The Justice Department and eight states filed suit against real estate company RealPage on Friday, alleging that the company facilitated anti-competitive agreements among landlords nationwide that artificially inflated rents.
The lawsuit is the latest step by the Biden administration in an aggressive strategy to target anticompetitive behavior by large corporations. In announcing the lawsuit, 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 rent just because a company found a new way to cooperate with landlords and break the law,” Garland said.
The attorneys general of eight states – California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington – joined the government in the lawsuit, which was filed in federal court in North Carolina.
According to the lawsuit, RealPage operates payment management systems for millions of landlords across the country. The lawsuit alleges that the company used data from those landlords to feed an algorithm that regularly provided price recommendations for their areas.
These recommendations allowed landlords to keep prices artificially high – knowing that competitors wouldn’t undercut them – and enabled landlords to avoid rent drops during market downturns, the lawsuit says. The arrangement allowed landlords to earn higher revenues and RealPage to get a share of those profits, it says.
The complaint cites numerous internal emails and other communications stating that RealPage management wanted landlords to work together and not compete on rent.
“Everyone knows the rent is damn high, and we argue that’s one of the reasons why,” Garland told reporters.
In a statement, RealPage spokeswoman Jennifer Bowcock defended the company’s practices, saying it had complied with the law and that the acquisition of data company LRO, whose data is at the center of the Justice Department’s allegations, was approved by the Justice Department in 2017.
Bowcock said the company would “vigorously defend” the lawsuit, calling it a distraction from the fundamental market forces that led to the price increases.
“We are disappointed that after many years of investigation and cooperation on the antitrust issues surrounding RealPage, the Department of Justice is now bringing a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the statement said.
Jonathan Kanter, assistant attorney general of the Justice Department’s antitrust division, told reporters that RealPage used its software to acquire data on more than three million rental units from landlords, and that data on more than 10 million other rental units is also available.
Kanter said RealPage has a strong presence in most rental markets across the country, with 60 percent or more of landlords in some markets using the company.
Under the Biden administration, the Justice Department and the Federal Trade Commission have taken an aggressive stance against internet giants like Amazon and Google, as well as major corporations like Live Nation.
Deputy Attorney General Lisa Monaco said Friday that the Justice Department will take action to protect consumers even if antitrust laws have not been adapted to technological advances such as artificial intelligence or machine learning.
“Training a machine to break the law is still breaking the law,” Monaco said.
