T
he U.S. Department of Justice (DOJ) has filed a civil antitrust lawsuit against RealPage Inc., a leading provider of rental software, for allegedly using a pricing algorithm to determine rent prices for landlords. The DOJ, along with attorneys general from eight states, claims that RealPage's dominance in the market is due to its possession of sensitive competitive information obtained illegally.
Key points:
1. The DOJ alleges that RealPage uses a pricing algorithm to determine rent prices for landlords, effectively engaging in price-fixing.
2. The lawsuit was filed in U.S. District Court for the Middle District of North Carolina, with seven other states joining the DOJ and North Carolina in the suit: California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington.
3. The DOJ argues that RealPage's model hinders natural market forces and benefits landlords at the expense of renters.
4. Assistant Attorney General Jonathan Kanter criticized RealPage's statement that its model represents a "rising tide raises all ships" philosophy in action, arguing that for renters, this rising tide means less money for basic necessities like food, healthcare, childcare, and education.
5. The DOJ also alleges that RealPage's dominance in the market is protected by its possession of a large amount of competitively sensitive information obtained illegally.
RealPage responded to the allegations on its website, stating that its product often recommends lowering rent prices when supply and demand dynamics indicate this is necessary. The company is owned by private equity firm Thoma Bravo.
This lawsuit comes at a time when the U.S. is trying to control inflation, with rent prices being a significant contributor to high inflation rates. The DOJ's investigation into real estate practices continues, as they monitor commissions practices following recent rule changes. The National Association of Realtors (NAR) has informed its members that the DOJ is closely watching to ensure agents comply with the August 17 practice changes and warned them not to look for workarounds. Earlier this year, courts allowed the DOJ to reopen its investigation into industry practices based on NAR rules.
