New York's Attorney General antitrust division has recently launched an investigation into Compass Inc.'s (“Compass”) dominance in the New York residential real estate market. As part of the inquiry, agents from the department have reached out to leaders at top New York City brokerages requesting information about Compass. 

The investigation follows Compass’s $1.6 billion merger closing with Anywhere Real Estate, the parent company of Corcoran, Sotheby’s International, and Coldwell Banker. The deal resulted in Compass International Holdings becoming the largest residential real estate firm in the country. The $10 billion entity will have more than 340,000 agents and franchises, a presence in every major U.S. city, and operations in 120 countries. The Anywhere acquisition came on the heels of Compass’s 2024 purchase of @properties and Christie’s International Real Estate for $444 million.

An analysis by the Capital Forum found that the combined Compass-Anywhere brokerage exceeded key thresholds in multiple cities, accounting for over 80% of transaction volume in Manhattan and over 60% in San Francisco in 2024. Under DOJ and FTC guidelines, a combined market share exceeding 30% can indicate that a merger may eliminate substantial competition between the merging parties.

The acquisition had previously drawn federal scrutiny from U.S. Senators Warren and Wyden, who urged the FTC and DOJ to examine the deal, given concerns that the combined company could control over 70% of real estate shares in certain markets. Despite the anticompetitive concerns, no extended federal challenge materialized, yet the New York Attorney General’s office stepped in to investigate Compass’s footprint in New York.

Broader Takeaways 

State-level antitrust enforcement is filling the gap left by federal inaction. The Compass investigation illustrates a growing trend: when federal agencies decline to challenge a transaction, state attorneys general may and do intervene independently. The Compass probe came after the DOJ seemingly cleared the deal, signaling that companies cannot assume that federal clearance ends their antitrust exposure.

Market concentration thresholds matter even post-closing. The Compass investigation began after the merger had already closed, underscoring that antitrust risk does not end at deal consummation. Like federal enforcers, state enforcers retain authority to challenge completed mergers. 

Pre-transaction risk mapping can minimize challenges. Modeling market share concentrations across relevant geographic and product markets can identify jurisdictions where state Attorney General challenges are most likely and can help structure transactions to minimize exposure. 

Businesses must anticipate antitrust scrutiny at both the federal and state level. With federal and state enforcement increasingly diverging, businesses must anticipate regulatory challenges at both levels. 

Potential Multistate Action

Given Anywhere-Compass’s presence in multiple metropolitan areas beyond New York, other state attorneys general may seek to join or initiate parallel investigations. States with significant residential real estate markets where the combined entity holds a substantial share, such as California, Florida, Texas, Massachusetts, and Illinois, are among the most likely to pursue independent inquiries or coordinate with New York’s investigation.

Reed Smith’s State Attorney General Tracker is here to help

We recently launched our State Attorney General Tracker to help businesses anticipate antitrust trends, manage compliance, and mitigate legal risk across all 50 states. Click here to learn more about our tracker and how to gain access.

Contact

If you have any further information regarding this matter or have questions about the potential antitrust implications for your business, Reed Smith’s Antitrust & Competition team is actively tracking these developments and is prepared to help your organization. 

Co-authored by Jocelyn A. Millorino.