Compass — the $4.4 billion Softbank-backed brokerage that’s shaken up the real estate landscape over the past seven years — was hit with an explosive and wide-ranging lawsuit Wednesday by a key rival accusing it of price-fixing and collusion, “predatory” poaching and unfair business practices.
Realogy, in a 68-page complaint filed in New York State Supreme Court, alleges the firm routinely engages in “illegal schemes to gain market share at all costs and to damage, or even eliminate, competition.”
In stark terms, Realogy details its main rival’s modus operandi for attracting agents with astronomical splits and navigating non-competes in what it says is “predatory recruiting and poaching” practices.
And it accuses Compass CEO Robert Reffkin of personally soliciting Realogy to enter into an illegal price-fixing agreement “where the two companies would agree to limit agent compensation and ‘compete on brand,’ but not on price.” Realogy said it declined Reffkin’s overture.
In a statement, Compass sought to shut down the accusations by accusing its rivals of being slow to innovate — instead turning to the court system to prop up their businesses. “At Compass we focus on providing the best possible experience for our employees, agents and their clients,” the statement said. “Instead of building a better future for the real estate industry, our competitors are using the court system to stifle competition, but these efforts have been unsuccessful.”
In fact, Realogy has been stung by agent losses around the country, where it has faced competition from Compass and Warren Buffett’s Berkshire Hathaway. The real estate conglomerate has gone head-to-head with Compass before, most recently when a Realogy executive blasted Compass for “taking advantage” of its agents. Read more