The Justice Department has filed an antitrust lawsuit against real estate company RealPage for using its technology to enable landlords to collude to raise rent prices.
U.S. Attorney General Merrick Garland announced the suit in a press conference Wednesday, saying RealPage’s illegal price-fixing practices push rents higher than they would be if landlords were pricing them competitively.
The suit, alleging violation of the Sherman Act, was filed on behalf of the Justice Department in addition to the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.
At issue is RealPage’s commercial revenue-management software that landlords use to price apartments.
The complaint states RealPage contracts with participating landlords who share otherwise confidential information on things like rent prices and lease terms. The system then uses that information to train and run RealPage’s algorithmic pricing software, which generates price recommendations to participating landlords based on their and their rivals’ sensitive information, the Justice Department said.
The suit alleges RealPage uses this process to enable landlords to align on rent prices rather than compete with each other: “Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Garland said. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”
The suit also accuses RealPage of monopolizing the market: "RealPage has unlawfully maintained its monopoly over commercial revenue management software for multi-family dwellings in the United States, in which RealPage commands approximately 80% market share. Landlords agree to share their competitively sensitive data with RealPage in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data. This creates a self-reinforcing feedback loop that strengthens RealPage’s grip on the market and makes it harder for honest businesses to compete on the merits."
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The suit said RealPage’s practices harm millions of Americans, also by training landlords to limit concessions, like a “free month” rental promotion, and discounts, among other practices.
“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices — undermining competition and fairness for consumers in the process,” said Deputy Attorney General Lisa Monaco.
“Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct,” she said.
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