Owning multiple real estate offices in a single market clearly isn’t illegal, but how big can you get without running afoul of antitrust laws? Attorneys say it’s not the size of the company, but rather its behavior that can trigger regulatory scrutiny.

Realogy is the largest franchisor of residential real estate brokerages in the world, according to the company’s 2016 annual filing with the Securities and Exchange Commission (SEC). It’s a $5.81 billion company that owns multiple real estate agency brands and offices, nearly half of PHH Mortgage, and several title, settlement and relocation services companies.

At 13.5 percent of the national residential brokerage market, Realogy is big, but far from the only game in town, and even if it had 100 percent of a particular local market, it wouldn’t necessarily be illegal.

It isn’t illegal for a company to have a significant market share – even a market share of 100 percent – according to Boston antitrust attorney Alicia Downey, as long as the company acquires that market share fairly and doesn’t do anything to impede competition in the market.

“There is an antitrust risk when a company holding a monopoly or a large market share is somehow able to exploit that position to keep prices high, coerce customers to deal only with them, or arrange things that keeps competitors out by unfair means, such as false advertising, contracts that make it unduly difficult or expensive to switch service providers, or by using things like over-restrictive non-competes,” Downey said.

“The residential real estate brokerage industry is highly competitive with dozens of local competitors and low barriers to entry in most markets across the country. As a multi-brand franchisor with many independently owned and operated offices, we support full and fair competition, including among our franchisees,” said a company spokesman for Realogy.

Downey said antitrust laws aren’t focused on restricting a company’s growth; they’re designed to ensure no company does anything that restricts consumer choice.

For example, Realogy-owned franchises were involved in 44.5 percent of real estate sales in Westwood in 2016. The median sale price for a single-family home in Westwood was $657,000 that year. Downey said that while that may be profitable, on its face, it’s not illegal.

“In theory, if I’m trying to sell my house in one town,” Downey said, “there’s no law that says I can’t go on the Internet to find and hire a licensed real estate agent from anywhere in the state.”

Before a publicly-traded company like Colliers International, RE/MAX holdings or Realogy makes a major acquisition, the Federal Trade Commission requires it undergoes what’s called a Hart Scott Rodino review, where regulators look for antitrust issues in the proposed merger. Boston antitrust attorney Jerry Cohen of Burns & Levinson said the government can block a proposed merger it feels will limit consumer choices too much.

“If you’ve gone through a Hart Scott Rodino review and you are turned down,” Cohen said, “many companies will just call the deal off. Although Zillow acquired Trulia. That was scrutinized and objected to at first and ultimately approved.”

Last year the proposed $6.3 billion merger of Staples and Office Depot was blocked by a federal judge who sided with the FTC’s antitrust concerns.

Downey said it’s not very common, but the FTC can go back and review a company after a merger has occurred, if it has reason to suspect antitrust violations.

The Company Town

Having a financial interest in multiple real estate service providers sounds similar to the old “company towns” of a century ago, where the main employer in town often owned the homes its workers rented. But even that wouldn’t be illegal, as long as consumers have free access to other choices. Consumers may prefer to buy multiple goods or services from a single company or family of companies for convenience. It only becomes problematic when consumers who purchase one service are forced to buy other services from that company that they may not necessarily want or could get elsewhere.

An recent, well-known example of this would be when the court found that Microsoft Corp. had an unfair advantage by installing only its own Internet Explorer browser on its computers when it had a huge percentage of the market for PC-compatible operating systems. Because of that, other browser companies were virtually locked out of the browser market.

Downey said owning multiple real estate service providers would be illegal only if the government could prove that the company went beyond their own business and acted to reduce or eliminate its competitors with the objective of gaining a stranglehold on the market for real estate brokerage and possible other real estate transaction services in a particular geographic area.

“You can acquire enormous market power if you do it fairly,” Cohen said. “It is only illegal to achieve market power unfairly.”