Four years before Standard Oil faced its dissolution under the Sherman Antitrust Act, its value was $100 million. 15 years later, the 34 companies which it had split into were worth $2.9 billion. A loss for Standard Oil perhaps, but a win for its shareholders, including John Rockefeller. While the industry may not have a Standard Oil, real estate today faces antitrust challenges of its own. The US federal government recently opened up an antitrust inquiry into residential real estate brokerage commission practices, this time seeking to gain information from data provider CoreLogic. The Justice Department had previously filed a lawsuit against the National Association of Realtors, also about unfair commission setting, which ended in a settlement.
Where else could antitrust effect the real estate business? The two areas that immediately stand out are in commercial data access and brokerage as well. Neither scenario is likely any time in the near future. On the data side, the Standard Oil in question is CoStar, which is certainly not the only provider currently in business (see CompStak, Reonomy, and others). Even in the wake of the Xceligent closure, CoStar does not stand alone in the field. Similarly, consolidation in commercial brokerage has a ways to go, even with JLL acquiring HFF. The big three brokerages (CBRE, JLL, and Cushman & Wakefield, in that order) will remain. In fact, it is likely that more companies, like the (comparatively) smaller Newmark Knight Frank or Avison Young, will actually enter the big leagues in the near future. If the giants end up acquiring most of the second and third tiers of brokerages, the situation might look different. If one of the top three were to acquire one of the others, things would certainly take a step in the antitrust direction.
Dividing up an enormous brokerage would be simple enough, perhaps mirroring the Standard Oil breakup that resulted in a number of regional oil companies. But the result of breaking up a monopolistic data company is far less certain. Would new companies be spawned out of different business lines or focus areas, like industrial and multifamily? Would this scenario play out with geographic divisions as well, with the successor firms focusing on distinct regions? No one can be sure. And while odds are we won’t see such a scenario play out, the seismic shock of the Standard Oil dissolution cannot be forgotten. In real estate, it might just remake the business.