United States v. Foley case brief

United States v. Foley case brief summary

FACTS
During a dinner party hosted by Foley, he stood up and announced that his firm was raising its commission rate across the board, from six percent to seven percent, regardless of what the other firms did. Within the following months, several other firms with representatives at the dinner party also raised their commission rate to seven percent.

Notable Facts

• There was evidence of efforts to force other firms to raise their rates from some of the defendants, including specific calls demanding quick increases of commissions.
• There had been several prior failed attempts to raise the commission by individual firms.
• The depression due to the oil-shocks had created a market where all the realtors were doing quite poorly.
• There was sufficient evidence for the jury to find that several other corporate defendants had also stated that they were raising their commission at the dinner.
• Foley was head of the trade association.

Analysis

• It was extremely easy for the realtors to increase consensus; they simply created a focal rule that moved from six percent to seven percent commission.
• Since every real estate transaction involved firms for both the buyer and the seller, it would have been extremely difficult to keep cheating secret; even giving secret rebates to customers require subsidizing the other firms’ “rebate” making it doubly expensive.
• Entry into the field is quite difficult and exclusion is simple, since real estate firms can refuse to deal with new realtors and real estate depends quite heavily upon reputation.
• Evaluating the economic sense of a potential agreement has made economic principles part of the plus factors.

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