CoStar sharply criticizes plaintiff in antitrust case involving hotel data

RealPage has drawn most of the attention for its antitrust lawsuit over rent optimization software, but it’s not the only tech company drawn into the conspiratorial fight. In February, hotel data provider STR and its parent company CoStar were also hit by a lawsuit in Washington state over their price comparison product. The lawsuit is similar to the one currently being filed by RealPage.

The lawsuit alleged that STR violates the Sherman Antitrust Act because of the way it allows hotel operators to share pricing data: “Competitors in the luxury hotel industry have agreed to continuously share their detailed, audited and competitively sensitive pricing information , supply and future plans through an intermediary, Smith Travel Research (“STR”), owned by Defendant CoStar Group. The purpose of this exchange is to allow competitors to share “rapid revenue and occupancy data” so that competitors can be sure each is receiving a “fair share” of revenue.”

This week, the defendants’ legal team responded to that charge by filing a motion to dismiss it. According to the proposal, the difference is that STR did not use an algorithm or provide price suggestions. Instead, they provide a benchmark for the fees charged in each market.

“To defendants’ knowledge, no court has ever found comparative activities such as those at issue in this case (which are analyzed under the ‘rule of reason’) to be an improper exchange of information violating Section 1 of the Sherman Act. “Such a discovery would set a new precedent that could upend many industries where benchmarking is a common and important market analysis tool.”

The motion also alleged that the plaintiffs failed to provide sufficient information to substantiate their conspiracy claims: “The complaint does not state ‘who’ participated in the alleged conspiracy, ‘when’ the alleged conspiracy began, or ‘what’ the Hotel Defendants allegedly agreed to do it.”

It is clear that this case is not the same as the one brought against RealPage. However, it is unclear whether these differences will be enough to protect STR from legal problems. Many companies offer benchmarking, and making it illegal would put many of them at risk. However, judges are often more concerned with the specific interpretation of the law than with the second-order effects of any new precedent. CoStar has been on a steady growth streak, thanks in part to the acquisition of STR. However, it is now clear that being the dominant data provider in the industry puts them at risk in today’s legal environment, and the winner-takes-all nature of data also makes it subject to litigation and regulation.

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