Federal Judge Upholds 'Adverse Commission Splits'

RE/MAX International Inc. v. Realty One Inc., DC NOhio, No. 1:94 CV 0062

July 1, 1996

CLEVELAND---Realty companies can legally impose "adverse commission splits" on cooperating brokers from other companies as long as they do so unilaterally and not by agreement with another company.

That is the gist of a decision from a judge of the U.S. District Court for Northern Ohio.

RE/MAX International, a 100 percent commission franchise network, had accused two Ohio companies, Realty One and Smythe Cramer, of violating federal antitrust law by imposing reduced commission splits for RE/MAX brokers.

The legal action stemmed from payment practices that the two Ohio companies originated in 1987.

RE/MAX charged that Realty One and Smythe Cramer modified their payment policy in retaliation for the fact that RE/MAX had recruited some of their salespeople. Under the policy, RE/MAX salespeople who cooperate with Realty One and Smythe Cramer receive commission splits that are substantially lower than what the two companies pay to cooperating brokers from other companies.

The judge ruled that the market shares of Realty One and Smythe Cramer were too low to support a finding of monopoly power in the markets they allegedly monopolized.

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