The US Federal Trade Commission (FTC) on Tuesday announced a lawsuit against Zillow and Redfin, alleging the real estate technology companies violated federal antitrust laws through agreements that eliminated competition in the online rental advertising marketplace.

The lawsuit alleges that in February, Zillow paid Redfin $100 million under a “Partnership Agreement,” requiring Redfin to exit the multifamily rental advertising business, terminate existing customer contracts, and transition those customers to Zillow. A concurrent “Content License Agreement” commits Redfin to display only Zillow listings for properties with 25 or more units, and bars Redfin from competing in this segment for up to nine years.

The FTC characterizes the arrangements as unlawful horizontal agreements between direct competitors aimed at eliminating competition, in violation of the Sherman Act. Section 1 of the Sherman Act prohibits contracts that “unreasonably” restrain trade or commerce. The lawsuit explains, “this agreement is nothing more than an end run around competition that insulates Zillow from head-to-head competition on the merits with Redfin.”

Tuesday’s lawsuit also alleges the arrangements constitute an illegal acquisition under the Clayton Act. Section 7 of the Clayton Act prohibits acquisitions of stock or assets of companies engaged when the acquisition will substantially lessen competition or create a monopoly in any line of commerce. The lawsuit notes that Zillow acquired Redfin’s customer relationships, confidential business information, and facilitated the hiring of approximately 450 terminated Redfin employees with key customer relationships. The FTC emphasizes that the online rental listing market is already highly concentrated, with Zillow, Redfin, and CoStar controlling over 85 percent of nationwide revenue.

Daniel Guarnera, the director of the FTC’s Bureau of Competition, said in a statement:

Paying off a competitor to stop competing against you is a violation of federal antitrust laws … Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market—one that’s critical for renters, property managers, and the health of the overall U.S. housing market.

The lawsuit claims that the agreements will substantially lessen competition, resulting in higher prices, reduced quality, and diminished choice for property managers advertising rentals. The FTC seeks a permanent injunction, potential divestiture, and other equitable remedies to restore competition.