Question

In 1986, Market Force, Inc. (MFI), began operating in the Milwaukee real estate market as a buyer's broker. MFI and prospective home buyers entered into exclusive contracts providing that MFI would receive a fee equal to 40 percent of the sales commission if it located a house that the buyer ultimately purchased. This 40 percent commission was the same commission selling brokers (those who ultimately produced a buyer, but whose duty of loyalty was to the seller) earned when they sold property placed on the local multiple listing service (MLS) by other brokers. MFI's contracts anticipated that the buyer would ask the listing broker (the one who had listed the property for sale on behalf of its owners and who received 60 percent of the commission when the property was sold) to pay MFI the commission at the time of the sale. If the listing broker agreed to do so, the buyer had no further obligation to MFI. For some time after MFI began operations, other real estate firms treated it inconsistently; some paid the full 40 percent commission but others paid nothing. In the fall of 1987, Wauwatosa Realty Co. and Coldwell Banker, the top two firms listing high quality homes in Milwaukee, issued formal policies on splitting commissions with buyer's brokers. Wauwatosa said it would pay 20 percent of the selling agent's 40 percent commission. Coldwell Banker said it would pay 20 percent of the total sales commission. Several other real estate firms followed suit, setting their rates at 10 or 20 percent of the total sales commission, with the result that firms accounting for 31 percent of the annual listings of the MLS adopted policies and disseminated them to other MLS members. MFI filed suit against the brokers who had announced policies, arguing that they had conspired to restrain trade in violation of § 1 of the Sherman Act. At trial, the defendants introduced evidence of numerous business justifications for their policies and argued that their knowingly having adopted similar policies was not enough, standing alone, to justify a conclusion that the Sherman Act was violated. Was this argument correct?



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  • CreatedJuly 16, 2014
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