California Attorney General Rob Bonta, in collaboration with the U.S. Department of Justice and a bipartisan coalition of eight attorneys general, has filed a lawsuit against RealPage, a revenue management software company used by landlords to price multifamily rental housing units. The lawsuit accuses RealPage of enabling landlords to artificially raise rents through a pricing alignment scheme that involved the illegal sharing of confidential pricing and supply information. This practice is alleged to have decreased competition, limited price negotiation, and increased prices in the rental housing industry, particularly affecting Southern California.
"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's business model involves generating rent increases for landlords using algorithmic models that recommend price hikes based on competitively sensitive data collected from competing landlords. This data is shared among subscribers who benefit from knowing competitors' pricing strategies. By doing so, RealPage can recommend uniform price increases across different properties, effectively eliminating competition.
The lawsuit alleges that RealPage violated Sections 1 and 2 of the Sherman Antitrust Act by engaging in anticompetitive agreements and monopolization practices. These offenses occur when a firm unlawfully maintains monopoly power by excluding rivals and harming competition. According to the complaint, RealPage's sharing of nonpublic data aligns landlords' pricing strategies and removes competitive pressure that typically benefits renters.
Over recent decades, housing needs in California have significantly outpaced production, leading to skyrocketing costs that make it increasingly difficult for residents to afford rent. An estimated 700,000 Californians are currently at risk of eviction.
The lawsuit seeks an end to:
- Anticompetitive agreements between RealPage and its landlord customers involving confidential information.
- The pricing alignment scheme designed to raise rents.
- RealPage’s alleged illegal monopoly in revenue management software built on competitors’ data.
Attorney General Bonta joins forces with the U.S. Department of Justice as well as attorneys general from Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington in this legal action.
A copy of the complaint can be found here.