A real estate firm is accused by the Justice Department of artificially escalating rental prices across the United States.
Based on the claims, the Texas-based corporation allegedly utilizes confidential landlord data that isn't publicly available to refine their algorithm for rental price suggestions. This supposedly forms a "massive scheme to undermine fair competition," as asserted by a Justice Department representative.
In a press release, Attorney General Merrick Garland commented, "Tenants should not be charged more rent due to a company innovating ways to collude with landlords and transgress the law." The accusations propose that RealPage's algorithm enables landlords to exchange secret, sensitive information related to competition and adjust their rent prices accordingly.
According to the complaint, the software relies on non-public landlord information, which includes monitoring competitor prices or incentives, to help landlords maximize their earnings from tenants in various ways.
The unnamed Justice Department official stated, "Landlords and RealPage are aware that they have multiple tools to thrive in a free market." They further explained that RealPage's software eliminates the need for landlords to compete fiercely for tenants, as they can rely on the algorithm.
The complaint brings a novel argument that the algorithm developed by the company infringes upon antitrust rules, as per Justice Department officials.
The lawsuit filed by the Justice Department comes amid a surge in corporate landlords, with ownership of numerous rental units being a key focus of the case.
As one official pointed out, "It's not hard to imagine all this collusion occurring amid...a surge in corporate landlords who are evicting renters at higher rates compared to individual landlords, who often lack the funds to utilize this type of software."
The software, the Justice Department claims, holds a monopoly in the rental management software market. This software is employed in managing over 3 million rental properties across the United States, with a majority based in Southern states.
The Justice Department stated in their announcement of the charges, "In a free market, these landlords would typically compete against each other to attract tenants by offering competitive pricing, discounts, incentives, lease terms, and other aspects of apartment leasing." However, they argue that RealPage both encourages this scheme and maintains a monopoly in the market for commercial revenue management software.
This is a continuously evolving story. Updates are forthcoming.
The Justice Department argues that RealPage's software, used by over 3 million rental properties, provides landlords with a monopoly in the market for rental management, potentially enabling them to collaborate and infringe upon antitrust rules. This collaborative behavior could lead to tenants being overcharged due to the company's innovative methods that involve private landlord data.
