Zillow avoided trial recently by settling federal and state antitrust claims over a 2025 agreement in which it paid Redfin $100 million to shut down its rental listings business and hand its advertising customers over to Zillow. The case, brought in the U.S. District Court for the Eastern District of Virginia, offers a useful reminder for any business considering a deal that pays a competitor to leave a market rather than simply buying its assets. Regulators are treating that structure as a potential antitrust violation, separate from whether the underlying transaction looks like a normal acquisition.
What The Government Alleged
The Federal Trade Commission, joined by the attorneys general of Arizona, Connecticut, New York, Virginia, and Washington, sued Zillow and Redfin in September and October 2025. The complaint framed the 2025 agreement as a payment for exit: Zillow and Redfin operated two of the three leading rental listing advertising networks, and rather than compete for apartment listing customers, Redfin agreed to shut down its rental advertising business, transfer its customer contracts to Zillow, and stay out of the market for up to nine years. Judge Anthony Trenga consolidated the FTC and state suits in November 2025 and denied a motion to dismiss the following May, which meant the case was headed toward trial before the settlement was announced.
The government’s theory did not depend on showing that Zillow and Redfin had ever formally merged or that either company controlled the entire rental listings market on its own. It depended on the idea that a dominant player can pay a competitor to remove itself from the field, achieving much of the effect of a merger while avoiding the merger review process, and that this kind of arrangement can violate the antitrust laws just as a traditional price-fixing or market-allocation agreement would.
What The Settlement Requires
The consent order runs for ten years and puts several concrete obligations on both companies. Redfin has to restart its rental listings advertising business within six months, which means rebuilding the technology behind it and hiring a general manager, sales staff, and support personnel largely from scratch. Zillow must waive any noncompete restrictions that would otherwise block Redfin from hiring former Zillow employees to help with that rebuild, and Redfin’s relaunched service is expected to carry substantially more apartment listings than it did before the shutdown. For nine months after relaunch, Zillow also must let its existing advertising customers renegotiate their contracts without penalty, giving property managers a real opportunity to shift business to Redfin if they choose. The two companies can continue a narrower listing-syndication relationship, reportedly through at least 2030, but without the provisions that required Redfin to exit the market altogether.
The FTC’s own announcement described the order as designed to restore the competitive pressure that existed before the 2025 deal, with the expectation that renewed competition between the two platforms will help control pricing for both renters and the property management companies that pay for listing placement.
Why The Structure Of The Deal Mattered
A straightforward acquisition of a competitor generally goes through a defined regulatory process, including a Hart-Scott-Rodino filing and, above certain thresholds, a waiting period during which antitrust regulators can investigate before the deal closes. A payment to a competitor to simply stop competing and hand over customers can accomplish something similar in economic effect without going through that same review. Regulators have shown increasing willingness to challenge these arrangements directly, treating them as unlawful agreements not to compete rather than waiting to see whether a later merger review might catch the same conduct.
For companies weighing a deal that involves a competitor exiting a line of business, winding down a product line, or transferring customer relationships in exchange for payment, the practical questions worth asking early are similar to what any merger analysis would ask: does the arrangement meaningfully reduce competition in a relevant market, would the parties otherwise have kept competing head to head, and is there a plausible business justification beyond removing a rival. Structuring the deal as a licensing agreement, an asset sale, or an ordinary business partnership does not automatically change how regulators or courts will view the substance of what the parties actually agreed to do.
What Businesses Should Be Watching Moving Forward
The Zillow-Redfin settlement adds to a growing list of enforcement actions where regulators have gone after pay-to-exit and market-allocation arrangements that fall short of a full merger, and companies in concentrated markets, particularly online marketplaces and listing platforms, should expect that scrutiny to continue. It is also worth watching how the ten-year consent order plays out in practice, since Redfin’s obligation to rebuild a shuttered business from near zero is a more involved remedy than a typical fine, and how well that rebuild succeeds may influence how aggressively regulators pursue similar structural remedies in future cases. Businesses negotiating any agreement where a competitor agrees to reduce or end its market presence in exchange for payment should treat that provision as an antitrust risk factor worth flagging early, not a side term to work out after the main deal points are settled.
This article is provided for general informational purposes and does not constitute legal advice. Businesses with questions about a specific transaction or agreement should consult with counsel.
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