The U.S. Department of Justice filed a lawsuit against RealPage on Friday, accusing the company of violating antitrust laws by conducting a price-fixing scheme that involved the exchange of private rental information among competing landlords.
The U.S. Department of Justice said RealPage, a Texas-based software company widely used in the real estate industry, had replaced “competition with coordination” in urban areas, leading to widespread artificial inflation of rental prices.
RealPage “replaces rivalry with unity. It undermines competition and the competitive process. It does so openly and directly – and American renters are paying the price,” Justice Department lawyers wrote in the complaint.
Attorney General Merrick Garland said in a press conference announcing the lawsuit that the lawsuit is the result of a two-year investigation. Eight states, including California, Colorado, Connecticut, North Carolina, Minnesota, Oregon and Tennessee, joined the Justice Department’s lawsuit.
RealPage’s website proudly states that the company provides pricing services for more than 24 million rental units internationally.
“This software is designed, marketed and sold to enable landlords to evade the intense competition in the rental market,” Garland said, claiming RealPage violated the Sherman Antitrust Act, a law designed to combat corporate monopolies.
Exorbitantly high rents are a major concern for young voters, and rental levels have a disproportionate impact on their demographic – one statistic found that 84% of Gen Z residents who live alone rent rather than buy.
RealPage provides its pricing services to a vast majority of companies that manage apartments, Justice Department lawyers said. RealPage describes its services, offered primarily through a program called YieldStar but also through other programs, as “revenue management.”
In practice, companies that manage large apartment buildings in urban areas set their rental rates using a RealPage product like YieldStar by sending information to YieldStar, which in turn generates an algorithm with pricing information for the apartment management companies. The companies acting as landlords then use this information to communicate their rental rates to prospective tenants or to provide renewal rent rates to current tenants who are considering renewing their lease.
According to the US Department of Justice, all companies that manage different apartment buildings pass on “competitively sensitive” pricing data to a market-dominant company, RealPage. RealPage, in turn, “enables landlords to manipulate, distort and undermine market forces.”
The lawsuit cited landlords who had experience with RealPage, with one landlord saying the company could “take the guesswork out of” pricing decisions.
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“I’ve always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and terms. This is classic price fixing,” said another landlord.
RealPage’s press office did not respond to a request for comment.
