SCL Partner Harrison McAvoy recently spoke with HousingWire about the FTC’s lawsuit against listing platforms, Zillow and Redfin, concerning the companies’ $100 million rental syndication deal and alleged non-compete agreement:
Harrison McAvoy, a partner at Shinder Cantor Lerner LLP who specializes in antitrust law, believes that the allegations have sticking power.
“Generally these types of agreements receive intense scrutiny, so the defendants will have to identify some pro-competitive justification for the deal, otherwise it could be fairly smooth sailing for the government,” McAvoy said.
McAvoy noted that the FTC also brought claims under the Clayton Act, in which it claims that the agreement constitutes an acquisition, as Zillow has acquired assets “including Redfin’s customer relationships, key employees, business information, and a commitment by Redfin to terminate a class of customer contracts by a date certain.”
“It accomplishes the transfer of a sufficient part of the bundle of rights and privileges from Redfin to Zillow such that the transfer has economic significance and an anticompetitive effect,” the FTC’s filing states.
“Even if the court sees some justification for the deal, resulting in less scrutiny on the Sherman Act Section 1 claim, the court will also evaluate it under the standards for mergers,” McAvoy said.
When it comes to the government’s FTC Act claims, McAvoy said that since this statute is a bit broader than antitrust laws, it could provide the FTC with a little more flexibility for proving its case.
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Although the lawsuits may prove to be costly for Zillow and Redfin, which was acquired by Rocket in March of this year, in terms of legal fees, McAvoy notes that neither suit is requesting monetary damages, just injunctive relief, which could potentially mean just the unwinding of the deal.
“This may be to some degree about drawing a line in the sand or signaling to the rental listing market that these kinds of deals are not going to be acceptable in the future,” he said.
The article was featured on HousingWire and can be accessed here (paywall).
