RealPage Sued by Justice Department for Alleged Rent Price-Fixing

The algorithm is jacking up our rent — or, at least, the government seems to think so. The Justice Department launched an antitrust lawsuit against private equity firm Thoma Bravo’s RealPage Friday for allegedly helping property managers conspire to drive up rent on millions of units across the US.

The Devilish Rent Down in Georgia

According to the Zillow Observed Rent Index, the average US rent has risen more than a third since the early days of the pandemic, from $1,551 in February 2020 to $2,069 on July 31. The DoJ’s civil suit, filed in North Carolina federal court, claims RealPage, which controls an 80% market share of commercial revenue management software for housing rentals, is squelching competition with its algorithm and holds an illegal monopoly on rent-setting software.

RealPage’s price-setting algorithm collects data on rents from competing landlords (some of it public and some confidential), allegedly allowing them to raise rents in illegal price collusion. The DoJ said landlords using RealPage own 30% or more of the rental apartments in some cities; the lawsuit focuses on southern hubs including Atlanta, Charlotte, Dallas, and Nashville. Recent legal victories prove the suit may have a chance of going forward:

• On the real estate front, The National Association of Realtors agreed in March to pay $418 million to settle claims that its members conspired to keep agent commissions high. The association agreed to scrap its standard 6% commission on house sales, which was more than double what is typical in other countries.
• On the price collusion and algorithms front, in May a judge declined to dismiss a DoJ antitrust suit against Agri Stats, a meatpacking industry data provider accused of collecting and sharing confidential data that let its meat-processor clients conspire to hike prices for restaurants, grocery stores, and consumers.

Rent Dissent: While the case could be a landmark test of how algorithms and AI impact anticompetitive market behaviors, RealPage denies all allegations. “RealPage’s revenue management software is purposely built to be legally compliant, and we have a history of working constructively with the DOJ to show that,” the company said.