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RealPage and 14 Landlords Sued for Unlawfully Colluding to Raise Rents

By Mihaela Lica Butler | November 6, 2023

The District of Colombia has sued RealPage and fourteen of the largest landlords in DC for unlawfully conspiring to use RealPage's Revenue Management (RM) software to inflate rents for tens of thousands of apartments in the District.

Besides RealPage, the Defendant Landlords mentioned in the lawsuit filed in DC Superior Court include Avenue5 Residential, LLC; AvalonBay Communities, Inc.; Bell Partners, Inc.; Bozzuto Management Company; Camden Development, Inc.; Equity Residential Management, LLC; Gables Residential Services, Inc.; Greystar Management Services, LP; Highmark Residential, LLC; JBG Associates, LLC; Mid-America Apartments, LP; Paradigm Management II, LP; UDR, Inc.; and William C. Smith & Co., Inc.

RealPage promotes three revenue management products: YieldStar, LRO, and AIRM. These products share the same functionality as they utilize algorithms powered by RealPage's extensive data repositories accessible to all three products. RealPage's RM Software enables clients to optimize rental prices to achieve the highest possible yield or a combination of rent and occupancy for each property. Simply put, these products employ statistical models that analyze data, including proprietary and non-public information, to estimate the supply and demand for specific types of multifamily housing in particular geographic areas. Based on this analysis, the products generate optimal rental prices that maximize the landlord's revenue. All these actions constitute unreasonable and unlawful restraints of trade in violation of the District of Columbia Antitrust Act, DC Code § 28-4502. The lawsuit demands maximum civil penalties as provided by the DC Antitrust Act.

Instead of competing on price, Defendant Landlords have delegated their price-setting authority to RealPage, creating a centralized system. Additionally, Defendant Landlords have agreed in writing to share competitively sensitive data with RealPage, allowing them to monitor and enforce compliance with the agreed-upon rents set by the RM Software.

This scheme extends beyond the District, as many of the largest providers of multifamily housing in the nation have also joined this rent-setting cartel and adopted RealPage's RM Software. However, the scheme's impact is particularly significant in the DC metropolitan area.

Defendant Landlords are among the largest providers of multifamily housing in the District, and RealPage's RM Software is used to set rents for over 90% of units in large buildings with 50 or more units. Even when considering the broader multifamily housing market, the scope of this misconduct remains significant, with RealPage's RM Software used to set rents at over 50,000 units in the District.

The consequences of the Defendants' anticompetitive scheme are widespread and severe. To entice more landlords to join their cartel, Defendants have publicly advertised that participating landlords can increase their revenue (rents) by 2-7%, resulting in millions of dollars in wrongfully inflated rents over the past four years alone.

Defendants achieve these results by limiting market competition. Instead of competing on price to attract renters, they conspire to share information, restrict supply, and drive up rents. In a competitive market, competitors would keep their pricing strategies confidential. However, Defendants understand that recruiting more participants to their anticompetitive scheme strengthens their ability to extract unlawfully higher rents, as they trust that their competitors will not drastically undercut their prices.

The rising cost of housing is a challenge for District residents, particularly as most of the city's population consists of renters. In recent years, renters in the District have faced staggering rent increases, with approximately a quarter of renters spending over 50% of their income on rent.

The Defendants' anticompetitive agreement has worsened the affordable housing crisis in DC, causing numerous District renters to overpay for rent month after month. Housing is a fundamental necessity, and by demanding unlawfully high cartel rents, Defendants have inflicted significant harm on neighbourhoods across the District. Every dollar of increased rent that the cartel unlawfully extracts from District renters contributes to widening wealth gaps, forces residents to make sacrifices in other areas of their lives, and pushes them out of a District whose housing is increasingly unaffordable.

The Attorney General is bringing this action in his parens patriae capacity to seek treble damages for the harm inflicted on District renters, along with civil penalties and allow to the District of Columbia its costs, including reasonable attorneys' fees; and k. Order any additional relief the Court deems just and proper.

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Mihaela Lica Butler is senior partner at Pamil Visions PR. She is a widely cited authority on public relations issues, with an experience of over 25 years in online PR, marketing, and SEO.She covers startups, online marketing, social media, SEO, and other topics of interest for Realty Biz News.
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