The Federal Trade Commission (FTC) recently sued Zillow and Redfin, alleging they entered into an illegal agreement where Zillow paid Redfin to exit the internet listing services (ILS) advertising market for rental properties. In a new insight, Director of Competition Policy Fred Ashton walks through the FTC’s complaint.

Key points:

• The FTC alleged that in exchange for a $100 million payment and other compensation from Zillow, Redfin agreed to end contracts with advertising customers, stop competing in the advertising market for multifamily properties, and serve as an exclusive syndicator of Zillow listings.
• The FTC claimed the agreements function as an acquisition as the transfer of assets has “economic significance and an anticompetitive effect.”
• This agreement effectively eliminates the head-to-head competition on the merits between the two firms, which could result in higher prices and worse terms for multifamily unit advertisers and reduce the incentive for the remaining competition to innovate and provide better services for consumers.

Read the analysis.