CoStar Asks Supreme Court To Review Antitrust Dispute With Crexi
CoStar Group, the $29B real estate data company with platforms used by thousands of brokers nationwide, is seeking to go before the U.S. Supreme Court to prove it's not an illegal monopoly.
The company filed a petition Wednesday asking the high court to review an appeals court decision regarding claims from competitor Crexi that CoStar's practices violate antitrust law, Reuters first reported. The court's decision on whether to hear the case will have significant implications in the real estate industry and beyond.
The U.S. Court of Appeals for the 9th Circuit ruled in June that Crexi “plausibly” argued that CoStar violated the Sherman Antitrust Act and exercised monopoly power over the industry. It overruled a district court's previous dismissal of Crexi's antitrust claims and ordered a lower court to reconsider them.
Crexi's antitrust claims arose as a countersuit after CoStar had initially sued the competitor in 2020 over copyright infringement, claiming it stole thousands of photos from the larger firm's database.
Now, CoStar is arguing that the appeals court made the wrong decision in allowing the antitrust portion of the case to proceed.
The antitrust claims center around two CoStar practices: preventing brokers that use its platforms from putting listings on competing platforms and blocking competitors from accessing its platforms.
Crexi argues these practices raise costs and harm competition in the industry. CoStar argues it isn't obligated to let competitors use its platform and that allowing the antitrust case to proceed would disincentivize companies from investing in proprietary databases.
CoStar General Counsel Gene Boxer said in a statement to Reuters the antitrust claims “were concocted in order to manufacture leverage after CREXi was caught red-handed engaging in mass infringement.”
A Crexi spokesperson said in a statement to Bisnow the appeals court “unanimously and decisively affirmed” its antitrust claims.
“This petition is just another attempt by CoStar to delay its inevitable liability for years of anticompetitive misconduct against the commercial real estate industry,” the spokesperson said. “CoStar’s monopolist playbook is finally being exposed in court.”
Claims that CoStar acts as a monopoly date back to at least 2017, when then-competitor Xceligent filed a similar antitrust countersuit in a case that CoStar had initially filed over intellectual property theft. After suffering a setback in that case, Xceligent filed for Chapter 7 bankruptcy and shut down in December 2017.
CoStar has also faced antitrust scrutiny from the Federal Trade Commission, which blocked its $588M acquisition of RentPath in late 2020. The FTC also intervened in CoStar's acquisition of LoopNet in 2012, forcing it to spin off a subsidiary of that company that acted as a competitor: Xceligent.
The Supreme Court's decision on whether to hear CoStar's argument for dismissing Crexi's antitrust claims could have ripple effects either way, legal scholars told Prism News.
If the court hears the case, it could set a precedent on antitrust law in digital marketplace sectors not just limited to commercial real estate. And if it rejects CoStar's petition, it would lead the lower court to consider the antitrust claims against CoStar, posing risks to the data giant and potentially opening the door to similar cases.
