FTC weighs in on antitrust allegations leveled against CoStar
CoStar’s residential business has managed to avoid the antitrust cases rocking the industry, but it’s a different story on the commercial side.
CoStar has been able to steer clear of the antitrust issues bedeviling the residential side of real estate, which has been hammered with lawsuits claiming MLSs, brokerages and associations are engaging in anticompetitive practices.
But federal officials want courts to reconsider antitrust allegations against CoStar's commercial real estate business.
What is this case about? At issue is whether CoStar engaged in monopolistic practices by blocking brokers from sharing listing information with CoStar's competitors "on threat of losing access to CoStar's services."
The suit started with a copyright infringement case brought by CoStar against Commercial Real Estate Exchange Inc. (CREXi) in 2020.
"CREXi is attempting to build its own online commercial real estate marketplace and auction platform by free-riding on CoStar's billions of dollars of investments and the thirty-plus years of hard work by CoStar's employees," the original suit alleges.
CREXi countersued, accusing CoStar of unfair and monopolistic behavior that resulted in inflated prices for its services: "With a market cap of $25 billion, CoStar is the CRE industry behemoth, with a size and reach that far exceeds any company in the history of these markets," the counterclaim alleges. "Today, CoStar enjoys monopoly power in the relevant markets for internet CRE listing, information, and auction services in at least 50 specific metropolitan areas across the United States."
What are the new developments? In an amicus brief filed with the Ninth Circuit Court of Appeals on Jan. 26, the Federal Trade Commission said a lower court used faulty standards in dismissing CREXi's antitrust counterclaims against CoStar in February 2023.
"The Federal Trade Commission is concerned that the district court committed three fundamental legal errors that, unless corrected, could shield harmful monopolistic conduct from antitrust review," the brief states.
The FTC said it was not taking a position on the question of whether CoStar was illegally operating as a monopoly, but acknowledged it is investigating the allegations.
"This brief is based solely on the complaint allegations and not any information the FTC may have learned in this or any other matter," the FTC said in the brief.