“Americans should not be paying more rent because a company has found a new way to conspire with landlords to break the law,” Attorney General Merrick Garland said Friday.
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RealPage is now under the jurisdiction of the U.S. Department of Justice.
The U.S. Justice Department and eight state attorneys general filed a lawsuit Friday charging RealPage with being at the center of an illegal scheme to raise rental prices in cities across the country.
The new lawsuit, filed in the U.S. District Court for the Middle District of North Carolina, is just the latest challenge against a company that uses advanced technology and works with some of the nation’s largest landlords to adjust rental prices in near real-time, but it reportedly Is the first major antitrust lawsuit to directly target algorithms New York Times.
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“Americans should not be paying more rent because one company has found a new way to collude with landlords to break the law,” Attorney General Merrick Garland said in a statement Friday. “We claim that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and adjust rents. The use of software as a sharing mechanism does not exempt the program from Sherman Act liability, and the Department of Justice will continue to aggressively enforce antitrust laws and Protect the American people from violators.
RealPage, owned by private equity firm Thoma Bravo, has denied wrongdoing in previous lawsuits filed by renters and Washington, D.C., and did so again in a statement to Inman on Friday.
“We are disappointed that after years of educating and collaborating on RealPage’s antitrust issues, the U.S. Department of Justice has chosen to file this lawsuit at this time in an attempt to bring years of responsible use to the benefit of the public,” said RealPage spokesperson Jennifer. Competing technology as a scapegoat “This simply distracts from the fundamental economic and political issues driving inflation across the economy, particularly housing affordability, which should be the focus of policymakers in Washington, D.C. “
Bowcock noted that the Justice Department previously reviewed RealPage’s 2017 acquisition of one of its companies and cleared the deal of antitrust concerns.
“We believe the charges brought by the Department of Justice are baseless and do nothing to make housing more affordable,” Bowcock said. “We intend to vigorously defend ourselves against these charges.”
In some ways, the lawsuit is timely. RealPage sells its software to landlords as a way to drive down the market, providing them with data to help them set the highest possible rents, despite the underlying impulse to lower prices to fill units.
The country is currently emerging from the highest levels of apartment construction in four decades. That’s pushing up vacancy rates in some markets, testing landlords’ ability to compete with others also trying to fill newly vacant buildings.
“The free market requires landlords to compete on merit, rather than coordinate pricing,” the complaint reads. “Landlords should win over tenants by offering what they believe to be the most attractive combination of price and quality.”
The U.S. Department of Justice and attorneys general are seeking an injunction to prevent RealPage from enforcing its information-sharing framework and halt what they say is the company’s monopoly.
The Justice Department said RealPage had created a way to avoid competing with each other, using RealPage’s own marketing language to outline the company’s pitch to some of the largest landlords in the United States.
“Tenants are entitled to benefit from intense competition among landlords. In good times, such competition should limit rent increases; in hard times, competition should lower rents and make housing more affordable,” the complaint reads. “RealPage’s business was built by defeating natural competitive forces.”
“RealPage replaces competition with coordination. It replaces competition with solidarity. It turns competition and the competitive process on its head. It does it openly and directly — and America’s renters pay the price.
Read the full complaint here (please refresh if you have trouble viewing it):
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