Federal regulators are accusing online real estate firm Zillow of paying rival Redfin $100 million to discourage competition in home rental advertising, harming both renters and property managers.

In a lawsuit filed Tuesday in the U.S. District Court for the Eastern District of Virginia, the Federal Trade Commission alleged the companies struck an "unlawful agreement that eliminates Redfin as a competitor" in the market for placing home rental ads on so-called internet listing services, which the agency notes are widely used by consumers.

Zillow and Redfin, which both operate large real estate listing networks, in February agreed that Redfin would stop competing in the ad market for multifamily properties for nine years and help transition its customers to Zillow, the FTC alleged.

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