The Justice Department and eight states on Friday announced a lawsuit against real estate company RealPage, alleging the company facilitated anticompetitive collusion among landlords nationwide that artificially inflated rents.
The suit is the Biden administration’s latest step in an aggressive strategy targeting anticompetitive behavior by large companies. In announcing the suit, Attorney General Merrick B. Garland told reporters that the company had helped landlords collude to keep rents high across the country.
“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,” Garland said.
The attorneys general of eight states — California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington — joined the administration in the suit, which was filed in a federal court in North Carolina.
According to the suit, RealPage operates payment management systems for millions of landlords nationwide. The suit alleges the company used data from those landlords to feed an algorithm that provided regular price recommendations for their areas.
Those recommendations allowed landlords to keep prices artificially high — knowing competitors would not undercut them — and allowed landlords to avoid downswings in rent prices during market downturns, the complaint says. The arrangement allowed landlords to gain more revenue and RealPage to gain a share of those profits, it says.
The complaint cited numerous internal emails and other communications stating that RealPage executives intended landlords to act together rather than compete with each other over rental prices.
“Everybody knows the rent is too damn high and we allege this is one of the reasons why,” Garland told reporters.
In a statement, RealPage spokesperson Jennifer Bowcock defended the company’s practices, saying that it complied with the law and that its acquisition of the data company LRO, whose data is at the core of the DOJ allegations, was approved by the DOJ in 2017.
Bowcock said the company would “vigorously defend” the suit and called it a distraction from the fundamental market forces driving price increases.
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the statement said.
Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division told reporters that RealPage acquired data on more than 3 million units from landlords using its software, which was supplemented by data from more than 10 million other rental units.
Kanter said RealPage had a significant presence in most rental markets across the country, and in some markets 60 percent or more of landlords used the company.
Under the Biden administration the DOJ and Federal Trade Commission have taken an aggressive stance against internet giants like Amazon and Google as well as large corporations like Live Nation.
Deputy Attorney General Lisa Monaco said Friday that the DOJ will act to protect consumers even though antitrust law has not been updated to handle technological advances like artificial intelligence or machine learning.
“Training a machine to break the law is still breaking the law,” Monaco said.
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