The Justice Department, in collaboration with multiple state Attorneys General, has filed a suit against RealPage Inc., accusing the Texas-based property management software company of creating a pricing algorithm that allegedly reduces competition and inflates rental prices. RealPage has been accused of violating Sections 1 and 2 of the Sherman Act, according to a U.S. Department of Justice from the Justice Department. The complaint asserts that RealPage's software recommendations are derived from confidential data shared among competitors, a practice that distorts fair market competition and affects millions of American renters.
About the allegations handed down by the Court for the Middle District of North Carolina, Attorney General Merrick B. Garland said, as per the U.S. Department of Justice, "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". The Justice Department alleges that RealPage facilitated an environment where landlords could coordinate pricing, effectively bypassing the competitive forces that would otherwise benefit consumers. An internal acknowledgment from RealPage was cited, noting their software as driving every possible opportunity to increase the price, which underlines the company's focus on maximizing profits for landlords over fair market processes.
Acting Associate Attorney General Benjamin C. Mizer highlighted the timing of such conduct amidst a housing affordability crisis, stating, as per the U.S. Department of Justice, "As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents". Serving about 80% of the market with its commercial revenue management software, RealPage has been accused of unlawfully maintaining a monopoly, erecting barriers for competitors that challenge the notion of business on merit.
The complaint also points to RealPage's "auto accept" feature and pricing advisors as tools that push landlords towards adherence to algorithm-generated price recommendations, which "tends to maximize price increases, minimize price decreases, and maximize landlords’ pricing power", according to U.S. Department of Justice. This not only propels RealPage's monopoly but also solidifies an unwelcome stronghold on the rental market, leaving little room for competitive and fair pricing to take root.