By Jonathan Stempel

May 7 (Reuters) - A federal judge rejected Zillow's ZG.O and Redfin's RKT.N request to end a U.S. Federal Trade Commission lawsuit accusing them of illegally agreeing to suppress competition for online apartment rental listings.

U.S. District Judge Anthony Trenga in Alexandria, Virginia, said in a Wednesday night order that the FTC plausibly alleged that the defendants violated antitrust law.

In its complaint last September, the FTC said Zillow paid Redfin $100 million plus a monthly fee over nine years in exchange for Redfin ending its contracts with advertising customers and serving as an exclusive syndicator of Zillow's listings, essentially copying Zillow's websites.

The FTC said the February 2025 agreement would likely raise prices to advertise vacancies in multifamily rental buildings and reduce both companies' incentive to make their platforms easier for renters to use.

Redfin is owned by Rocket Companies.

In seeking a dismissal, Zillow and Redfin said their agreement promoted competition, and benefited renters and property managers.

The companies said renters who preferred Redfin's listing service could view Zillow listings there, while property managers had two listing services to attract renters.

They also said the agreement let Redfin spend money it had devoted to its underperforming rental advertising business to upgrade its listing service, and Zillow compete more effectively for property managers' advertising dollars.

Zillow said in a statement on Thursday: "We remain confident we will demonstrate the pro-competitive and consumer benefits of our partnership with Redfin in court."

Redfin and its lawyers did not immediately respond to requests for comment.