FTC Moves To Block CoStar Acquisition Of RentPath
The complaint alleges that the deal would concentrate online listings for large apartment complexes even more than they already are in 49 major U.S. metro markets.
“[CoStar and RentPath's] aggressive, head-to-head competition has kept advertising rates low while offering consumers a convenient, data-rich tool for finding an apartment," FTC Bureau of Competition Deputy Director Daniel Francis said in a statement on Monday. "This acquisition will eliminate price and quality competition that benefits both renters and property managers.”
CoStar owns Apartments.com, ApartmentFinder.com and ForRent.com, which are platforms that match prospective renters with available units. RentPath operates Rent.com and ApartmentGuide.com, which are similar websites.
Washington, D.C.-based CoStar reached an agreement to acquire RentPath for $588M in February after the Atlanta-based company filed for Chapter 11 bankruptcy. In a preliminary move to Monday's announcement, the FTC in April asked CoStar for additional materials in a process known as a Request for Additional Information and Documentary Materials, better known as a second request.
"We believe the FTC is wrong in its assessment of our transaction [and] are examining our options," a CoStar representative said in an email Monday evening to Bisnow.
The move is the second time the agency has taken antitrust action against CoStar. In 2012, when CoStar acquired LoopNet for $860M, the FTC required CoStar to divest LoopNet's interest in real estate data operation Xceligent, which was acquired at the time by the British media company DMGT.
The FTC also took the unusual step of requiring CoStar to allow customers in longer-term contracts to terminate them early. The agency further stipulated that CoStar couldn't bundle its products together in ways that could impede its competitors. That antitrust action didn't turn out to be a long-term solution. In December 2017, Xceligent filed for Chapter 7 bankruptcy and closed. Before Xceligent's demise, CoStar sued the company for allegedly taking thousands of images from CoStar's site.
For its part, Xceligent had filed an antitrust countersuit against CoStar, alleging the data giant has created a monopoly and engaged in years of anticompetitive behavior. Xceligent accused CoStar of employing internet blocks and other practices to prevent its users from sharing their property information, charges that CoStar dismissed as a groundless counterattack.
CoStar ultimately prevailed in its suit against the defunct Xceligent, winning an award of $500M in 2019. The parties reached a settlement through which Xceligent's insurers paid CoStar $10.75M.
After the acquisition of LoopNet in 2012, CoStar continued on an aggressive path of acquisitions that continues to the present, including the 2014 purchase of Apartments.com, the 2015 ApartmentFinder.com buy, the ForRent acquisition in 2017, a deal for Off Campus Partners in 2019, the $450M purchase of STR in 2019 and the $190M acquisition in May of digital auction platform Ten-X.