The Department of Justice (DOJ) continues to take aim at alleged antitrust violations in the real estate industry.
The DOJ filed a civil suit against RealPage on Friday, claiming that the company’s YieldStar and AI revenue management (AIRM) software allowed multifamily landlords to artificially inflate rents through the sharing of private information. This information was fed through the platform’s algorithms to make rent-price recommendations.
“The software feeds landlords daily pricing recommendations, taking the guesswork out of understanding what competing landlords are doing,” Benjamin Mizer, the DOJ’s acting associate attorney general, said in a statement. “As a result, landlords can align rental prices, and tenants are limited in their ability to successfully negotiate counter offers or seek discounts. This type of conduct is egregious.”
The complaint alleges that landlords using YieldStar agreed to provide RealPage “competitively sensitive data” that isn’t available to the public. The information is used to generate price-floor recommendations for landlords and their competitors, depriving the market of independent decision-making. The DOJ claims this allowed landlords to align on pricing to “raise the tide” for those using YieldStar and AIRM.
Further, the DOJ accuses RealPage of attempting to monopolize the market for commercial revenue management software through exclusionary conduct with “self-reinforcing data and scale advantages.”
On a Friday conference call about the case, the DOJ highlighted parts of the complaint involving quoted communications in which RealPage executives said their product helps to identify situations to increase rents. The DOJ also claimed that RealPage’s best practices can help landlords eliminate concessions such as a month of free rent or access to amenities.
Economic policy organization Groundwork Collaborative praised the action as a “good day for renters and families and a bad day for predatory landlords.”
“The Department of Justice is right to take on the affordability crisis that RealPage has been supercharging,” Groundwork executive director Lindsay Owens said in a statement. “Algorithms are being used to unfairly drive up prices for housing, meat, and more. This price-fixing must be stopped.”
A DOJ official said that additional landlord defendants could be added to the complaint in the future. Several states — North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington — are also listed as plaintiffs in the lawsuit.
The DOJ’s suit is just the latest of a string of antitrust lawsuits filed against RealPage. According to The Real Deal, at least seven class-action suits were filed against the company in 2022, which were sparked by an expose from ProPublica.
In 2023, a group of renters filed a suit in Tennessee alleging that RealPage organized a “cartel” of the biggest landlords in the country.
The RealPage suit comes after years of DOJ involvement in antitrust lawsuits against the real estate industry, most notably the class-action suits against the National Association of Realtors, brokerages and multiple listing services that allege anticompetitive behavior related to buyer broker compensation offers negotiated on the MLS.
The $418 million settlement that NAR reached with plaintiffs in multiple class-action antitrust suits in March has sent shockwaves through the industry as it tries to implement and adjust to new rules agreed to in the settlement.