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The U.S. Department of Justice (DOJ) has entered into a massive antitrust lawsuit against software platform RealPage, backing the renters who are suing the company, and the landlords that use it, for price fixing.
The class-action suit is being heard by a federal court in Tennessee and combines 28 different similar cases from across the states. The plaintiffs allege that RealPage’s pricing algorithm, used by many of the nation’s largest landlords, is anti-competitive and artificially raises rents for multifamily and student housing.
Realpage had moved to have the case dismissed, arguing that the plaintiffs had not shown that use of its revenue-management software amounts to a conspiracy, among other defenses. The DOJ, which is not a party to the case, argued that the case should be heard, according to its statement of interest in support of the plaintiffs filed last week, and first reported by ProPublica. The DOJ had previously notified the court of its intent to participate in the case, and will join oral hearings scheduled for next month.
There is a separate antitrust lawsuit against RealPage in Washington, D.C, which the D.C. attorney general filed against the firm in early November.
“As technology has evolved, so too have methods of price fixing,” the DOJ wrote in its statement. “Today, software algorithms can be employed to fix prices — and this modern machinery may be easier and more effective than past methods of price fixing.”
The DOJ argued that RealPage’s pricing algorithm, which allegedly uses real-time, private information from its client landlords, constitutes both “concerted action” and an “unreasonable restraint” on trade, two tests of the Sherman Act which forms the basis of antitrust law in the United States.
RealPage’s defense said its algorithm recommends rather than mandates pricing. The DOJ shot back by pointing to allegations from tenants that RealPage does enforce its pricing, or at least constrains landlords from setting rents freely, and arguing that “tacit agreement” could be enough to be anti-competitive.
The court itself has not yet approved or denied the motion to dismiss, and oral arguments are scheduled for Dec. 11.
RealPage did not immediately respond to a request for comment. A spokesperson for the company previously said in regard to the Washington, D.C., suit: “In seeking to draw a causal connection between revenue-management software like ours and increases in market-wide rents, this copycat suit repeats the inaccuracies of predecessor cases.”
Chava Gourarie can be reached at cgourarie@commercialobserver.com.
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