DOJ Sues RealPage for Alleged Rent-Fixing Scheme: A Major Test for Antitrust Laws

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In a dramatic escalation of antitrust enforcement, the U.S. Department of Justice (DOJ) has filed a landmark lawsuit against RealPage, a leading provider of rental management software. This move, announced on Friday, targets the company's alleged role in an illegal scheme to manipulate rental prices nationwide.

The Allegations Unpacked

Attorney General Merrick Garland was unequivocal in his condemnation. “Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Garland asserted. The lawsuit, lodged in the U.S. District Court for the Middle District of North Carolina, accuses RealPage of facilitating a covert network where landlords use its technology to share sensitive pricing data and coordinate rent increases.

This lawsuit is a pioneering effort, marking the first major antitrust case to challenge an algorithmic system directly. The DOJ claims that RealPage’s software, by enabling real-time adjustments in rent prices and facilitating information sharing among landlords, undermines the competitive nature of the rental market.

RealPage’s Defense

RealPage, owned by private equity firm Thoma Bravo, has consistently denied any wrongdoing. In a statement, spokeswoman Jennifer Bowcock expressed disappointment with the DOJ’s actions. “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,” Bowcock said. She argues that the lawsuit misrepresents the technology as a scapegoat for broader economic issues impacting housing affordability.

Bowcock also highlighted that the DOJ had previously reviewed and cleared RealPage’s acquisition of another company in 2017, questioning the current timing and basis of the allegations. “We believe the claims brought by DOJ are devoid of merit and will do nothing to make housing more affordable,” Bowcock added.

The Bigger Picture

The timing of the lawsuit aligns with a critical phase in the housing market. The U.S. is witnessing a surge in apartment construction, the highest in four decades, leading to increased vacancy rates. Amid this shifting landscape, RealPage’s software is alleged to have exacerbated rental inflation by discouraging price competition among landlords.

The DOJ's complaint argues that a truly competitive market should enable landlords to vie for renters through a balance of price and quality. “A free market requires that landlords compete on the merits, not coordinate pricing,” the complaint states. The lawsuit seeks an injunction to halt RealPage’s alleged information-sharing practices and challenge what the DOJ describes as the company's monopolistic behavior.

What’s at Stake

This lawsuit could have profound implications for how technology intersects with market competition. As RealPage stands accused of replacing competition with coordination, the outcome of this case may reshape industry practices and set new precedents in antitrust law.

In a market where fair competition and housing affordability are critical, the DOJ's bold move underscores a commitment to protecting renters from potential exploitation. As this legal battle unfolds, it promises to be a defining moment for both the rental industry and antitrust enforcement.