The Justice Department and several state attorneys general filed an antitrust suit Friday against RealPage, alleging the real estate software company engaged in a complex collusion scheme with landlords that resulted in higher prices for renters across the country.
The lawsuit is the latest salvo in the Biden administration’s increasingly aggressive efforts to rein in powerful companies who they accuse of using their dominance in the markets to harm consumers.
The Justice Department’s suit, a result of what officials described as a years-long “painstaking” investigation, alleges the company unlawfully conspired with landlords who agreed to share with the company non-public information related to rental rates and lease terms that RealPage then entered into its algorithmic pricing software.
As a result, the lawsuit alleges, the software would generate pricing recommendations for properties based on the non-public information that in the usual course of business would not be part of normally competitive efforts between landlords to attract renters.
While the company has faced civil lawsuits before at the state level over allegations of collusion, officials said the suit appears to be the first federal one of its kind involving such an advanced algorithmic collusion scheme.
Attorney General Merrick Garland speaks during a news conference at the Department of Justice, Aug. 23, 2024, in Washington.
POOL/ABC News
“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,” Attorney General Merrick Garland said in a statement announcing the lawsuit. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents.”
The civil complaint against the company quotes extensively from internal documents and testimony from RealPage executives, including one instance where the company allegedly acknowledged how its software benefited landlords’ efforts to maximize prices — describing its software as “a rising tide raises all ships.”
While it’s not immediately clear what the department will ultimately demand of the company if a judge finds its actions violated antitrust laws, the Justice Department said in a release it will seek an order that RealPage cease in its alleged collusion with landlords “and restore competition for the benefit of renters in states across the country.”
RealPage did not immediately respond to a request for comment on the lawsuit from ABC News.
The Justice Department recently filed an antitrust lawsuit against RealPage, a leading provider of property management software, for allegedly colluding with landlords to stifle competition in the rental market. The lawsuit, which was filed in the U.S. District Court for the Northern District of Texas, accuses RealPage of engaging in anticompetitive behavior that has harmed both tenants and smaller property management companies.
According to the complaint, RealPage has used its dominant position in the property management software market to enter into exclusive agreements with landlords, effectively shutting out competitors from accessing valuable data and services. This, in turn, has limited tenants’ options for finding affordable housing and has made it difficult for smaller property management companies to compete on a level playing field.
The Justice Department alleges that RealPage’s actions have resulted in higher prices for tenants and reduced innovation in the rental market. By stifling competition, RealPage has been able to maintain its dominant position and extract higher fees from both landlords and tenants.
In response to the lawsuit, RealPage has denied any wrongdoing and has vowed to vigorously defend itself in court. The company has stated that it is committed to promoting competition and innovation in the rental market and that it will cooperate fully with the Justice Department’s investigation.
The outcome of this lawsuit could have far-reaching implications for the rental market and for the broader tech industry. If RealPage is found guilty of antitrust violations, it could face significant fines and be forced to change its business practices. This could open up new opportunities for smaller property management companies and lead to lower prices for tenants.
Overall, the Justice Department’s lawsuit against RealPage highlights the importance of maintaining a competitive marketplace in the rental industry. By holding companies accountable for anticompetitive behavior, regulators can help ensure that tenants have access to affordable housing options and that smaller businesses have a fair chance to succeed. It will be interesting to see how this case unfolds and what impact it will have on the future of the rental market.
