Attorney General Merrick B. Garland delivered remarks on August 23, 2024, regarding the Justice Department's lawsuit against RealPage for an alleged algorithmic pricing scheme that impacts millions of Americans.
"Good morning.
Over a century ago, Congress passed the Sherman Antitrust Act to protect competition in the marketplace. As the Supreme Court has explained, the 'central evil' addressed by Section 1 of that Act is 'the elimination of competition that would otherwise exist,' including competition on prices.
When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting.
Today, it looks like landlords using mathematical algorithms to align their rents.
But antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert.
And Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law.
So today, after a nearly-two-year investigation, the Justice Department, joined by eight states, has sued RealPage, a commercial real estate software company, for violating the Sherman Antitrust Act.
RealPage sells landlords what it calls 'revenue management' software. We allege that this software is developed, marketed, and sold to enable landlords to sidestep vigorous competition in the rental market. Competing landlords agree to submit to RealPage, on a daily basis, their most sensitive non-public information including rental rates, lease terms and projected vacancies.
RealPage then combines this data from competing landlords and feeds it into an algorithm that provides real-time pricing recommendations back to the competing landlords.
But as we allege these are more than just recommendations. RealPage actively polices landlords’ compliance with those recommendations. It also monitors landlords’ other policies by for example trying to stop concessions that landlords use to attract or retain renters.
A large number of landlords effectively agree to outsource their pricing decisions to RealPage by using an 'auto accept' setting which effectively permits RealPage determine price renter will pay.
Landlords understand what their arrangement with RealPage gets them. As one said 'I always liked this product because your algorithm uses proprietary data from other subscribers suggest rents terms That’s classic price fixing.'
And RealPage understands what it’s doing too In advertising its service Landlords frequently says rising tide raises all ships.' As vice president explained phrase means there greater good everybody succeeding versus essentially trying compete against one another.'
But essentially trying compete against one another is what our free-market economy about ensuring such competition our antitrust laws about.
Americans spend more money on housing than any other expense Tens millions Americans renters almost half those households spend close third hard-earned income rent
Under antitrust laws Landlords like any competitors may not share each other confidential sensitive data way permits them align how they price products case apartments thus cause renters pay more competitive market Using software sharing mechanism calling Artificial Intelligence Revenue Management as does not immunize scheme from Sherman Act liability
Justice Department takes seriously responsibility protect Americans illegal conduct undermines competition drives up prices
We will continue aggressively enforce antitrust laws protect American people those who violate them
I applaud attorneys staff Department’s Antitrust Division outstanding work case behalf American people Thank you all."