New FTC Chairperson May Expect More Scrutiny of the Real Estate Industry



When it comes to real estate competition and antitrust compliance, the city has a new sheriff.

Last week, the US Senate approved a bipartisan vote of 69-28 votes. Lina Khan, adjunct professor of law at Columbia Law School and advocate of antitrust reform as Commissioner for the Federal Trade Commission. Then President Joe Biden immediately appointed Khan as chairman of the Federal Trade Commission, the youngest in history at the age of 32.

Federal Trade Commission and U.S. Department of Justice (DOJ) are the two federal agencies responsible for antitrust compliance – a hot topic in real estate as flurry of antitrust lawsuits In recent years, lawsuits have been filed against the National Association of Realtors, Zillow, franchise giants Realogy, Keller Williams, RE / MAX and Home Services of America, as well as several numerous listing services.

The FTC, which also investigates unfair and deceptive trading practices, has the power to set rules about what constitutes fair competition and sue for antitrust violations. The agency can also reject mergers between competitors or force companies to change the terms of acquisitions.

Khan’s appointment seems to indicate that the Biden administration plans to take an aggressive approach to antitrust regulation when it comes to the likes of Amazon, Facebook, Google and Apple, given Khan’s reputation as a monopoly fighter.

Khan made a name for herself as a Yale law student with a 2017 report titled “The Amazon Antitrust Paradox“, In which she advocated modernizing antitrust laws, arguing that measuring competition based on price increases for consumers, known as the consumer welfare standard, is not enough to address the potential competitive harm created by Amazon’s dominance.

“In particular, the current doctrine underestimates the risk of predatory pricing and that the integration of different business lines could be anti-competitive,” Khan wrote. “These concerns are amplified in the context of online platforms for two reasons. First, the economics of platform markets provide incentives for companies to pursue growth rather than profit, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational – even if existing doctrine considers it irrational and therefore implausible.

“Second, because online platforms serve as important intermediaries, the integration between business lines allows these platforms to control the underlying infrastructure on which their competitors depend. This dual role also allows the platform to use the information it collects about the companies using its services to undermine them as competitors. “

In 2020, Khan was an advisor to the Judicial Chamber’s Antitrust Subcommittee on Amazon, Facebook, Google, and Apple, and was part of the team that published 450-page report in October, pushing for stricter enforcement of antitrust laws as well as new regulations.

“[T]These firms use their dominance in ways that undermine entrepreneurship, compromise American privacy on the Internet, and undermine the activity of a free and diverse press, ”the report said. “The result is less innovation, fewer consumer choices and weakened democracy.”

Khan’s views on the real estate industry in particular are unknown, but her history suggests a closer look at competition in real estate, according to Stephen Brobeck, a senior fellow with the Consumer Federation of America. consumer observation group

Stephen Brobeck

“Given Chairman Khan’s strong professional commitment to antitrust compliance, we expect her to support the FTC’s more vigorous efforts to ensure effective price competition between real estate agents and brokers,” Brobek told Inmanu via email.

When asked whether these efforts could be focused on real estate commissions or company consolidation, Brobek replied, “It’s hard to say.”

The FTC declined to comment on what the industry could expect from the FTC under Khan, but noted that “the agency continued to be active in real estate enforcement” as the FTC and DOJ conducted joint seminar on the June 2018 real estate broker competition.

The agency pointed to several enforcement actions in recent years, including adding requirements in 2018 by order to acquire CoreLogic of DataQuick, suing block CoStar’s acquisition of RentPath who succeeded in derailment merger and trial and settlement with the Louisiana Board of Real Estate Appraisers, in connection with allegations that the board set prices for appraisal services in the state.

In accordance with New York TimesThe FTC employs more than 1,000 investigators, lawyers, and economists who are responsible for overseeing the U.S. economy amid growing concerns over the influence of large tech companies. Earlier this month, Democratic lawmakers in the U.S. House of Representatives presented five antitrust billsThey all have Republican sponsors aimed at dominating tech giants like Amazon, Google, Facebook and Apple.

The bills, some of which are likely to apply to real estate companies like Zillow and CoStar, prohibit companies with 50 million or more US users per month and a market capitalization of $ 600 billion from prioritizing their own business on their marketplaces, prohibit dominant companies from acquiring competitors that will strengthen their monopoly power, make it illegal to own the “dominant online platform” of another line of business that creates a conflict of interest, require platforms to make user data portable and interoperable with other services, and increase fees that large companies pay when requesting a merger permit, according to Vox

NAR and CoStar declined to comment for this story. Zillow did not respond to requests for comment.

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