Dive Brief:

• The Justice Department and eight states filed an antitrust lawsuit Friday against RealPage, alleging an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market,” according to a news release from the DOJ.
• The civil suit, which was filed in the U.S. District Court for the Middle District of North Carolina, alleges that the Richardson, Texas-based software and data firm violated the Sherman Act, which prohibits unfair monopolies. 
• In a statement to Multifamily Dive, RealPage spokesperson Jennifer Bowcock said RealPage’s software “is purposely built to be legally compliant, and we have a long history of working constructively with the DOJ to show that.”

Dive Insight:

The DOJ alleges that RealPage’s agreements and conduct harm the competitive process in local apartment markets across the United States. It contends that the company encourages loyalty to its algorithm’s recommendations through various methods, including an “auto accept” functionality and the use of pricing advisors who monitor landlords’ compliance. 

Through that functionality, RealPage’s software can maximize price increases, minimize price decreases and maximize landlords’ pricing power, according to the DOJ. The Justice Department also said the company “trained” landlords to limit concessions and discounts to apartment residents. 

“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 B. Garland said in the news release. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents.”

The Justice Department said landlords agree to provide pricing data to the company because they know they can leverage the sensitive information of their rivals.

“RealPage’s core value proposition creates a self-reinforcing feedback loop of data and scale advantages,” the suit said. “The sharing of competitively sensitive information among rivals attracts more landlords that seek to maximize revenues and extract more money from renters.”

In addition, the DOJ’s complaint alleges that RealPage maintained a monopoly over commercial revenue management software for apartments in the U.S., with an approximately 80% market share. 

The Biden administration has recently focused on cracking down on what it sees as anti-competitive activity in several sectors, targeting multifamily, hotels and other industries. The attorneys general of these states joined the suit:

• California. 
• Colorado.
• Connecticut.
• Minnesota.
• North Carolina.
• Oregon.
• Tennessee.
• Washington.

RealPage’s reaction

The RealPage statement said the company intends to “vigorously defend” itself and that the claims are devoid of merit and will do nothing to make housing more affordable.

“In 2017, when the DOJ granted antitrust clearance for our acquisition of LRO [Lease Rent Options], the DOJ also analyzed extensive information about our revenue management products without objecting to them in any way,” Bowcock said.

RealPage called the suit a distraction “from the fundamental economic and political issues driving inflation throughout our economy — and housing affordability in particular,” which it said should be the focus of policymakers.

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” Bowcock said.

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