The US Department of Justice (DOJ) announced a lawsuit Tuesday against six corporate landlords and a software company accused of colluding to fix rent prices by sharing sensitive competitive information through the use of pricing algorithms.
The DOJ accused the landlords of colluding through software created by tech company RealPage, which collects sensitive pricing information and uses the combined information to make pricing recommendations. The DOJ claimed RealPage marketed the software as a tool to allow landlords to cooperatively fix prices and prevent competition from driving rents down.
The complaint specifically cites marketing language from RealPage that purports to help landlords “move in unison versus against each other.” The company stated:
[Real Page] help[s] curb [landlords] instincts to respond to down-market conditions by either dramatically lowering prices or by holding price when they are dramatically losing velocity and/or occupancy … Our tool [] ensures that [landlords] are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions.
According to the complaint, information that is shared in the software includes rental prices from executed leases, lease terms, and future occupancy, all of which are traditionally nonpublic sets of data that landlords would regard as confidential. The algorithm that the data is fed into also monitors compliance with the recommendations it provides in addition to advising on other renter-friendly policies. The software allows landlords to “outsource” their rent pricing to RealPage with auto acceptance settings designed to “optimize” rents.
The DOJ claimed RealPage allowed “landlords to manipulate, distort, and subvert market forces” and was “predatory and exclusionary.” The defendants have been accused of violating antitrust laws, including the Sherman and Clayton Acts, that prohibit anti-competitive business practices and unfair monopolies. The filing also listed violations under 10 different state laws whose respective jurisdictions are party to the case, including California, North Carolina, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, Oregon, Tennessee, and Washington.
The DOJ is seeking an injunction against the companies to prevent them from engaging in the alleged unlawful practices or other similar ones. The DOJ stated: “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”
Greystar Real Estate Partners LLC, a defendant in the case, expressed disappointment with the suit and denied anti-competitive practices. The company stated: “We are disappointed that the DOJ added us and other operators to their lawsuit against RealPage. Greystar has and will conduct its business with the utmost integrity. At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”
