FTC Sues to Block CoStar Group, Inc.’s Proposed Acquisition of Chief Competitor RentPath Holdings, Inc.

The Federal Trade Commission has filed an administrative complaint, and 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 alleges 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.”

Internet listing services, or ILSs, provide free user-friendly interfaces for consumers to search for a place to live from a database of available units. Information about the number of bedrooms, monthly rent, available move-in date, and amenities like swimming pools or exercise rooms is readily available, as are floor plans, real-time vacancy data, and quality photos or video tours. Millions of U.S. consumers rely on ILSs each year to gather information about rental properties, or to contact property managers about leasing an apartment, according to the complaint.

For apartment owners and property managers, ILSs help to fill apartments by creating and targeting advertisements of vacant units to interested prospective renters. Property managers pay ILSs advertising fees in exchange for listing their properties. ILSs attract significant numbers of prospective renters to browse available rental units, and provide a way for them to contact properties directly to express interest in leasing.  

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.

The complaint alleges that for years, CoStar and RentPath have been each other’s closest rivals, competing to sell ILS advertising to property management companies and to attract prospective renters to use their ILS search services. CoStar and RentPath compete aggressively for website traffic from prospective renters and business from advertisers. Each has targeted the other with sales campaigns and significant discounts to win and retain advertising customers.  

The Commission vote to issue the administrative complaint and to authorize staff to seek a preliminary injunction was 4-1. Commissioner Christine S. Wilson voted no. The FTC will file a complaint in the U.S. District Court for the District of Columbia to enjoin the deal pending an administrative trial. The administrative trial is scheduled to begin on June 1, 2021.

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.