The U.S. Department of Justice, in collaboration with state attorneys general from Illinois and Massachusetts, has submitted an updated complaint today in an ongoing antitrust case. This lawsuit accuses six prominent landlords of conspiring to manipulate rental prices through a sophisticated algorithmic pricing strategy. The allegations suggest that these landlords’ practices have led to soaring rents, adversely affecting millions of renters across the United States.
The landlords implicated in this case include Greystar Real Estate Partners, Blackstone’s LivCor, Camden Property Trust, Cushman & Wakefield, Willow Bridge Property Company, Pinnacle Property Management and Cortland Management. Collectively, these firms oversee more than 1.3 million rental units spanning 43 states and the District of Columbia. Alongside the Justice Department’s action, the Attorneys General from California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee, and Washington have also joined the lawsuit as co-plaintiffs.
Greystar oversees a variety of properties in the Baltimore region, such as the recently launched Juniper development at Merriweather, The Crescent at Fells Point, McHenry Row Apartments, and the upcoming Enolia complex designed for Morgan State’s off-campus housing.
The amended complaint reveals that these landlords participated in a coordinated effort to set rents based on sensitive pricing data shared among competitors. They allegedly used RealPage’s pricing algorithms, which were designed to optimize rental pricing, but were misused to suppress competition. This practice not only affected rent prices but also led to anti-competitive behavior that included direct communications between executives about pricing strategies, “market surveys” to share rent information, and discussions in RealPage’s user groups about modifying the software’s pricing methodology.
“For too long, landlords have exploited sensitive pricing data and algorithms to increase rents at the expense of millions of renters struggling to afford housing,” said Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “This lawsuit seeks to end this harmful practice and restore competition in the rental market, which will ultimately make housing more affordable for everyday Americans.”
RealPage and the landlords implicated are facing allegations of wielding enough market influence to seriously disrupt competition in various areas nationwide. The plaintiffs contend that there are viable alternatives to RealPage’s methods that would enable landlords to set rental prices without negatively impacting competition. They are calling on the court to rule the defendants’ actions illegal, put an end to the anticompetitive behaviors, reinstate fair competition, and award damages for the harm inflicted. Additionally, they are seeking to recover their legal expenses and attorneys’ fees.
Additionally, a consent decree has been suggested between Cortland and the Department of Justice, mandating Cortland’s cooperation in the federal investigation and legal proceedings, while also prohibiting the use of sensitive competitive data from rivals in their pricing strategies, among other stipulations.
The Justice Department has announced a settlement agreement with Cortland, one of the landlords implicated in the legal proceedings. If the court approves the proposed consent decree, Cortland will be obligated to assist with the ongoing investigation and litigation led by the government. Additionally, the company will be prohibited from utilizing competitors’ data for its pricing strategies and will no longer be allowed to employ third-party software or algorithms for apartment pricing without oversight from a court-appointed authority.
This lawsuit and subsequent settlement are part of a broader initiative by the Justice Department to tackle rising concerns regarding unfair practices in the rental market, aiming to foster transparency and equity in apartment rent determinations. The case highlights the vital need to maintain competitive and accessible housing markets for all Americans.
The proposed settlement with Cortland will be available for public commentary for a period of 60 days, after which the U.S. District Court for the Middle District of North Carolina will make a final ruling. The Justice Department’s action, supported by state attorneys general, aims to address a widespread issue impacting renters across the country, shining a light on the growing power of algorithmic pricing and its potential to disrupt fair competition.
