FTC Sues CoStar to Block RentPath Acquisition
December 1, 2020
The Federal Trade Commission is suing to block CoStar Group Inc.’s acquisition of its competitor RentPath Holdings over concerns the deal will eliminate competition in the apartment marketplace. The complaint alleges the acquisition would significantly increase CoStar’s already-large presence in the rental market, with listing sites advertising large apartment complexes in 49 metro areas nationwide.
CoStar operates a network of websites that includes Apartments.com, ApartmentFinder.com, and ForRent.com. RentPath operates similar websites, including Rent.com and ApartmentGuide.com.
“Renters have come to depend on the convenience of online search sites to find available apartments that meet their needs and budget,” says 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.”
Currently, about 70% of U.S. apartment complexes with 200 or more units and about 50% of U.S. apartment buildings with 100 to 199 units advertise on internet listing services (ILSs) that are operated by either CoStar, RentPath, or both. CoStar and RentPath have competed to sell ILS advertising to property management companies to attract prospective renters, competing for traffic from prospective renters and business from advertisers.
In February, CoStar announced it would acquire RentPath Holdings Inc. in a $587.5 million acquisition.
“We consider the FTC is incorrect in its evaluation of our transaction and are analyzing our choices,” Matt Blocher, CoStar Group’s vice chairman of promoting and communications, told media outlets in response to the lawsuit.
Updated: January 25, 2021