The Department of Justice (DOJ) has initiated legal action against RealPage, a real estate software company, by filing an antitrust lawsuit. The complaint, dated August 23, alleges that RealPage’s rental price algorithm enables landlords to engage in illegal coordination of rent increases. The DOJ asserts that the use of software as a means of collaboration does not exempt this scheme from liability under the Sherman Act. The Department of Justice remains committed to vigorously enforcing antitrust laws and safeguarding the American public from those who violate them.
Enacted in 1890, the Sherman Act serves as the antitrust law under which the DOJ has pursued lawsuits against companies like Apple, Google, and Live Nation for their alleged involvement in illegal and anticompetitive activities.
In a statement on August 23, the Attorney General indicated, “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.”
The complaint, filed in the Middle District of Northern California, includes references to statements made by RealPage executives, such as, “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.”
RealPage describes itself as a technology platform that empowers real estate owners and managers to revolutionize the rental space experience. The platform enables clients to gain transparency into asset performance, leverage data insights, and optimize space usage for increased yields, as stated on its website.
The lawsuit argues that free markets rely on competition among landlords rather than price coordination. Attorneys general from Oregon, Minnesota, California, Colorado, North Carolina, Connecticut, Tennessee, and Washington have joined the lawsuit.
The civil suit also claims that RealPage disrupts healthy competition between landlords, which diminishes the ability of families to obtain the best value for their housing needs. According to the DOJ, RealPage holds approximately 80 percent market share.
This lawsuit by the DOJ is the latest in a series of actions against technology products that are seen to facilitate anticompetitive markets. The case invokes both Sections 1 and 2 of the Sherman Antitrust Act, which deal with conspiracies among businesses and monopolization respectively.
The lawsuit follows Vice President Kamala Harris’ speech in Raleigh, North Carolina, where she pledged to address the collusion between corporate landlords to establish artificially high rental prices through the use of algorithms and price-fixing software.
The DOJ also highlighted an instance where a RealPage executive explained to a landlord that using competitor data could potentially lead to a $50 increase instead of a $10 increase for the day.
Assistant Attorney General Jonathan Kanter, who heads the DOJ’s Antitrust Division, positioned the lawsuit as a means to make housing more affordable for millions of Americans. “Competition – not RealPage – should determine what Americans pay to rent their homes,” he stated in a press release.
The DOJ is seeking a court order to prohibit RealPage from engaging in the anticompetitive practices outlined in the complaint, as well as any other practices with similar effects and intentions. Additionally, the department is requesting any other appropriate relief as deemed fit by the court.
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