agreement, auction, Auction Law, auctioneer, auctioneers, auctions, collusion, commissions, discussion forum, discussion forums, economic harm, harm competition, National Auctioneers Association, Sherman Antitrust Act
- “I’ve been an auctioneer selling horses every Friday for nearly 10 years. I just got a call to sell some antique furniture and other collectibles.
- Because I’ve never done such an auction, I wonder if others can post what they normally or customarily charge (commission, fees) for such an auction. Thanks!”
Technically, colluding on price amongst competitors, also known as horizontal price fixing, is viewed as a per se violation of the Sherman Antitrust Act regardless of the market impact or alleged efficiency of the action.
Yet, it’s important to note that the United States Supreme Court has consistently ruled that such is not a violation within the context of ethics and/or public safety.
The thought here is that if such collusion results in a higher degree of ethical behavior and/or an increase in public safety, then it is indeed permitted activity.
What is a per se violation? A violation that is inherently so. In other words, obvious, and “in itself” a violation.
As a side note — in 2007, the United States Supreme Court ruled that vertical price fixing by a manufacturer and its retailers, also known as retail price maintenance, is not a per se violation.
Nevertheless, we explore here auctioneers discussing commissions with their competitors. Such discussions take place in person, via email, on discussion forums, and otherwise. We suggest two important points here:
- The actual discussion amongst competitors itself is not a violation of the Sherman Antitrust Act.
- Even if such discussion results in collusion, such action is not a violation of the Sherman Antitrust Act if it promotes professionalism and/or ethical behavior.
Our auctioneer here who has sold horses at auction for nearly 10 years has little knowledge of what to charge a potential client for an antiques and collectibles auction. Therefore, he asks his fellow auctioneers on a discussion forum for their help.
What is the potential problem here?
If it was found that because of this post on a discussion forum, seven other auctioneers belonging to this group posted that they charged a certain percentage, and then other auctioneers of this group adjusted their rates to this same percentage — to the detriment of the public, or as the courts have ruled:
- If such creates inappropriate economic harm or if it unreasonably harms competition …
… then such postings on a discussion forum might be used to substantiate a violation of the Sherman Antitrust Act.
Or, they might not, especially if the discussion and related postings did not result in economic harm nor harm competition, or the discussions were within the context of ethics and/or public safety.
And, we should note that the issue here isn’t the “discussion forum” itself as such collusion could take place in person, via email, or otherwise. The discussion forum platform gets the most attention because it provides a publicly accessible permanent record of such — different from say a telephone conversation which is typically unrecorded.
Can an auctioneer discuss commissions with competitors? Yes, that is completely permissible and not a violation of the Sherman Antitrust Act; can an auctioneer discuss commissions with competitors with the intent of (or resulting in) economic harm or harm to competition? No, this would be a violation of the Sherman Antitrust Act.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Greater Columbus Auctions and Goodwill Columbus Car Auction and. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.