RealPage Anticompetitive Cartel Pushes Rents Higher Class Action

This class action alleges that certain lessors who rent out multifamily real estate properties have formed a cartel to take anticompetitive actions in the real estate markets in various locations. The complaint alleges that, with the help of a software platform from RealPage, Inc., a long list of major real estate companies like the Irvine Company, LLC, Greystar Real Estate Partners, LLC, and Cushman & Wakefield, Inc. have conspired to drive up rents, to the detriment of consumers.

The class for this action is all persons and entities in the US and its territories that are direct purchasers of multifamily residential real estate leases from a lessor participating in RealPage’s pricing software and/or lease renewal staggering software programs, or from a division, subsidiary, predecessor, agent, or affiliate of such lessor, at any time between October 18, 2018 and when the unlawful conducts and its anticompetitive effects no longer persist.

Before 2016, the complaint alleges, lessors who offered leases on multifamily real estate properties, such as apartments, set their own prices, doing so to maximize occupancy. For example, the complaint alleges, lessors with open properties might cut prices to get tenants to sign leases with them, rather than with another company. Rent levels therefore reflected supply and demand, the complaint says.

However, the complaint claims that in 2016, lessors began to collude, instead of setting their prices independently, with the help of RealPage, which offers software and data analytics. According to the complaint, RealPage has “facilitate[ed] an agreement among participating Lessors not to compete on price, and allowing Lessors to coordinate both pricing and supply through at least two mutually reinforcing mechanisms in furtherance of their agreed aim of suppressing price competition for multifamily residential real estate leases.”

RealPage’s software collects data on more than 16 million units, the complaint says, and “standardizes this data to account for differences in the characteristics or ‘class’ of the property in question[,]” then runs it all through its algorithm to come up with a rent price. Its Pricing Advisors then work with groups of formerly competing lessor in a city or geographic area to oversee their pricing, the complaint claims.

Once it has set a price, the complaint alleges, it pressures lessors to accept it, which they must do at least 80% of the time.

The goal of all this is to raise rents: “Indeed,” the complaint alleges, “RealPage directly ties compensation for its Pricing Advisors to whether they have been successful in raising rents across their assigned area or city overall—not to their ability to meet revenue goals for their assigned competing Lessors.”

RealPage helps lessors coordinate not only on prices but also on availability, the complaint claims, pressuring them to “stagger” renewals of leases, so that supply does not outpace demand.

The complaint contends that this elimination of competition between lessors violates antitrust laws, like the Sherman Act.

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Collusion and Price Fixing, Residential Rentals or Leases