The Justice Department, with the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, have filed a civil antitrust lawsuit against RealPage. The lawsuit outlines an unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments.
The alleged conduct robs renters of the benefits of competition on apartment leasing terms and harms millions of Americans, the Justice Department says. Filed in the U.S. District Court for the Middle District of North Carolina, the lawsuit alleges that RealPage violated Sections 1 and 2 of the Sherman Act.
“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” says assistant attorney general Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition—not RealPage—should determine what Americans pay to rent their homes.”
The complaint claims that RealPage contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates, and other lease terms, to train and run RealPage’s algorithmic pricing software. This software then generates recommendations, including on apartment rental pricing and other terms, for participating landlords based on their and their rivals’ competitively sensitive information.
After a nearly two-year investigation, the complaint further alleges that, in a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing. RealPage additionally uses this arrangement and its data trove to maintain a monopoly in the market for commercial revenue management software. The complaint aims to end RealPage’s alleged illegal conduct and restore competition for the benefit of renters in states across the country.
“Today’s complaint against RealPage illustrates our corporate enforcement strategy in action. We identify the most serious wrongdoers, whether individuals or companies, and focus our full energy on holding them accountable,” says deputy attorney general Lisa Monaco. “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. 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 anti-competitive conduct.”
According to officials, internal documents and sworn testimony from RealPage and commercial landlords outline RealPage’s and landlords’ objective to maximize rental pricing and profitability at the expense of renters. RealPage acknowledged that its software is aimed at maximizing prices for landlords, referring to its products as “driving every possible opportunity to increase price,” “avoid[ing] the race to the bottom in down markets,” and “a rising tide raises all ships,” the Justice Department reports.
RealPage's CEO and president Dana Jones said in an emailed statement, "Over the past year and a half, we’ve actively engaged with stakeholders and policymakers to help educate and influence better policy decisions toward a healthier, more efficient rental housing ecosystem that doesn’t stifle innovation in the multifamily industry. Despite these tireless efforts, and our extensive cooperation with the Department of Justice over many months, today the DOJ announced they are pursuing a lawsuit against us."
Jones continued, "We will continue to defend ourselves vigorously against the baseless allegations and remain focused on serving our customers with legally compliant products and advocating for effective policies that advance housing affordability for all."
Today’s complaint separately alleges that RealPage has unlawfully maintained its monopoly over commercial revenue management software for multifamily 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. The arrangement creates a self-reinforcing feedback loop that strengthens RealPage’s grip on the market and makes it harder for honest businesses to compete, the Department notes.
“RealPage’s egregious, anti-competitive conduct allows landlords to undermine fair pricing and limit housing options while stifling necessary competition,” says acting associate attorney general Benjamin C. Mizer. “The Department remains committed to rooting out illegal schemes and practices aimed at empowering corporate interests at the expense of consumers.”
