“Breaking News: DOJ Sues Landlords for Price-Fixing Algorithm – Get the Inside Scoop!”
The Department of Justice has taken legal action against six of the nation’s largest landlords, accusing them of using a pricing algorithm to unlawfully collaborate in raising rents across the country. This lawsuit is an expansion of an antitrust complaint filed in August against property management software-maker RealPage, alleging illegal price-fixing to reduce competition among landlords.
The investigation into this scheme followed a 2022 ProPublica story that revealed how RealPage was assisting landlords in setting rents nationwide in a manner that could lead to cartel-like behavior. The six landlords manage over 1.3 million apartments in 43 states and the District of Columbia, with one of them already reaching a settlement with prosecutors.
Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division stated that the landlords shared sensitive information about rental prices and used algorithms to coordinate in keeping rent prices high, prioritizing profits over affordability. The lawsuit aims to end this practice and make housing more accessible.
Since the initial investigation, senators have introduced legislation to ban similar rent algorithms, and tenants have filed numerous federal lawsuits. Cities like San Francisco, Philadelphia, and Minneapolis have also taken steps to prohibit landlords from using such algorithms.
RealPage’s software collected nonpublic pricing data from multiple property managers and utilized a common algorithm to recommend rent levels, violating rules against coordination. The landlords were accused of communicating directly about pricing through calls, emails, and forums hosted by RealPage.
RealPage’s Senior Vice President Jennifer Bowcock defended the company, stating that they have removed nonpublic data from their software despite believing it was legal and pro-competitive. The lawsuit also involves landlords like Greystar and Camden Property Trust, with statements from these companies denying any anti-competitive practices.
One landlord, Cortland, has agreed to stop using competitors’ nonpublic data under a settlement with prosecutors. The lawsuit also names Cushman & Wakefield and Pinnacle as defendants, along with Blackstone’s LivCor. The attorneys general of Illinois and Massachusetts have joined the lawsuit, bringing the total number of participating states to 10.
A White House report highlighted the impact of algorithmic pricing on renters, estimating that it costs renters an average of $70 more per month in units where it is used. The total added cost to renters from these algorithms in 2023 was estimated to be around $3.8 billion.
The future of the lawsuit under the incoming administration remains uncertain, with President-elect Donald Trump nominating Gail Slater to lead the Justice Department’s antitrust division. Slater is a veteran antitrust attorney and economic advisor to JD Vance.