Antitrust Division Seeks Participation in Rental Software MDL


Case raises questions about competitors using algorithms to set prices.

Interested in the matter’s Sherman Act implications, the Department of Justice Antitrust Division is expected to file a memorandum supporting its participation in the RealPage Inc. antitrust action in federal court in Tennessee on Nov. 15, 2023. Arguments are set for Dec. 11 before Chief Judge Waverly D. Crenshaw who is overseeing cases consolidated in multi-district litigation (In re: RealPage, Inc., Rental Software Antitrust Litigation [NO. II], Case No. 3:23-md-3071, MDL No. 3071).

The issue that drew the attention of DOJ antitrust enforcers is how the Sherman Act will apply when competing businesses — in this case landlords, property owners, and property managers — use algorithms to set prices. RealPage is the connective entity in this equation, providing property management software for the multi-family, single-family, commercial, and vacation rental housing industries.

RealPage also caught the Division’s eye in 2017 when it acquired its largest competitor, Lease Rent Options, for $300 million. RealPage made other acquisitions that year, including Axiometrics, an apartment market data provider, for $75 million, and On-Site Manager, Inc., a leasing and marketing platform company, for $250 million. Three senators urged DOJ to investigate the company following publication of an investigative report published by ProPublica in mid-October 2022.

Commenting on an individual case filed against RealPage in San Diego last year, MoginRubin LLP’s Jonathan Rubin said allegations describe algorithmic price fixing in which the antitrust violation occurs when multiple competitors access the same database platform and analysis tools. “Exchanges of information between competitors—particularly pricing information—is inherently suspect under the antitrust laws,” Rubin wrote. “The legal issue here will be whether the algorithmic process based on information from competing suppliers constitutes joint profit maximization.”

“When competitors set their prices jointly—rather than individually—they commit the ‘supreme evil of antitrust.’ Whether joint price setting is accomplished through the functionality of a database platform or by conventional means makes no difference, price fixing is unlawful per se,” Rubin concluded. Read his post.

This issue was specifically called out for attention in President Biden’s Oct. 30 “Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence,” which calls for “clear guidance to landlords, Federal benefits programs, and federal contractors to keep AI algorithms from being used to exacerbate discrimination.”

Edited by Tom Hagy.

Sign up to view this Whitepaper