Uncle Sam now targets six landlord giants in war on alleged algorithmic rent fixing

One of ya is gonna sing like a canary, prosecutors say

The US Justice Department on Tuesday expanded its antitrust lawsuit against property management software vendor RealPage, which is accused of unlawful algorithmic rent-fixing, to include six of the largest US landlords while also proposing a settlement to resolve the case against one of the defendants.

In August 2024, the Justice Department and the Attorneys General of eight US states filed a civil antitrust complaint against RealPage for offering software that competing landlords allegedly have used to coordinate rent hikes and unfairly hit renters in the pocket.

The newly filed amended complaint has been joined by the Attorneys General of Illinois and Massachusetts and names six additional defendants – the real estate firms alleged to have used RealPage's software to collude and set rent prices.

These companies – Greystar Real Estate Partners LLC (Greystar); Blackstone’s LivCor LLC (LivCor); Camden Property Trust (Camden); Cushman & Wakefield Inc and Pinnacle Property Management Services LLC (Cushman); Willow Bridge Property Company LLC (Willow Bridge) and Cortland Management LLC (Cortland) – oversee more than 1.3 million units in 43 states and the District of Columbia. And they're alleged to have violated antitrust law through the sharing of non-public data and algorithmic price setting designed to keep rents high by avoiding the downward price pressure of competition.

"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," said Acting Assistant Attorney General Doha Mekki of the Justice Department’s antitrust division, in a statement.

"Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country."

Last month, Texas-based RealPage said it had received notice that the Justice Department had closed its criminal investigation of the company. The rental management software biz said it would continue to fight the remaining civil lawsuits against the company, insisting that the litigation is "based on misinformation and baseless allegations."

The amended complaint [PDF] has grown by 46 pages and includes new details that seemingly support the government's allegations that the defendant companies worked together to set rents. For example, this added passage describes how executives at competing firms allegedly shared internal information:

[I]n March 2020, a senior executive at Greystar obtained a copy of Willow Bridge’s sensitive strategic plans regarding the COVID-19 pandemic. The plans included Willow Bridge’s corporate protocols for concessions, rent increases, and lease terms. The plans recommended that property managers work closely with YieldStar and LRO to preserve rent integrity. The Greystar executive forwarded Willow Bridge’s plans to executives at Cushman & Wakefield and another landlord. All four landlords compete with one another.

Another new passage describes what appears to be the willful flouting of price fixing laws.

For example, in Minnesota, property managers from Cushman & Wakefield, Greystar, and other landlords regularly discussed competitively sensitive topics, including their future pricing. When a property manager from Greystar remarked that another property manager had declined to fully participate due to 'price fixing laws,' the Cushman & Wakefield property manager replied to Greystar, 'Hmm... Price fixing laws huh? That’s a new one! Well, I’m happy to keep sharing so ask away. Hoping we can kick these concessions soon or at least only have you guys be the only ones with big concessions! It’s so frustrating to have to offer so much.'

Essentially, these rental property firms are claimed not just to have relied on a common software pricing algorithm powered by their unlawfully shared internal data, but to have communicated with each other directly to keep prices aligned. The businesses are alleged to have regularly conducted "market surveys" in which property managers shared sensitive competitive data about rents, occupancy, pricing strategies, and discounts. They're also alleged to have participated in "user groups" hosted by RealPage and to have shared information about configuring RealPage's software with a common set of parameters.

The Justice Department has proposed a consent decree for one of the defendants, Cortland, which manages more than 80,000 rental units across 13 states. If the proposal is accepted by the court, Cortland is expected to cooperate with the Justice Department's case against the other companies.

The proposed decree requires Cortland to not use competitors' competitive pricing data to train machine-learning models, nor employ third-party software or algorithms for pricing apartments except under the supervision of a court-appointed monitor.

Another requirement would prevent the firm from seeking or disclosing competitively sensitive data from or with other property management entities for the purpose of price setting.

And it seems the biz is happy with the deal offered by prosecutors.

“Cortland is pleased to announce the US Department of Justice filed a proposed settlement that would resolve the antitrust division’s civil investigation into Cortland related to antitrust violations in the multifamily housing industry," it told us in a statement.

"The terms of Cortland’s settlement have been agreed to with the Department of Justice and will be filed with the court for its approval. We look forward to putting the federal government’s investigations behind us in 2025, as we continue to seek opportunities to invest in tools and services that will improve resident experience and the success of our managed communities.”

Meanwhile, RealPage SVP of communication and creative Jennifer Bowcock told The Register, referencing the upcoming change of administration in the US:

We are disappointed that the DOJ, just one month after abandoning its baseless criminal investigation and less than two weeks before the agency changes hands, is expanding its civil lawsuit related to use of revenue management software. Fewer than 10 percent of all rental housing units in the US use RealPage software to suggest rental prices, and our software recommendations are accepted less than half the time, as the DOJ has acknowledged.

It does not make sense to now sue these, or any, property management companies using RealPage, as our software was purposely built to be legally compliant. It’s past time to stop scapegoating RealPage - and now our customers - for housing affordability problems when the root cause of high housing costs is the under-supply of housing which we have been saying from the beginning.

"RealPage’s use of nonpublic data has always been legal, but to help our customers comply with new local legislation that limits the use of nonpublic data, we have already removed nonpublic executed rent pricing data from the highly blended, aggregated and anonymized market range rent information used by our products," Bowcock continued.

"Of note, the politically motivated push to outlaw the use of nonpublic data is misguided; nationally, from 2019-2023, nonpublic executed lease prices were, on average, nearly 1.20 percent lower than the corresponding publicly available pricing information.

"It is also unfortunate that Attorneys General of Massachusetts and Illinois are joining this flawed civil case that seeks to blame pro-competitive technology that has been used responsibly for years. Lack of supply is the root cause of the housing affordability crisis."

She also vowed the software maker would fight on: "We are still reviewing the DOJ’s new claims, but we continue to believe this lawsuit will do nothing to make housing more affordable and will stifle the innovation that helps the US remain globally competitive. We are proud of the solutions RealPage provides, and we remain committed to vigorously defending ourselves and our customers against the DOJ’s accusations." ®