Justice Department Accuses RealPage of Price-Fixing Apartment Rents

The U.S. Department of Justice announced Friday it sued real estate software company RealPage for allegedly colluding with landlords to price-fix higher rents on apartments around the country.

The DOJ said it filed an antitrust lawsuit against the company, backed by eight other states including California, Colorado, Minnesota, North Carolina and Washington, for allegedly allowing landlords to secretly raise rents “beyond market forces,” The New York Times reported.

In remarks on the lawsuit, Attorney General Merrick Garland said Friday the DOJ has sued RealPage after a two-year investigation for violating the Sherman Antitrust Act, which protects competition in the marketplace.

“Antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert,” Garland said. “And Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law.”

RealPage, owned by private equity firm Thoma Bravo, is a subscription data company that allows landlords to share details on rents that are normally confidential or not widely available. Landlords who know comparable rents in their markets are able to quickly adjust their rents up or down.

In a statement Friday, RealPage said the DOJ’s claims were “devoid of merit and will do nothing to make housing more affordable,” The Associated Press reported.

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the company said.

Spokespeople for RealPage and the DOJ did not immediately respond to requests for further comment.

Under federal antitrust laws, landlords may not share confidential data with each other that would allow them to align their pricing because it would cause renters to pay more than they normally would in a competitive market, according to Garland. RealPage has faced criticism in the past — including a class-action suit by tenants — that its pricing algorithm used by some of the largest landlords artificially raised rents.

Garland said in his remarks that RealPage “understands what it’s doing” by advertising its service to landlords across the country as a tool to help them “sidestep vigorous competition in the rental market.”

RealPage has previously denied other accusations of illegal collusion and argued that landlords are not required to use its software, the Times reported. The company has instead blamed the country’s rising rents on a lack of housing units.

Garland added on Friday that the DOJ will continue to pursue its lawsuit and “protect Americans from illegal conduct that undermines competition and drives up prices.”

Isabelle Durso can be reached at idurso@commercialobserver.com.