I write to express concern on behalf of the industry I represent, as well as my personal misgivings, regarding a provision of the Consent Order related to CoStar data extracts and internal database usage rights. This is an important issue to the commercial real estate (CRE) industry because a number of large CRE brokers take data extracts from CoStar and use these extracts to construct their internal CRE information databases, and these internal databases are critical to the day-to-day functioning of these brokers’ businesses. The provision at issue is the proviso of Paragraph III.H.2.c., which reads as follows: “Provided, however, Respondents may decline to offer CoStar Database extracts to, or allow the creation of internal databases incorporating portions of the CoStar Database by, Customers who purchase, license, or subscribe to CRE Product Offerings from CoStar Competitors.” There is concern in the broker community that an ambiguity exists in the Consent Order as to whether or not this provision could be read to supersede existing contractual protections that customers have against CoStar taking such actions. Given the importance of data extracts and internal usage rights to a number of large players in the CRE industry, the only reading that is consistent with the remedial purpose of the Consent Order is that this provision in no way would affect or supersede existing contractual protections. A contrary reading would effectively foreclose CoStar competitors from access to these important customers (due to these customers’ dependence on CoStar extracts and internal usage rights), and without access to these customers it is very unlikely that a competitor will succeed in becoming a credible national alternative to the merged CoStar-LoopNet entity. This potential situation is anathema to our free enterprise system, and I find it repugnant as a CRE industry advocate and even more so as an American. I call on the FTC to clarify that this provision is in no way intended to modify or supersede existing contractual protections. Thank you for your thoughtful consideration of this comment.
Proposed Consent Agreement In the Matter of CoStar Group, Inc., Lonestar Acquisition Sub, Inc., and LoopNet, Inc., FTC File No. 1110172 #00046
Atlanta Commercial Board of Realtors
Proposed Consent Agreement In the Matter of CoStar Group, Inc., Lonestar Acquisition Sub, Inc., and LoopNet, Inc., FTC File No. 1110172