Final answer:
Agencies that agree to raise commission charges to 8% are likely engaging in price fixing, which is generally illegal. Such collusion undermines market competition and is subject to antitrust laws designed to maintain a competitive environment. Care must be taken to adhere to legal standards and avoid illicit business practices.
Step-by-step explanation:
When two leading agencies agree to raise commission charges for a certain class of client to 8% of the sale price, they may be engaging in price fixing, which is generally illegal. Price fixing occurs when businesses collude to set the prices of goods or services, rather than letting competition in the market determine them.
In many jurisdictions, it is illegal for firms to set fixed prices or to create arrangements that partition the market, because such actions can reduce competition and harm consumers. While firms may be tempted to earn higher profits by defying the law, regulations exist to prevent outright collusion and protect the competitive process.
Even subtle agreements that may not be outright minimum price contracts can come under scrutiny. As such, the scenario in which brokers jointly agree to set a commission fee could be considered illegal and may be subject to regulatory or legal action. Firms should navigate these gray areas carefully to ensure they remain compliant with antitrust laws that proscribe such cooperative pricing strategies.