- The Department of Justice’s Antitrust Division has launched an investigation to determine if RealPage’s software helped apartment operators coordinate rent prices, according to a report from ProPublica.
- The investigation comes after three senators — Subcommittee Chair on Competition Policy, Antitrust and Consumer Rights Amy Klobuchar (D-MN), Dick Durbin (D-IL) and Cory Booker (D-NJ) — sent a letter asking the Antitrust Division to investigate “recent allegations of anticompetitive collusion leading to significant increases in rents for apartments.”
- In the letter, the Democratic senators said they were concerned that RealPage’s software “essentially amounts to a cartel to artificially inflate rental rates in multifamily residential buildings.” They also expressed reservations about the RealPage User Group — a forum of more than 1,000 RealPage clients that work together on things like revenue management and screening.
Sens. Klobuchar, Durbin and Booker noted in the letter that the DOJ Antitrust Division has aggressively assessed and investigated anticompetitive conduct in the past, including looking at how algorithms could facilitate collusion. “We encourage you to continue that work and take appropriate action to protect renters and competition in residential rental markets,” they said.
RealPage and DOJ didn’t respond to inquiries from Multifamily Dive as of publication time.
The DOJ’s decision to look into RealPage isn’t a surprise to New York City-based attorney Carol Sigmond, a partner in the construction and litigation practice groups at Greenspoon Marder LLC.
“If the Justice Department does decide to take a look at this, that’s going to change the game dramatically,” she told Multifamily Dive before reports of the investigation came to light.
ProPublica also reported that DOJ staff raised questions about RealPage’s 2017 purchase of Rainmaker Group, producer of the Lease Rent Options software, more commonly known in the industry as LRO. However, those concerns were overridden by “political appointees of former president Donald Trump,” according to the publication.
The new DOJ investigation comes after a suit filed in October in which a group of renters in market-rate apartments alleged that RealPage and a number of large operators committed antitrust violations under the Sherman Act. The five renters accuse property managers of sharing “competitively sensitive information with one another” by using RealPage as a conduit. The companies include:
- Greystar Real Estate Partners
- Lincoln Property Co.
- FPI Management
- Avenue 5 Residential
- Equity Residential
- Essex Property Trust
- Thrive Communities Management
- Security Properties
In a separate suit filed earlier this month, a University of Washington student alleged collusion in the student housing market among ReaPage and large operators, including:
- Greystar Real Estate Partners
- Cushman & Wakefield
- BH Management Services
- The Michaels Organization
- Campus Advantage
- Cardinal Group Holdings
- CA Ventures Global Services
- D.P. Preiss Co.
The plaintiff, Gabriel Navarro, who filed the suit in the U.S. District Court for the Western District of Washington in Seattle, claims there was an unlawful agreement among student housing managers to “artificially inflate the prices of student housing across the United States,” including in Seattle; Ann Arbor, Michigan; and Gainesville, Florida.
The lawsuit argued that “RealPage provided the platform and the algorithm for collusion.” In doing so, it gave student housing operators the ability to collaborate and track competitors’ rents, according to court documents.
Multifamily Dive reached out for comment to each of the housing providers named and received a response from Campus Advantage and Lincoln.
“Campus Advantage strongly disagrees with the unsubstantiated allegations in the lawsuit and intends to vigorously defend against the claims,” the company said. “Campus Advantage is proud of its track record creating successful communities.”
Lincoln responded to Multifamily Dive with a statement saying the allegations are without merit, and that it denies that the company or any of its employees have engaged in conduct in violation of U.S. antitrust laws. “Lincoln looks forward to the opportunity to bring the facts to the attention of the court,” it said in the statement.
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