David D. Cross is partner and chair of San Francisco-based Morrison Foerster’s antitrust litigation practice and is a first-chair trial lawyer representing domestic and multinational companies in complex matters.

Opinions are the author’s own.

Antitrust scrutiny of the rental housing industry has reached new heights in the form of nationwide class actions, federal and state investigations and congressional inquiries. A key focus is the longstanding use of algorithmic revenue management software, which critics argue allows housing providers to increase prices above competitive levels. 

President Joe Biden, in his State of the Union address, talked about using federal antitrust laws to lower rental housing prices.

In addition to the high-profile multifamily cases focused on RealPage and Yardi, private plaintiffs have targeted additional third-party software and data providers, mobile home providers and large hotels with conspiracy claims regarding rental prices. In addition, members of Congress are urging regulators to investigate potential antitrust violations in the multifamily housing industry. 

The Department of Justice has ongoing antitrust investigations into RealPage’s revenue management software and its use. Late last year, DOJ expressed support for the private plaintiffs’ claims pending in federal court in Nashville, but the court notably rejected DOJ’s position that the plaintiffs alleged a per se offense. 

DOJ, along with the U.S. Federal Trade Commission, recently filed a similar statement of interest in support of plaintiffs’ claims against Yardi and various housing providers in Washington. 

On March 20, Politico reported that DOJ has expanded its ongoing civil investigation into the rental housing market by opening a criminal investigation into RealPage and certain users of its revenue management software. The article confirmed rumors about a criminal probe in the industry — one of the only known criminal investigations involving algorithmic pricing tools. 

State attorneys general are pursuing their own investigations into these concerns, and two already have filed suit. On November 1, 2023, the District of Columbia sued RealPage and 14 property managers. Arizona filed a similar lawsuit against RealPage and 10 property managers on February 28, 2024.

Mitigate risk

With lawsuits and investigations mounting, housing providers and others in the industry need to be aware of increasing antitrust risks associated with information sharing and algorithmic software. 

Although it is of course not an antitrust violation for firms to use such software to help with their own independent decisions, including setting their own prices and managing their own inventory, unfortunately even meritless lawsuits and investigations can impose enormous expense, exposure and business disruptions for both providers and users of such software. 

Exchanges of certain types of commercially sensitive information can increase this risk even when entirely lawful due to growing actions by private plaintiffs and antitrust enforcers. Property managers and owners would be particularly well served to implement a robust antitrust policy and compliance program that addresses these and other emerging technologies.

They can also mitigate antitrust risk by taking certain steps. Although these steps should not be needed to insulate lawful, independent action against antitrust exposure, they nonetheless are highly valuable in the current climate. They are: 

Use software as a recommendation. It is prudent to treat revenue management software as one input among others when setting prices and managing inventory. Recommendations generated by the software are best treated as exactly that: recommendations, or suggestions, that each user independently decides to accept or reject for any given rate.

Document each decision. Revenue management users are well served documenting in real time their independent decision-making, both when licensing the software and when subsequently using it to help set prices and manage inventory. 

Importantly, revenue maximization is not the same as price maximization. Maximizing revenue often involves reducing prices to sell more volume, which revenue management software frequently recommends. Maintaining a record highlighting independent action and decision-making — including the reasons for the decisions — can help show government enforcers and courts that any concerns about collusion with competitors are meritless.

Know what you’re working with. Revenue management users should try to understand how the software works and what data sources it relies on for its recommendations. Software that is not fully understood by the users and operates like a “black box” can increase antitrust risk if only because the users themselves may struggle to show enforcers and courts that the software fully complies with the antitrust laws when in fact it does.

Identify the source of information. Revenue management programs that do not rely on non-public, commercially sensitive data from competing users for price or inventory recommendations present less antitrust risk than software that does in the current climate. 

To be clear, this is not necessary to comply with the antitrust laws. But it can help avoid getting drawn into costly, burdensome investigations and litigation designed to expand the scope of the antitrust laws. 

Provide training. Adopting a written antitrust compliance policy with accompanying employee training can help significantly reduce antitrust risk. The policy should be written in simple terms that employees at all levels can readily understand. 

Employees including senior leadership should be trained to identify potentially anticompetitive conduct and encouraged to promptly flag any such concerns for company counsel. Firms without in-house counsel would be well served to engage competent antitrust counsel to help prepare an appropriate policy, administer training and handle any reports of potential anticompetitive conduct within the protections of the attorney-client privilege.

 Hopefully, the courts will bring the issues surfaced by private plaintiffs and government enforcers to a swift conclusion. In the meantime, businesses should take reasonable measures to mitigate risk, including consulting experienced antitrust counsel.

Morrison Foerster attorneys Mary G. Kaiser and Benjamin E. Campbell contributed to this article.