Zillow, Redfin seek dismissal of FTC suit over rentals deal
A Jan. 13 motion argues that the FTC has provided no evidence of antitrust violations, and renters and property managers benefit from the listings partnership.
Insisting that their rentals partnership makes "renters and property managers better off," Zillow and Redfin asked a U.S. District court to dismiss a case filed by the Federal Trade Commission and five states.
What this case is about: The FTC filed an antitrust lawsuit against the real estate portals on Sept. 30 alleging that an agreement between the two companies was anticompetitive. One day later, five state attorneys general filed a similar suit; the two cases were merged in late November.
At issue is a syndication deal announced last February, in which Zillow agreed to pay $100 million to be the exclusive provider of multifamily rental listings for Redfin and its owned rental sites, Rent.com and ApartmentGuide.com. The lawsuits claim the partnership was a conspiracy to eliminate competition.
No harm to consumers — only benefits, attorneys argue: In a motion to dismiss filed Jan. 13 in the Eastern District of Virginia, attorneys for Zillow and Redfin indicated that Redfin had struggled to grow its rental listings over the last few years, whereas Zillow had a good supply.
"Both renters and property managers benefit from the Partnership. Prospective renters who prefer Redfin's listing service now can view Zillow's broad inventory of listings on Redfin's Website and Redfin is able to use the money it was spending on its underperforming rental advertising business to compete against Zillow and others for even more renters — including by adding content to make Zillow's listings more attractive and by using Zillow's listings to optimize its own search engine," the filing states.
In addressing the antitrust claims, attorneys for the portals noted that the case is focused on rental advertising customers — but notably leaves renters out of the equation — adding that there are many ways to advertise rental properties to potential renters, including targeted internet advertising and social media marketing.
While the plaintiffs claim the deal will result in "undue concentration," they don't present any evidence of market share concentration for Zillow, Redfin or other competitors to support that conclusion, according to the filing.
"Plaintiffs have not alleged any harm to renters using the Zillow and Redfin listing services, have not pled markets that capture the full breadth of competition for rental advertising, and have not even tried to allege that Defendants have sufficient market power to harm competition. Each of those pleading failures warrants dismissal in its own right," the filing states.
What the FTC previously said: In the original complaint, the FTC noted that the deal resulted in the termination of some 450 Redfin employees who had supported the company's rental listing business.
The "obviously anticompetitive" agreement will mean "reduced choice, higher prices, and reduced quality" for multifamily rental advertising customers, the complaint added.