After real-estate data company CoStar Group Inc. said in February it would buy competitor RentPath Holdings Inc. for $587.5 million, RentPath employees sent emails to customers saying prices would likely increase after the acquisition closed, WSJ Pro Bankruptcy reported. “If the sale does go through CoStar will control pricing for everything and most likely will go up,” a RentPath regional account manager said in a customer email after the deal was announced, according to a lawsuit filed Monday by CoStar that was ineffectively redacted. Days later in February, a RentPath salesperson told customers in southern New Jersey and Philadelphia, “I am strongly suggesting to all clients to lock in our low pricing because if the sale goes through it will not exist EVER again,” the lawsuit said. CoStar said in yesterday’s lawsuit that it was worried that the messages could be used by federal antitrust regulators to block the acquisition and that RentPath management didn’t correct information its employees sent to customers, despite requests from CoStar. In November, the Federal Trade Commission said it would block the deal, saying the transaction “would likely lead to anticompetitive effects.” The RentPath employee messages were outlined in a lawsuit CoStar filed in the U.S. Bankruptcy Court in Wilmington, Del., where RentPath filed for chapter 11 protection in February. CoStar cited the emails to support its allegation RentPath management engaged in “a customer misinformation campaign designed to boost RentPath’s short-term sales while poisoning the FTC approval process.” The companies are now fighting in court over the deal’s collapse. RentPath terminated the agreement and is seeking a $58.75 million breakup fee from CoStar, which has denied it is liable. CoStar said that RentPath didn’t do its best to make sure regulators would approve the transaction and now wants a bankruptcy judge to rule the company violated the terms of the agreement.
