Antitrust Suit Against CoStar Should Be Revived, Appeals Court Rules

A court will consider antitrust claims against real estate information company CoStar Group after a federal appeals court deemed a competitor’s arguments credible.

Los Angeles-based CREXi, which operates an online commercial real estate marketplace, “plausibly” argued that CoStar could be in violation of the Sherman Antitrust Act and wield monopoly power over the commercial real estate data market, the U.S. Court of Appeals for the 9th Circuit said in an opinion published Monday.

CREXi made its arguments in a countersuit after CoStar sued it in September 2020, alleging “flagrant and widespread theft of CoStar's intellectual property.” 

In the original suit, CoStar sought a series of damages from CREXi for what it claims was a scheme to build its business using stolen content, including thousands of pictures, from CoStar.

A district court denied CREXi’s motion to dismiss CoStar’s copyright infringement claims, and the appeals court upheld that decision. But appellate judges reversed the district court's dismissal of CREXi's antitrust counterclaims, meaning the matter will return to a lower court for reconsideration. 

In a statement sent to Bisnow, CoStar alleged that CREXi harvests CoStar content, deliberately piggybacking on a competitor, adding that trial on its infringement claims is imminent.

Regarding the revival of CREXi’s antitrust claims, CoStar “remains confident that the facts will refute CREXi’s baseless accusations” during discovery, it said in the statement.

“We are disappointed and respectfully disagree with the decision to permit the antitrust claims to proceed — a decision which, as many federal antitrust enforcers warned, now paves the way for future lawsuits that are similarly meritless,” Gene Boxer, CoStar’s general counsel, said in the statement. “But there is much more to come.” 

In a statement to Bisnow, CREXi said that the decision is “a clear signal that monopolistic practices hurt our industry and must come to an end.”

“This ruling isn’t just a win for Crexi — it’s a critical inflection point for the entire commercial real estate industry,” CREXi General Counsel Adam Greenberg said in the statement. “Crexi will continue fighting for a competitive ecosystem that benefits everyone.”

The appeals court ruled CREXi had plausibly argued that CoStar perpetuates a scheme of anticompetitive conduct by preventing its broker customers from providing listings to CoStar competitors through contractual terms and technological barriers.

“The panel held that a monopolist wielding its power to exclude competitors and maintain monopoly power in its markets violates … the Sherman Act,” Judge Anthony D. Johnstone wrote in the decision.

The panel also found that CoStar could be in violation of California’s Cartwright Act and Unfair Competition Law, according to court documents.

CoStar said it was eager for the matter to be resolved in its favor.

“We look forward to showing, through discovery, that these allegations are false, and transparently designed to distract from CREXi’s own widespread misconduct — and to thereafter prevailing, at summary judgment or trial,” Boxer said in the statement. 

CoStar has faced previous allegations that it is monopolizing the market, as well as antitrust scrutiny from the Federal Trade Commission. In late 2020, the FTC filed an administrative complaint and authorized a lawsuit against the company to block its acquisition of RentPath, arguing it would concentrate too much of a specialty niche in CoStar's hands.  

The FTC also stepped into CoStar's 2012 deal to buy LoopNet. The FTC forced it to spin off LoopNet subsidiary Xceligent to act as a competitor in the market. Xceligent filed for bankruptcy and shut down in late 2017 after a pitched legal battle with CoStar.

CREXi was founded in 2015 by Michael DeGiorgio, a former executive at digital auction platform Ten-X, which CoStar acquired in 2020. CREXi in 2020 raised at least $40M across multiple funding rounds. 

Ten-X sued CREXi in 2016, claiming DeGiorgio used trade secrets from his former firm. The companies reached a settlement in May 2017, with CREXi agreeing to pay $1.6M and DeGiorgio releasing a statement apologizing for his actions.

CREXi was valued at $500M in a 2022 funding round, making it one of the biggest U.S. CRE data platforms behind CoStar, which has a market cap valuation of about $33.8B. CREXi holds about 3B SF and $600B worth of properties for sale at any given time, according to Forbes.

UPDATE, JUNE 26, 8:10 A.M. CT: This article has been updated to add a comment from CREXi.