The United States government has initiated legal action against RealPage, alleging that the company’s software undermines competition in the rental housing market by aiding landlords in collectively setting prices, according to documents filed by the Department of Justice and eight state attorneys general. Read the lawsuit.
Attorney General Merrick Garland emphasized that modern-day antitrust violations are not limited to backroom deals, stating, “Today, it looks like landlords using mathematical algorithms to align their rents. But antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert.” The Justice Department’s press release noted that RealPage’s pricing algorithm runs afoul of antitrust laws.
The lawsuit contends that RealPage enables landlords to sidestep competition by collecting nonpublic, sensitive rental data and feeding it into an algorithm that provides pricing recommendations. The government maintains that these recommendations are more than just suggestions and that RealPage ensures compliance with them.
In its defense, RealPage claims that its software benefits both housing providers and residents by making price recommendations based on property-specific objectives. RealPage insists landlords are not required to follow its recommendations.
The lawsuit also cites landlords who claim the software eliminates the “guessing game” in setting prices, a practice the Justice Department argues amounts to price fixing. Garland remarked that many landlords “outsource their pricing decisions” to RealPage’s algorithm, effectively allowing the software to determine rental rates.
The case, filed in the U.S. District Court for the Middle District of North Carolina, names six landlords in North Carolina as participants and is supported by eight states, including California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington.
The government and the states accuse RealPage of violating Section 1 and Section 2 of the Sherman Act by sharing information among competitors and monopolizing the commercial revenue management software market. RealPage is also facing a ban on its software in San Francisco.
RealPage has dismissed the allegations as “devoid of merit,” arguing that the lawsuit will not contribute to making housing more affordable. RealPage further stated, “We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years.”
For more details about the lawsuit, visit Ars Technica.