With respect to the regulatory review of the Compass-Anywhere merger, the normal process has changed. Instead of facing a full antitrust investigation, Compass and its legal team bypassed carrier antitrust officials and appealed directly to senior leadership at the Department of Justice, allowing the deal to be cleared and successfully blocking a deeper investigation, allowing the deal to close in early January 2026.
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The result was not a normal permit. This is a regulatory decision that departs from recent antitrust enforcement standards and raises serious questions about how competition policy is applied to residential real estate consolidation.
The merger proceeded without the level of scrutiny that many believed the deal warranted, even as lawmakers, consumer advocates and some career antitrust enforcement officials warned it could harm homebuyers and independent brokerages.
In most industries, large mergers follow established analytical frameworks. Federal antitrust authorities review transactions, calculate market share, and apply standard concentration metrics (particularly the Herfindahl-Hirschman Index (HHI)) to determine whether a transaction is likely to harm competition.
However, residential real estate is structured differently. HHI cannot gain market power in the real estate market as it does in other industries because competition occurs through participation in transactions rather than simply market share.
Regulators may have used traditional metrics to assess Compass’ post-merger market share. What seems much less likely is that they accounted for a proportion of transactions involving Compass. By evaluating the merger in the same way as other industries, regulators may have significantly underestimated the competitiveness that a single company would have gained.
How to measure market share
The Herfindahl-Hirschman Index (HHI) measures how concentrated a market is based on the relative size of participants. For most industries, this approach works fairly well because each unit of market share is assumed to correspond to the same level of competitive leverage.
However, in a two-sided real estate market, companies can participate in transactions from either side, effectively increasing their market presence.
For brokerage firms, market share is most often discussed in terms of transactions rather than transactions. Each buyer-side or seller-side representation counts as one unit. Intermediaries representing both sides of a transaction record both sides.
This practice is deeply embedded in MLS reporting, fee calculations, and industry rankings. Side-based market share treats each side as independent. But from a competitive perspective, what matters is how often companies engage in deals.
A company with a 15% market share as measured by the deal side does not necessarily mean that it only participates in 15% of the deals. Participation depends entirely on how these factions are distributed. In the unlikely scenario where intermediaries are involved in all trades on both sides, 15% of the trading parties will participate in only 15% of the trades.
However, if the intermediary represents only one side of each transaction, that same 15 percent share would result in it participating in 30 percent of all transactions. This dynamic amplifies market power in real estate and, if not carefully considered, can significantly underestimate the post-merger company’s influence.
Impact of market power
Based on publicly available data and industry analysis, Compass is estimated to have a market share of 13% to 18% nationally following this transaction. A Dec. 26, 2025, Capitol Hill Forum analysis found that the merger would result in market share concentrations in at least 12 states “well above thresholds that would be likely illegal.” Under the 2023 Merger Guidelines, a market share of more than 30% could potentially be illegal, especially in already concentrated markets.
According to available estimates, Compass is expected to have a market share of over 30% in a number of metropolitan areas, including:
Los Angeles: 40% Raleigh: 46% Houston: 50%+ Austin: 50%+ Honolulu: 54% Seattle: 57% Denver: 60% Boulder: 60% Brooklyn: 60%+ Washington DC: 60%+ Boston: 60%+ San Francisco: 64-65% Nashville: Near 70% Newport Beach, CA: 80%+ Manhattan: over 80%
The regulatory significance becomes clearer when these numbers are translated into trading participation rather than trading aspects. Using a transactional side mechanism, a company with a 15-20% share on the transactional side can reasonably expect to participate in approximately 30% of transactions.
In markets where a company controls 50-60% of the trading side, it is mathematically possible, and often more likely, for that company to participate in the majority of all trades. This level of participation begins to resemble industry advantage rather than regular competition.
Applying this lens reveals that traditional market share metrics may significantly underestimate a brokerage firm’s market power. As a result, the merger could lead to levels of market participation that create illegal competitive effects across many markets, including a far greater concentration in certain metropolitan areas than is permissible.
A new perspective on competition
The antitrust survival review of the Compass-Anywhere merger reveals fundamental weaknesses in the way competition policy is applied to residential real estate. Regulators authorized a deal that allows a single company (Compass) to participate in the majority of transactions in many of the nation’s largest housing markets.
Even under traditional market share analysis, industry experts were already warning of the emergence of anti-competitive conditions. These caveats become much more severe when viewed through the lens of transactional participation.
This result has an unpleasant conclusion. Regulators either failed to explain how market power actually manifests in a two-sided real estate market, or they did and allowed the merger to proceed anyway.
In either case, the result is the same. Traditional antitrust tools, such as HHI and trade-side market share, have proven insufficient to measure the actual competitive effects of consolidation. When firms participate in a large portion of a market’s transactions, they do more than just compete; they shape norms, access, and outcomes.
Unless antitrust enforcement evolves to reflect these developments, this merger will become a precedent rather than an exception. Without a recalibration of how market power is measured, future consolidations (potentially even larger) will continue to pass regulatory scrutiny while quietly transforming the competitive landscape of the U.S. housing market.
By the time traditional indicators indicate a problem, the market may already be beyond repair.
Sean Frank is the founder and CEO of Mainframe Real Estate of Florida. Connect with him on Instagram and LinkedIn.
