
On Tuesday, the U.S. Department of Justice (DOJ) took a significant step by filing a lawsuit against six corporate landlords and a software company, accusing them of collusion to manipulate rental prices.
This serious allegation revolves around the inappropriate sharing of sensitive competitive information through pricing algorithms.
Allegations Against Corporate Landlords
The lawsuit claims that these landlords conspired to align their pricing strategies using a technological platform provided by RealPage.
This company specializes in collecting and analyzing proprietary data to provide pricing recommendations.
The DOJ argues that RealPage promoted its software as a means for landlords to collaborate, effectively stabilizing or fixing rental prices.
Such actions hinder competition that could potentially lead to lower rental costs.
In its complaint, the DOJ highlighted marketing claims by RealPage that suggested the software was designed to encourage a unified approach among landlords rather than promoting rivalry.
Instead of competing, the software purportedly helps landlords resist the temptation to sharply lower prices in response to market fluctuations or falling occupancy rates.
The primary objective was to maximize revenue, even in tough economic climates.
Impact on Market Dynamics
The complaint also details the range of sensitive data shared through this platform.
This includes confidential information like rental prices from existing leases, lease conditions, and predictions about future occupancy rates.
Typically safeguarded within the industry, such data becomes vulnerable through this shared platform.
Moreover, the algorithm not only recommends pricing but also keeps an eye on landlords’ compliance with these suggestions and promotes various tenant-friendly policies.
In essence, the software allows landlords to hand over control of their rental pricing decisions to RealPage, incorporating automated settings aimed at maximizing income.
The DOJ criticized RealPage for fostering practices that distort market dynamics, labeling the company’s behaviors as both predatory and exclusionary.
The lawsuit cites potential breaches of antitrust laws, particularly the Sherman and Clayton Acts, which exist to curb anti-competitive conduct and deter monopoly formation.
Additionally, the DOJ’s complaint includes accusations of violations under ten different state laws from areas such as California, North Carolina, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, Oregon, Tennessee, and Washington.
Response from Defendants
To address these allegations, the DOJ is seeking an injunction to prevent the defendants from continuing these purported illegal practices or any similar operations in the future.
They stressed the importance of prioritizing affordable housing and criticized corporate strategies that put profits ahead of people’s needs.
In response to the lawsuit, Greystar Real Estate Partners LLC, one of the named parties, voiced their disappointment and denied any claims of anti-competitive behavior.
They asserted that they operate with integrity and are prepared to vigorously defend themselves against the accusations put forward in the lawsuit.
Source: Jurist