Federal regulators are looking to block CoStar’s $588 million purchase of troubled rental listing platform RentPath, which operates Rent.com and ForRent.com.
The U.S. Federal Trade Commission said Monday that it filed an administrative complaint and authorized a federal lawsuit seeking to unwind the deal. According to regulators, the deal would significantly consolidate CoStar’s footprint in the rental listings arena — specifically, for large apartment complexes in 49 metro areas.
“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,” Daniel Francis, deputy director of the FTC’s bureau of competition, said in a statement. “This acquisition will eliminate price and quality competition that benefits both renters and property managers.”
In a statement, CoStar said it believes the FTC is “wrong in its assessment,” and that it is examining its options.
CoStar and RentPath have been fierce rivals for years — targeting each other with sales campaigns and dangling special deals to win customers, according to the complaint.
By joining forces, the FTC alleges, CoStar would control an outsize share of rental listings. CoStar already operates Apartments.com, ApartmeentFinder.com and ForRent.com.
According to the FTC complaint, 70 percent of the country’s apartment complexes with 200 or more units are listed on sites operated by CoStar, RentPath or both. Fifty percent of buildings with 100 to 199 units are listed on their sites.
“The acquisition will increase concentration in these markets even further,” an FTC news release asserted.
CoStar disclosed plans to buy RentPath in February, a week after the troubled apartment listing firm filed for Chapter 11 bankruptcy.
Faced with financial trouble and competition, owners TPG Capital and Providence Equity had tapped financial advisers to restructure $650 million of debt, the Wall Street Journal reported at the time.
The purchase was subject to bankruptcy court and regulator approval, which is now proving elusive.
In a news release, the FTC said its commissioners voted four to one to seek a preliminary injunction. Pending an administrative trial, set to begin June 1, the FTC plans to file a complaint in U.S. District Court in the District of Columbia.
CoStar has been circling the residential space for the past six years. In 2014 it shelled out $585 million for Apartments.com, followed by acquisitions of ApartmentFinder ($170 million in 2015), ForRent ($385 million in 2017) and Cozy Services ($68 million in 2018). In February, it shelled out $588 million to buy RentPath, the parent company of ApartmentGuide.com, Rentals.com and Rent.com.
It’s been named as a bidder for CoreLogic, one of the country’s biggest residential real estate data companies. And last week it announced plans to buy Homesnap, a national search portal for sales listings, for $250 million.