Pricing alignment schemes contributed to higher rent prices throughout Southern California.
August 24, 2024 – OAKLAND, CA – California Attorney General Rob Bonta on Friday, alongside the U.S. 
Department of Justice, and a bipartisan coalition of eight attorneys general, filed a lawsuit against RealPage, a revenue management software company used by landlords to price multifamily rental housing units. The lawsuit alleges RealPage enabled landlords to artificially raise rents by participating in a pricing alignment scheme that increased their rent revenue across the board, enabled by the illegal sharing of confidential pricing and supply information. This harmed consumers by decreasing competition, limiting price negotiation, and increasing prices in the rental housing industry. Pricing alignment schemes affected rental housing throughout California, especially in multifamily buildings in Southern California including in Orange County, Anaheim, Santa Ana, Irvine, Riverside, San Bernardino, Ontario, Rancho Cucamonga, Temecula, Murrieta, San Diego, and Carlsbad.
“Anticompetitive agreements are illegal, whether done by a human or software program. RealPage misused private and sensitive consumer data to take the competition out of the rental industry, leaving renters no other choice but to pay the intentionally high prices that landlords agreed to set,” said Attorney General Bonta. “This means that even if rental home supply was high, rent prices stayed the same, and in some cases, rents went up. This conduct is unacceptable and illegal, and given California’s current housing shortage and affordability crisis, it is causing real harm. Every day, millions of Californians worry about keeping a roof over their head and RealPage has directly made it more difficult to do so.”
RealPage is in the business of generating rent increases and growing revenue for landlords by using algorithmic models to recommend price increases to subscribers. It does so by amassing competitively sensitive data from competing landlords through its pricing algorithms and sharing this data among subscribers. Landlords understand that their nonpublic data will be used to recommend prices not just for their own units, but also for competitors who use the programs. Landlords agree to provide this information because they understand they will benefit from the information of their rivals. In other words, RealPage knows what competing landlords are charging and can increase profits for landlords by using that information to recommend landlords set or raise their prices uniformly, thereby eliminating competition, and leaving renters no choice but to pay artificially high prices.
Over the last four decades, housing needs have significantly outpaced housing production in California. Housing costs have skyrocketed, making it harder for Californians to keep a roof over their heads. California's 17 million renters spend a significant portion of their paychecks on rent, with an estimated 700,000 Californians at risk of eviction.
The lawsuit filed on Friday alleges RealPage violated Sections 1 and 2 of the Sherman Antitrust Act, which prohibits anticompetitive agreements, monopolization, and attempted monopolization. Monopolization offenses occur when a single firm maintains a monopoly unlawfully, by using its control of the market to exclude rivals and harm competition. RealPage’s unlawful sharing of nonpublic, competitively sensitive data aligns landlords’ pricing and effectively removes the competitive pressure that benefits renters. Without competitive pressure, landlords have no incentive to decrease prices or offer discounts common in rental markets, like a free month or waived fees. RealPage’s rivals who lawfully compete on merits cannot guarantee landlords the increased profits that RealPage can provide, this maintains and protects RealPage’s monopoly power.
The lawsuit seeks to end:
- The anticompetitive agreements between RealPage and its landlord customers to share confidential, competitively sensitive information.
- A pricing alignment scheme to raise rents for the American public.
- RealPage’s illegal monopoly in revenue management software built on the competitors’ data that it collects and uses.
In filing the lawsuit, Attorney General Bonta joins the U.S. Department of Justice and the attorneys general of Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.
A copy of the complaint can be found here.
View Justice Department press conference here.
Video: The Justice Department filed a civil antitrust lawsuit against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments. RealPage’s alleged conduct deprives renters of the benefits of competition on apartment leasing terms and harms millions of Americans. Attorney General Merrick B. Garland, Deputy Attorney General Lisa Monaco, Acting Associate Attorney General Benjamin C. Mizer, and Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division held a press conference to make the announcement.
Source: CA DOJ
