The Federal Trade Commission is likely to sign off on Zillow’s proposed acquisition of Trulia and could grant early termination and close its review of the deal sooner than expected.
The FTC “is likely to say there’s not a problem,” Notre Dame law professor and antitrust expert Joseph P. Bauer said. If there are concerns about the impacts of mergers on competition, the FTC usually proposes measures for the two companies to abide by before they would consider blocking it.
Bauer cited CoreLogic’s 2014 acquisition of DataQuick Information Systems Inc., which put foreclosure data aggregator RealtyTrac in the tax, deed and mortgage data licensing business. CoreLogic agreed to license national assessor and recorder bulk data to RealtyTrac to settle an FTC complaint that the $661 million deal was likely to result in less competition.
Zillow and Trulia execs have said they expect the merger, announced in July and approved by shareholders on Dec. 18, to go through in the first half of this year.
The FTC, which is responsible for evaluating the impacts of such deals on the competitive landscape, made second requests for information from the companies in early September, and Zillow has agreed to hold off on consummating the deal until Feb. 15 — unless the FTC wraps up its review before then.
Inman Publisher Brad Inman reported today that a reliable source has informed him that the FTC has decided to approve the deal and that an official announcement is expected soon.
Bauer said that the FTC’s request for additional information from Zillow and Trulia is not uncommon and shows regulators are “exerting extra caution.”
The Zillow and Trulia deal is unique because the FTC has to decide if online advertising and offline advertising are the same, Bauer said.
Zillow and Trulia executives have said the companies are capturing only a small percentage of overall real estate marketing dollars. But some real estate agents are concerned that Zillow, Trulia and partner sites capture the majority of consumer traffic to real estate search portals.
While Zillow has said it intends to continue operating Trulia as a separate site, some fear a merger could pave the way for the combined company to raise the rates it charges for ads and leads across sites like Yahoo Homes, AOL Real Estate, HGTV’s FrontDoor, HotPads and MSN Real Estate.
Zillow CEO Spencer Rascoff said the two companies don’t intend to raise prices right away if the merger is approved in early 2015.
Bauer said that if the FTC considers online and offline marketing to be congruent, then the two companies pose less of a threat to competition and the merger would likely be approved. But if the FTC decides online and offline marketing are distinct, it’s conceivable that regulators could terminate or impose conditions on the merger to preserve competition in online marketing, he said.
The National Association of Realtors has reportedly sought to block the deal on antitrust grounds. NAR’s official search portal, realtor.com — once the most popular real estate search portal on the Internet — now attracts fewer visitors than Zillow or Trulia. But News Corp.’s acquisition of realtor.com operator Move Inc. in November could help it become more competitive.
