms coordinate that decision, the conduct changes character. It stops being competition and becomes a private rule about who is allowed to compete.

Antitrust Laws treat this as one of the classic restraints of trade, sitting beside price fixing and market allocation. The FTC's guidance is that an agreement among competitors not to do business with targeted individuals or businesses may be an illegal boycott, especially if the group of competitors working together has market power. In brokerage, a few large firms in one county can carry that kind of power.

How It Works in Washington

Washington reaches boycotts through the Consumer Protection Act. RCW 19.86.030 says that every contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is hereby declared unlawful. That language tracks section 1 of the federal Sherman Act, 15 U.S.C. 1, which declares illegal every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States. A Sherman Act violation is a felony, punished by a fine not exceeding $100,000,000 for a corporation, or for any other person $1,000,000, or imprisonment not exceeding 10 years, or both.

The state side has teeth of its own. Under RCW 19.86.090 a person injured in business or property by a violation of RCW 19.86.030 may bring a civil action in superior court, and the court may in its discretion increase the award up to an amount not to exceed three times the actual damages sustained. Those are the Treble Damages brokers hear about in Consumer Protection Act training, and the twenty-five thousand dollar cap in that statute applies to increased damages for violations of RCW 19.86.020, not to RCW 19.86.030.

Set that against the way brokerage works day to day. Cooperation between competing firms through the Multiple Listing Service is normal and legal. The line is crossed when firms agree with each other about who gets that cooperation. Steering business away from a competitor because that competitor charges less is the fact pattern to watch, and it belongs on the same risk list as conflicts of interest under Washington's real estate laws.

Example

Four managing brokers in Spokane meet for coffee. A new firm, ClearPath Realty, has started listing homes for a flat $3,500 fee instead of the percentage the four are used to. Over the table they agree that none of their 120 brokers will show ClearPath listings and none will accept a ClearPath cooperating offer.

Two weeks later a buyer's broker at one of the four firms declines to show a ClearPath listing priced at $525,000 and says so in an email to her client. That email, plus the coffee shop agreement, is the case. The four firms are exposed under RCW 19.86.030 and under the Sherman Act even though ClearPath is still open and no consumer can point to a single overcharge. The seller whose $525,000 listing sat unshown can sue in superior court for actual damages, and under RCW 19.86.090 the court may increase that award up to three times the amount proved. A $20,000 loss becomes a $60,000 exposure, before costs.

Common Mistakes and Exam Traps

• A single firm refusing to work with a competitor is not a boycott. The violation needs an agreement among two or more competitors.
• Price fixing and boycotting are close cousins but different acts. Price fixing is an agreement about what competitors charge; a boycott is an agreement about who competitors will deal with.
• The target does not have to be driven out of business, and no consumer has to prove an overcharge, for the agreement itself to be unlawful under RCW 19.86.030.
• The twenty-five thousand dollar cap on increased damages in RCW 19.86.090 is tied to violations of RCW 19.86.020. Do not attach it to a restraint of trade claim under RCW 19.86.030.