Justice Department Takes Bold Action Against Major Landlords for Harmful Algorithmic Pricing Practices Affecting Millions of Renters

Attorneys General of Illinois and Massachusetts Join Lawsuit Against RealPage and Apartment Landlords, Raising Total State and Commonwealth Co-Plaintiffs to 10

The Justice Department, along with its state co-plaintiffs, submitted an amended complaint today in its antitrust action against RealPage, targeting six of the largest landlords in the nation for involvement in algorithmic pricing practices that adversely affected renters.

The amended complaint claims that these landlords — Greystar Real Estate Partners LLC (Greystar); Blackstone’s LivCor LLC (LivCor); Camden Property Trust (Camden); Cushman & Wakefield Inc and Pinnacle Property Management Services LLC (Cushman); Willow Bridge Property Company LLC (Willow Bridge) and Cortland Management LLC (Cortland) — engaged in an illegal scheme to reduce competition among landlords regarding apartment pricing, negatively impacting millions of American tenants. Collectively, these landlords manage over 1.3 million units across 43 states and the District of Columbia. The Attorneys General of Illinois and Massachusetts have joined the amended complaint as co-plaintiffs, increasing the overall total of State and Commonwealth co-plaintiffs to 10. Concurrently, the Justice Department submitted a proposed consent decree with landlord Cortland that mandates its cooperation with the government, ceasing the use of sensitive data from its rivals to establish rents, and refraining from utilizing the same algorithm as its competitors without corporate oversight.

“While citizens across the nation struggled to find affordable housing, the landlords mentioned in today’s lawsuit exchanged sensitive data about rental rates and employed algorithms to collude and maintain elevated rent prices,” stated Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Today’s measures against RealPage and six prominent landlords aim to terminate their practice of prioritizing profits over individuals and to improve housing affordability for millions of people nationwide.”

The amended complaint asserts that the six landlords actively engaged in a plan to determine their rents through each other’s competitively sensitive information via common pricing algorithms. Besides implementing RealPage’s anti-competitive pricing algorithms, these landlords coordinated through various means, including:

• Direct engagement with competitors’ senior executives regarding rents, occupancy, and other competitively sensitive subjects. In one instance, Greystar provided Camden with data not only about very recent renewal rates but also its pricing strategy for the forthcoming quarter, its acceptance of RealPage’s price suggestions, utilization of concessions, and competitively sensitive data concerning occupancy. Similarly, executives at Camden and LivCor communicated over several months about their pricing methodologies, including plans for certain price hikes.
• Consistently performing “call arounds.” During these discussions, somewhat euphemistically termed “market surveys,” property managers called or emailed competitors to share and occasionally discuss competitively sensitive data concerning rents, occupancy, pricing approaches, and discounts.
• Engaging in “user groups” organized by RealPage. For example, landlords exchanged views in user groups on how to adjust the software’s pricing methodology and their own pricing strategies. In a specific case, LivCor and Willow Bridge executives were part of a user group discussion regarding plans for renewal increases, concessions, and acceptance rates of RealPage rent suggestions.
• Exchanging information with competitors regarding parameters in RealPage’s software. For instance, at the request of Willow Bridge’s revenue management director, Greystar’s revenue management director provided its standard auto-accept parameters for RealPage’s software, including daily and weekly limits and the specific days of the week that Greystar employed “auto-accept.”

The Justice Department also announced a proposed consent decree which, if approved by the court, would resolve its allegations against Cortland, a landlord managing over 80,000 rental units in 13 states. Under the proposed consent decree, Cortland would assist in the Justice Department’s investigation and litigation and be prohibited from, among other activities:

• Utilizing competitors’ competitively sensitive data to train or operate any pricing models;
• Employing third-party software or algorithms to price apartments without oversight from a court-appointed monitor; and
• Requesting, revealing, or utilizing any competitively sensitive information from any other property manager in setting rental prices or formulating rental pricing recommendations.

As stipulated by the Tunney Act, the proposed consent decree, along with the competitive impact statement, will be published in the Federal Register. Any individual may submit written remarks regarding the proposed consent decree during a 60-day commentary period addressed to Chief, Technology and Digital Platforms Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 8600, Washington, D.C. 20530. At the conclusion of the 60-day commentary period, the U.S. District Court for the Middle District of North Carolina may issue the final judgment upon determining it serves the public interest.

Co-plaintiffs in this case include the Attorneys General of California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee, and Washington.

Greystar is based in Charleston, South Carolina; LivCor and Cushman & Wakefield (whose residential property management division previously operated independently as Pinnacle) are located in Chicago; Willow Bridge (previously known as Lincoln Residential) is situated in Dallas; Camden is headquartered in Houston; and Cortland is based in Atlanta. All are responsible for managing multifamily apartment complexes; several own some or all of the properties they oversee.