The Ministry of Justice (DOJ) continues to target alleged antitrust violations in the real estate industry.
The Justice Department filed a civil lawsuit against RealPage on Friday, claiming that the company’s YieldStar and AI Revenue Management (AIRM) software allowed multifamily landlords to artificially inflate rents by sharing private information that was fed through the platform’s algorithms to make rental price recommendations.
“The software provides landlords with daily price recommendations, eliminating the guesswork of what competing landlords are doing,” said Benjamin Mizer, assistant attorney general for the Department of Justice, in a statement. “This allows landlords to match rent prices and limits tenants’ ability to successfully negotiate counteroffers or obtain discounts. This behavior is egregious.”
The lawsuit alleges that landlords using YieldStar agreed to provide RealPage with “competitively sensitive data” that is not available to the public. The information is used to create minimum price recommendations for landlords and their competitors, depriving the market of independent decisions. The Justice Department alleges this allowed landlords to coordinate on pricing to “increase consumer favorability” for those using YieldStar and AIRM.
In addition, the Justice Department accuses RealPage of seeking to monopolize the market for commercial revenue management software through exclusionary behavior with “self-reinforcing data and scale advantages.”
During a conference call on the case Friday, the Justice Department highlighted portions of the complaint that included cited communications in which RealPage executives said their product helps identify situations where rent increases are necessary. The Justice Department also claimed that RealPage’s best practices can help landlords avoid concessions such as a month of rent-free time or access to amenities.
Economic policy organisation Groundwork Collaboration praised the action as “a good day for tenants and families and a bad day for predatory landlords.”
“The Department of Justice is right to address the affordability crisis exacerbated by RealPage,” said Lindsay Owens, executive director of Groundwork, in a statement. “Algorithms are being used to unfairly inflate the prices of housing, meat and more. This price-fixing scheme must be stopped.”
A Justice Department official said more landlords could be added to the lawsuit as defendants in the future. Several states — North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington — are also listed as plaintiffs in the suit.
The Justice Department’s lawsuit is just the latest in a series of antitrust lawsuits filed against RealPage. According to The only trueAt least seven class action lawsuits were filed against the company in 2022, sparked by a revelation of ProPublica.
In 2023, a group of tenants in Tennessee filed a lawsuit accusing RealPage of organizing a “cartel” of the country’s largest landlords.
RealPage’s lawsuit comes after years of involvement by the Justice Department in antitrust litigation against the real estate industry, particularly class action lawsuits against the National Association of Real Estate AgentsBrokerage firms and multiple listing services alleging anti-competitive conduct in connection with buyer’s agent compensation offers negotiated through the MLS.
The $418 million settlement that NAR reached in March with plaintiffs in several class action antitrust lawsuits sent shockwaves through the industry as it tries to implement and adapt to the new rules agreed to in the settlement.
