The Department of Justice (DOJ) has brought an antitrust lawsuit against real estate software company RealPage, alleging in an Aug. 23 complaint that its rental price algorithm allows landlords to illegally coordinate rent increases.
“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 Sherman Act, passed in 1890, is the antitrust law the DOJ has been using to sue companies like Apple, Google, and Live Nation over allegedly illegal and anticompetitive behavior.
In remarks on Aug. 23, the attorney general said: “When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting.
“Today, it looks like landlords using mathematical algorithms to align their rents.”
Filed in the Middle District of Northern California, the complaint pointed to statements like a company executive saying, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
Free Markets
According to its website, the company serves over 24 million units and has offices in North America, Europe, and Asia. Its headquarters is in Richardson, Texas.RealPage describes itself as providing “a technology platform that enables real estate owners and managers to change how people experience and use rental space.”
“Clients use the platform to gain transparency into asset performance, leverage data insights and monetize space to create incremental yields,” according to its website.
The lawsuit maintains that free markets entail landlords competing rather than coordinating prices.
Attorneys general from Oregon, Minnesota, California, Colorado, North Carolina, Connecticut, Tennessee, and Washington joined the lawsuit.
The civil suit adds that RealPage “distorts” the “robust and free competition between landlords” that helps families “secure the greatest value for their needs.” According to the DOJ, the company enjoys approximately 80 percent market share.
The DOJ’s lawsuit is the latest in a series it has brought against technology products that it alleges have fostered anticompetitive markets.
The civil complaint cites both Sections 1 and 2 of the Sherman Antitrust Act, which contain provisions on monopolization and conspiring among businesses.
It comes after a speech in Raleigh, North Carolina, in which Democratic presidential nominee Vice President Kamala Harris pledged to crack down on “corporate landlords [who] collude with each other to set artificially high rental prices [by] using algorithms and price-fixing software.”
The DOJ also pointed to how a RealPage executive “explained to a landlord that using competitor data can help identify situations where the landlord ‘may have a $50 increase instead of a $10 increase for the day.’”
Assistant Attorney General Jonathan Kanter, who leads the DOJ’s Antitrust Division, framed the lawsuit as a way “to make housing more affordable for millions of people across the country.”
“Competition—not RealPage—should determine what Americans pay to rent their homes,” he said in the press release.
DOJ is asking that the court prohibit RealPage from engaging in the anticompetitive practices it described “and from engaging in any other practices with the same purpose and effect as the challenged practices.”
The department is also requesting “any additional relief the Court finds just and proper.”
