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The U.S. Department of Justice (DOJ) is investigating whether Homestore.com, Inc. and the National Association of Realtors (NAR) are in violation of antitrust laws.
Homestore.com (Nasdaq: HOMS), based in Thousand Oaks, California, said it has received a request for information from the DOJ's antitrust division. According to the company's Web site, the request "seeks information about the business of Homestore.com as it related to Internet realty sites in the United States." The company said that the DOJ has not alleged any wrongdoing.
At the same time, the National Association of Realtors acknowledged that it too has been contacted by the DOJ. The NAR said that it has been asked for information regarding its official Web site, Realtor.com, which is also the home listing service used by Homestore.com.
Parties Mum
A spokesperson for the DOJ's antitrust division confirmed that an investigation has been initiated.
"We are investigating potentially anti-competitive conduct involving the online realty listings industry," Press Specialist Jennifer Rose said. Rose declined to say what prompted the investigation and said the department would not reveal any additional details about the investigation.
Defending Practices
According to published reports, the DOJ is looking into whether Homestore.com monopolized online listings by establishing arrangements with local listing services for exclusive rights to list homes online.
"We don't see anything that we've done that would create any sort of antitrust issues," Homestore.com CFO John Giesecke told Reuters yesterday.
Giesecke acknowledged that the company has struck deals with multiple listing services nationwide to exclusively list their homes for sale on its site in exchange for stock in the Internet venture. "There certainly isn't any law against being number one and no law against doing anything better than anyone," he added.
However, if Homestore.com has obtained exclusive rights to 85 to 90 percent of aggregate MLS listings -- as one industry executive told Reuters -- the company could be treading on dangerous ground with respect to antitrust laws.
NAR Fields Questions
Current NAR president Dennis Cronk said that his association, which represents realtors nationwide, has also been contacted by the DOJ.
"We are entirely confident that no laws have been violated in the operation of Realtor.com," Cronk said in a statement. "We will cooperate completely with the Justice Department and we anticipate that it will reach the same conclusion."
Realtor.com claims that its site lists more than 90 percent of all homes for sale in the United States.
Dominates Market
Homestore controls the vast share of the online home shopping market. The company, which offers links to home builders and real estate agents -- as well as content related to home buying -- said it currently lists about 1.3 million homes for sale in the United States.
According to Nielsen//NetRatings, Homestore.com drew 2.8 million unique users and 136 million page views during March, outpacing Microsoft's (Nasdaq: MSFT) HomeAdvisor by a margin of five to one. "We are the clear category leader," CEO Stuart Wolff said recently.
Last month, Homestore.com announced it would expand its partnership with GMAC's real estate and home financing units. Shares of Homestore.com were down nearly as much as 9 percent in early trading Wednesday but later rebounded to just under Tuesday's close of 19 1/4.
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