The proposed deal for Compass to acquire Anywhere was almost certain to draw regulatory scrutiny from the beginning, due to the size and nature of the deal—nearly doubling the size of the company and consolidating somewhere around 500,000 annual transactions and 100,000 agents under one roof.
What that scrutiny might look like became more clear yesterday, as Ron Wyden, top Democrat on the Senate Finance Committee, and Elizabeth Warren, ranking member of the Senate Banking, Housing and Urban Affairs Committee, wrote a letter to top officials at the Department of Justice and the FTC claiming the deal will harm consumers through price-fixing and decreasing transparency.
“The Compass-Anywhere merger threatens to stifle consumer choice and fair industry competition while entrenching existing antitrust and price manipulation concerns that have been at the center of mounting litigation,” Warren and Wyden wrote in a joint statement. “These risks demand close scrutiny under federal antitrust laws.”
First announced in September, the $1.6 billion deal, which would value the companies together at around $10 billion, sent shockwaves through an industry already parsing out other major shifts, from policy changes to another bombshell deal by Rocket (referenced in Warren and Wyden’s letter, and something Warren also opposed at the time). Compass has expressed confidence the merger will be approved by regulators.
A spokesperson for Compass declined to comment on the letter.
The letter also provides some insight into what lawmakers (at least on one side of the aisle) are paying attention to, both in the merger, but also more broadly in real estate. The Republican Trump administration has so far focused more the rental side when scrutinizing antitrust issues, with indications that the DOJ is more focused on the tech sector.
Maybe unsurprisingly, Warren and Wyden largely focused their criticism on the alleged impact the merger will have on affordability, citing many talking points that have come up in the course of the commission lawsuit saga.
“Reduced competition among brokerages has helped sustain a five to six percent commission rate in the United States, which is nearly double the global average,” the senators wrote. Specifically, they cited a 2019 study by Cornell and UPenn researchers which was also widely referenced in the commission lawsuits. Stephen Brobeck, now a senior fellow at the Consumer Policy Center whose work also fueled the commission lawsuits, is also cited as saying that “a worst-case scenario” for consolidation in brokerages would be “the collapse of the open housing market.”
The senators also widely cite mainstream media coverage of the post-settlement real estate landscape, arguing that the merger would “amplify” the risks of consumers losing out on transparent listing access.
Roughly three pages of the eight-page letter is focused on private listings, which the senators characterize as a practice that perpetuates housing discrimination and weakens competition. They cite recent Zillow studies that have claimed to show private listings sell for less.
“Well-connected consumers may purchase homes before less connected consumers even have an opportunity to place a bid—effectively stifling fair and open enterprise,” the two senators wrote.
This could violate fair housing laws, the senators claim, and point to recent cases where Compass or Compass brokers were found to be violating these laws through income discrimination or familiar discrimination.
Also notable, the senators highlight not just the alleged harm to consumers, but claim the merger will cause injury to “mom-and-pop” brokerages, which they claim “play a vital role” in the market.
“These risks demand close scrutiny under federal antitrust laws,” the senators wrote
Editor’s note: this story was updated at 3:03 p.m. eastern time with a response from Compass.
