Real estate company helped to artificially inflate rents across America, Justice Department alleges

By Holmes Lybrand and Evan Perez, CNN

(CNN) — The Justice Department has filed a civil lawsuit against the real estate company RealPage, alleging the company’s software uses landlord data to artificially inflate the price of rent across the United States by quelling competition in the market.

According to the complaint, the Texas-based company uses nonpublic data from landlords to train RealPage’s algorithm for pricing recommendations, creating a “vast scheme to subvert the competitive process,” one Justice Department official said.

“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,” Attorney General Merrick Garland said in a statement Friday. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents.”

The software, according to the complaint, uses non-public data provided by landlords to see what competitors are charging or offering to maximize the amount landlords can charge as well as other ways they can make more money from renters.

“The rent is too damn high, and this is one of the reasons why,” Garland told reporters during a press conference on Friday.

The complaint is unique in its allegation that an algorithm created by the company violates antitrust laws, Justice Department officials say, but still represents “one of the oldest” examples of violating antitrust laws in the United States.

The lawsuit from the Justice Department comes amid a rise in corporate landlords – companies that own large numbers of rental units – a fact that was central to the case.

“It is not far from our minds that all of this collusion is occurring against the backdrop of…a concentration of corporate landlords,” one official said of the complaint, “of people being evicted at higher rates when their landlords are corporate landlords who can afford to use this kind of software.”

The software, which the Justice Department says runs a monopoly on rental management software, is used in managing 3 million rental units across the United States, most of which are in Southern states.

“In a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing,” the Justice Department said in announcing the charges. “RealPage also uses this scheme and its substantial data trove to maintain a monopoly in the market for commercial revenue management software.”

This is a developing story. It will be updated.

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