US Department of Justice sues RealPage for allegedly facilitating price fixing on rents

The Justice Department filed an antitrust lawsuit against property management software provider RealPage on Friday, alleging the company facilitated collusion among landlords that drove up rents for millions of Americans.

The lawsuit alleges the Richardson, Texas-based company and its competitors engaged in a price-fixing scheme by sharing nonpublic, confidential information that RealPage’s algorithmic pricing software used to generate price recommendations. The company replaced competition with rent coordination to the detriment of tenants across the U.S., the lawsuit alleges, and monopolized the market through its revenue management software, which was used by landlords to maximize rental costs.

The Justice Department is joined by the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington. The lawsuit alleges that RealPage violated Sections 1 and 2 of the Sherman Act, an antitrust law.

“Americans should not have to pay more rent just because a company has found a new way
with landlords to break the law,” Attorney General Merrick B. Garland said in a statement Friday. “We allege that RealPage’s pricing algorithm allows landlords to exchange confidential, competitively sensitive information and adjust their rents. The use of software as an exchange mechanism does not exempt this system from liability under the Sherman Act, and the Department of Justice will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”

Assistant Attorney General Lisa Monaco said RealPage violated a centuries-old law in a modern way by using an AI-powered algorithm to coordinate rental prices, thereby “undermining competition and fairness for consumers.”

“Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all of our legal tools to ensure accountability for technology-enabled anti-competitive behavior,” she said in a statement.

RealPage claims the allegations against the company are false and insists that RealPage customers can set their own rental prices and reject the algorithm’s recommendations. The company added that it handles data responsibly.

“RealPage’s revenue management software is deliberately designed to comply with regulatory requirements, and we have worked constructively with the Department of Justice in the past to demonstrate this,” a company spokesperson said in a statement to CBS News.

The lawsuit comes at a time when Americans can barely afford basic necessities, from housing to grocery shopping, and high housing costs are contributing to persistent inflation.

“As Americans struggle to afford housing, RealPage is making it easier for landlords to raise rents in a coordinated manner,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust lawsuit 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.”

RealPage acknowledged that its product was designed to maximize landlords’ profits, describing it as “taking advantage of every possible opportunity to increase prices.”

One landlord praised RealPage’s software, saying he liked it because the algorithm “uses proprietary data from other subscribers to suggest rents and terms. This is classic price fixing…”

— Robert Legare of CBS News contributed reporting