Why this article is important: Antitrust has long been an issue in real estate. When new players attempt to innovate in the industry, it’s often too easy for old-school players to maintain their stranglehold on their access to information and users — ultimately to the detriment of real estate sellers, buyers, tenants and MLOs.
Antitrust patronage dogs the industry
Antitrust behavior in real estate is back in the news. This time, commercial real estate is getting the antitrust treatment, just not from regulatory agencies.
Antitrust rules are long-standing state and federal regulations designed to promote fair competition in the marketplace, a Teddy Roosevelt era awakening. When a player becomes too powerful, making it impossible for “little guys” to compete, that’s when the courts consider stepping in to stop what has become a monopoly, with power to control an entire industry to the exclusion of others.
Recently, you may recall the National Association of Realtors (NAR®) losing their fee-fixing case on antitrust violations. In an effort to codify the crackdown on price fixing in the real estate industry, this NAR lawsuit indirectly led to the new buyer representation laws here in California. United-we-profit is gone, but yet to be policed.
Related article:
The many faces of price fixing
One easy way for price fixing to occur is by allowing an industry — such as commercial real estate — to be dominated by a single provider of information.
CoStar is an online commercial real estate listing service and provider of data and analytics. It also owns sites like apartments.com, homes.com and LoopNet. Commercial Real Estate Exchange, Inc. (CREXi) operates a website offering similar commercial real estate services. Notably, CREXi provides a service publishing commercial properties marketed by brokers as available for sale or lease.
In 2023, CoStar sued CREXi, claiming it republished listing images which were originally published on CoStar’s website, a loophole LoopNet wanted closed.
In response, CREXi claimed CoStar is conducting antitrust activity, in violation of the Sherman Act, a federal law. Aside from having an oversized market influence, CoStar entered into exclusive arrangements in their dealings with brokers. The agreements prevented competitors of CoStar from accessing content and being able to compete. These dealings included:
- technological barriers constructed by CoStar that prevented brokers from freely publishing properties available for sale or lease on competing platforms; and
- contract language that directly or implicitly prohibited brokers from providing CoStar’s competition with properties for sale or lease.
CREXi claimed its only way to compete with CoStar was to unlawfully publish the photographs which appeared on CoStar’s website.
CoStar called CREXi’s antitrust claims a “sideshow” diverting attention from the real issue of copyright infringement on CoStar’s material. And…
Read More: Commercial real estate listing site under fire for antitrust dealings
