Using an administrative complaint procedure, the Federal Trade Commission has the power to flex its muscle even short of conducting an antitrust lawsuit. In a recent case, the FTC exerted enough pressure to squash the acquisition deal between Internet listing service providers CoStar and RentPath.
In November 2020, the Federal Trade Commission filed an administrative complaint that authorized a suit in federal court, to block internet listing services provider CoStar Group Inc.’s proposed $587.5 million acquisition of competitor RentPath Holdings, Inc. CoStar operates a network of websites, including Apartments.com, ApartmentFinder.com, and ForRent.com, which are two-sided platforms that match prospective renters with available apartments. RentPath operates similar websites, including Rent.com and ApartmentGuide.com.
The complaint alleged that the acquisition would significantly increase concentration in the already highly concentrated markets for internet listing services advertising for large apartment complexes in 49 individual metropolitan areas across the United States.
“Renters have come to depend on the convenience of online search sites to find available apartments that meet their needs and budget,” said Daniel Francis, Deputy Director of the FTC’s Bureau of Competition. “CoStar and RentPath operate several of the most popular sites, and their aggressive, head-to-head competition has kept advertising rates low while offering consumers a convenient, data-rich tool for finding an apartment. This acquisition will eliminate price and quality competition that benefits both renters and property managers.”
According to the complaint, 70 percent of U.S. apartment complexes with 200 or more units, and approximately 50 percent of U.S. apartment buildings with 100 to 199 units, advertise on ILSs operated by either CoStar, or RentPath, or both. The acquisition will increase concentration in these markets even further.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
