Nation’s biggest landlords used algorithm to overcharge renters in two Alabama cities, feds claim
An expanded federal antitrust lawsuit alleges renters in parts of two of Alabama’s largest cities may have been paying too much due to illegal scheming between some of the nation’s biggest landlords.
The U.S. Department of Justice announced this week it was expanding an antitrust complaint against RealPage Inc., maker of the software that 80% of landlords use to price apartments, to include six landlords that collectively operate 1.3 million rental units in 43 states.
In August, the Justice Department and eight states sued RealPage, based in Richardson, Texas, alleging the company contracts with competing landlords for nonpublic, competitively sensitive information about apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software.
On Tuesday, Justice added six landlords to the complaint, along with two more states. The complaint alleges RealPage’s software platform includes data from rental applications, executed leases and lease renewals shared by the landlords, which is used to generate pricing recommendations back to them, though they are ostensibly in competition to attract and retain renters.
Alabama is not a party to the suit, yet some of the companies named in the complaint manage or own properties in Alabama, primarily in Birmingham and Mobile. The complaint does not specify by name the apartment complexes in Alabama.
The six landlords are: Greystar Real Estate Partners LLC; Blackstone’s LivCor LLC; Camden Property Trust; Cushman & Wakefield Inc. and Pinnacle Property Management Services LLC; Willow Bridge Property Company LLC; and Cortland Management LLC.
“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division said in a news release.
The suit against RealPage and the landlords, “seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country,” Mekki said.
The federal complaint identifies markets in which RealPage and the landlords allegedly made agreements to share competitively sensitive, nonpublic information to set rental pricing that was likely to limit competition, and thus, cost renters more money. In southeast Birmingham and north Mobile, according to the complaint, up to 80% of both 1- and 2-bedroom apartment units managed by the companies were covered by RealPages’ software.
That market penetration would have allowed landlords to align pricing in those parts of Birmingham and Mobile in ways that, “have harmed, or are likely to harm, competition, and thus renters,” the complaint states.
According to the Justice Department complaint, RealPage’s software generates recommendations for rental pricing to participating landlords based on their and their rivals’ competitively sensitive information. In a free market, it states, renters would have a better chance of finding better rental terms because the landlords would be competing to attract them through pricing, discounts and concessions.
The nation’s largest apartment manager, Charleston, S.C.-based Greystar, said in a statement it was “disappointed” in the Justice Department’s action.
“Greystar has and will conduct its business with the utmost integrity,” it stated in a news release. “At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”
The Justice Department further claims RealPage uses collusion with landlords and its data trove to maintain a monopoly in the market for commercial revenue management software. RealPage’s platform is the market leader, according to the complaint.
The department is asking the court to order the companies to stop anticompetitive collusion and take any steps necessary to restore fair market conditions in the affected areas.