The Department of Justice (DOJ) has significantly broadened its investigation into the rental housing market by launching a criminal inquiry against RealPage, a software company responsible for influencing rental prices.
Allegations of Price-Fixing
At the heart of the investigation are concerns that RealPage may be facilitating price-fixing activities among significant property owners and management firms that utilize its software. Such practices, if proven, could contravene antitrust laws designed to ensure competitive market conditions and fair pricing for consumers.
Increased Legal Scrutiny on Housing
The DOJ’s action represents a significant escalation in a series of legal challenges targeting the rental housing market. These challenges encompass not only the DOJ’s efforts but also investigations and lawsuits initiated by state attorneys general and class-action plaintiff lawyers against key players in the industry.
Biden Administration’s Stance
This probe aligns with President Joe Biden’s broader domestic economic agenda, which prioritizes the crackdown on anti-competitive activities across various sectors, including housing. The administration has expressed a specific interest in addressing the rising costs of housing and ensuring fair market practices.
The Role of RealPage’s Software
Central to the investigation is RealPage’s YieldStar software, utilized by landlords to optimize rent pricing based on supply and demand estimates. The DOJ is scrutinizing the software’s role in potentially enabling competitors to share sensitive pricing information under the guise of market analytics.
Class-Action Lawsuits and State Legal Actions
RealPage, its private equity owner Thoma Bravo, and numerous property owners and managers are also facing a class-action lawsuit brought by renters. This is in addition to legal actions from the attorneys general in Washington, D.C., Arizona, and a recent investigation announced by the North Carolina attorney general.
Probes Align with Litigation Allegations
The DOJ’s investigations are believed to closely align with the allegations presented in the existing class-action lawsuits, which accuse RealPage and associated property managers of conspiring to artificially inflate rental prices through anti-competitive practices.
RealPage’s Response
In response to the allegations, RealPage has denied any wrongdoing. The company asserts that its revenue management software is designed to comply with legal standards and has previously engaged constructively with the DOJ to demonstrate its compliance.
Congressional Attention to Housing Prices
The escalating investigation comes at a time when Congress is increasingly concerned about soaring housing prices. Lawmakers are scrambling to find solutions to mitigate the impact on consumers, highlighting the importance of ensuring fair competition in the housing market.
Legal Precedents and Algorithmic Price-Fixing
The DOJ’s focus on algorithmic price-fixing represents a novel area of investigation within antitrust law. Previous cases, such as a small e-commerce case in 2015, have set precedents for addressing price-fixing facilitated by algorithms, indicating the DOJ’s willingness to tackle complex technological issues in enforcing antitrust laws.
The Impact of Information Sharing
The investigation also sheds light on the broader implications of information sharing among competitors, particularly when facilitated by technology. The DOJ’s probe into RealPage’s practices may set new benchmarks for how such activities are viewed under antitrust legislation.
Potential Outcomes of the DOJ Probe
While the investigation is still underway, its outcomes could have significant implications for RealPage, the rental housing market, and the enforcement of antitrust laws in industries influenced by technology and data analytics.
The Broader Antitrust Landscape
The RealPage investigation is part of a larger effort by the DOJ to address antitrust concerns across the economy. This includes scrutinizing information-sharing agreements and examining how technological advancements may influence competitive dynamics.
Looking Ahead
As the DOJ continues its investigation, the rental housing market remains under close watch by regulators, lawmakers, and consumers alike. The outcome of this probe could herald significant changes in how pricing practices are conducted and regulated, emphasizing the importance of maintaining fair competition for the benefit of consumers nationwide.
