Dive Brief

• The Department of Justice has opened a criminal investigation into RealPage and some of the large apartment owners and managers that use the company’s pricing software to determine if the Richardson, Texas-based firm is facilitating price fixing, unnamed sources told Politico.
• Politico, which did not name the owners and managers involved, called the criminal inquiry a “marked escalation of the probe” and said that the DOJ is concerned that RealPage’s software is being used as a shield for competitors to exchange sensitive pricing data that their rivals would otherwise be unable to access.
• In late 2022, the DOJ’s antitrust attorneys reportedly opened a civil investigation into RealPage’s algorithm, as groups of Senators asked for more scrutiny in 2022 and 2023. Politico reported that the inquiry is ongoing, and the agency’s lawyers issued subpoenas earlier this year on behalf of a federal grand jury in Washington, D.C.

Dive Insight:

The DOJ has also waded into antitrust suits against RealPage. Last fall, it filed a brief in U.S. District Court for the Middle District of Tennessee, saying a combined antitrust case brought by a group of renters against RealPage and multiple landlords should move forward and that apartment operators’ use of a shared algorithm is illegal under the per se rule of antitrust law.

Apartment pricing has been a target of state and federal investigators since a ProPublica report investigating RealPage’s model in October 2022. In the months following the report, more than 30 class-action suits were filed against RealPage and apartment owners and managers. These cases were consolidated into the one lawsuit that moved forward in Tennessee.

The Biden administration has been focusing on cracking down on what it sees as anti-competitive activity in the economy, targeting hotels and other industries. 

In his State of the Union address, President Joe Biden highlighted actions in the food, healthcare and housing markets. “For millions of renters, we’re cracking down on big landlords who break antitrust laws by price-fixing and driving up rents,” the president said in the State of the Union.

The DOJ isn’t just scrutinizing RealPage and its legal cases. The agency, along with the Federal Trade Commission, filed a brief earlier this month in the antitrust case involving Yardi Systems and multiple landlords in the Western District of Washington, arguing against a motion to dismiss.

Local scrutiny

Local officials have also begun scrutinizing rental pricing. In November, Washington, D.C., Attorney General Brian Schwalb brought a separate suit against RealPage and 14 landlords, accusing them of “unlawfully colluding” by collectively adopting the rents set by RealPage’s technology and “unlawfully agreeing to exchange competitively sensitive data in violation of the District of Columbia Antitrust Act.”

Earlier this month, Arizona Attorney General Kris Mayes announced a lawsuit against RealPage and nine apartment landlords last week for allegedly conspiring to illegally raise rents for hundreds of thousands of renters in the Phoenix and Tucson metro areas. 

Also earlier this month, North Carolina gubernatorial candidate and Attorney General Josh Stein announced an investigation into RealPage over concerns about anticompetitive conduct to raise the cost of rental housing.

RealPage reaction

RealPage didn’t reply to Multifamily Dive’s request for comment about a potential criminal investigation. Following the initial suit in October 2022, it did provide comment. 

“Rent prices are determined by various factors, including supply and demand as well as each property owner’s unique circumstances,” RealPage said in an email to Multifamily Dive. “There is a housing supply shortage and that alone drives prices higher. Occupancy has been at an all-time high.”

RealPage noted that revenue management is used across many industries, and its system isn’t the only option for property operators in the U.S.

“RealPage’s revenue management software is purposely built to be legally compliant,” the company said in the statement. “It focuses on the internal supply and demand dynamics at a particular property and does not consider or have any visibility into availability [supply] at competing properties.”

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