The Zillow Group stock market is displayed on a smartphone with the Zillow logo in the background on February 21, 2021.
Sopa images | Lightrocket | Getty images
The Federal Trade Commission continues the real estate giants Zillow And RedfinAlleging that the two have illegally conspired to reduce competition on the market in the multifamilial rental list online, the agency announced on Tuesday.
In the complaint, the FTC alleges that companies have violated federal antitrust laws earlier this year when Zillow paid Redfin $ 100 million to mainly reorganize the multifamilial rental lists of Zillow on Redfin and its sites.
The platforms belonging to Zillow- and Redfin such as Zillow Rentals and Rent.com are used by millions of Americans looking for their next house, said the FTC.
As part of the arrangement, the agency said that Redfin had agreed to terminate contracts with its existing advertising customers and helped Zillow acquire this business. Redfin is also committed to staying outside the multifamilial advertising market up to nine years and to reduce its role to unionize the lists of Zillow, which makes redfin sites practically identical to those of Zillow.
The FTC also alleges that Redfin dismissed hundreds of employees shortly after the signing of the agreement, then helped Zillow selectively recurrence many of them.
“The reimbursement of a competitor to stop competing against you is a violation of federal antitrust laws,” said Daniel Guarnera, director of the FTC competition office, in a statement. “Zillow has paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market – one which is essential for tenants, real estate managers and the health of the overall American housing market.”
After the FTC’s announcement, the actions of the rocket companies of Zillow and Redfin parents fell sharply in the afternoon trade.
“Our registration syndication with Redfin benefits both tenants and real estate managers and has widened tenants’ access to multifamilial ads on several platforms,” said a spokesperson for Zillow in a press release. “It is pro-comprehemal and pro-consumer by connecting real estate managers to more intentional tenants so that they can fill their vacant positions and that more tenants can go home. We remain confident in this partnership and the improved value it has offered and will continue to deliver to consumers.”
Redfin did not immediately respond to the request for CNBC comments.
The FTC trial aims to relax the agreement and may include requirements for disinvestment or restructuring to restore competition in the rental advertising market.