In this articleRKTZG your favorite stocksCREATE FREE ACCOUNTThe stock market graphic of Zillow Group is displayed on a smartphone with the logo of Zillow in the background on Feb.
21, 2021.Sopa Images | Lightrocket | Getty ImagesThe Federal Trade Commission is suing real estate giants Zillow and Redfin, alleging the two illegally conspired to reduce competition in the online multifamily rental listing market, the agency said Tuesday.
In the complaint, the FTC alleges that the companies violated federal antitrust laws earlier this year when Zillow paid Redfin $100 million to essentially re-host Zillow multifamily rental listings on Redfin and its sites.Zillow- and Redfin-owned platforms Zillow Rentals and Rent.com are used by millions of Americans ing for their next , the FTC said.As part of the arrangement, the agency said Redfin agreed to terminate contracts with its existing advertising customers and assisted Zillow in acquiring that .
Redfin also committed to staying out of the multifamily advertising market for up to nine years and reduce its role to merely syndicating Zillow's listings, making Redfin's sites virtually identical to Zillow's.The FTC also alleges that Redfin fired hundreds of employees shortly after the deal was signed and then helped Zillow selectively rehire many of them.
"Paying off a competitor to stop competing against you is a violation of federal antitrust laws," said Daniel Guarnera, director of the FTC's bureau of competition, in a statement.
"Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market—one that's critical for renters, perty managers, and the health of the overall U.S.
housing market."ing the FTC's announcement, s of Zillow and Redfin parent Rocket Companies fell sharply in afternoon trading."Our listing syndication with Redfin benefits both renters and perty managers and has expanded renters' access to multifamily listings across multiple platforms," a Zillow spokesperson said in a statement.
"It is -competitive and -consumer by connecting perty managers to more high-intent renters so they can fill their vacancies and more renters can get .
We remain confident in this partnership and the enhanced value it has dered and will continue to der to consumers."Redfin didn't immediately respond to request for from CNBC.The FTC's lawsuit seeks to unwind the agreement and may include requirements for divestitures or restructuring to restore competition in the rental advertising market.