DOJ Finds Landlords Taking Notes On (Civil) F'n Conspiracy
Ctrl+F for the win.
One of the wisest lessons of the television show The Wire is that you should not take “notes on a criminal fucking conspiracy.” Alas, it’s a lesson that escaped the folks at RealPage, a company that took rent data and an algorithm and turned it into a third-party app for landlords to — allegedly — slap some camouflage on classic price-fixing in the rental sector as detailed in the 115-page complaint filed by the DOJ and multiple state attorneys general.
Though don’t take the DOJ’s word for it… here’s what the landlords actually put in writing about the product:
Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing….”
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As one antitrust expert put it…
Perhaps RealPage only feared a civil antitrust claim the company didn’t realize the Stringer Bell Axiom should apply to them. It’s an oversight they likely regret right about now.
But at least this is a just customer spouting off about the product and not the company itself. Surely someone with the company immediately responded that “of course this is not classic price-fixing because that would be illegal and we denounce any suggestion that our product can be used that way.” Oh, they didn’t? Well, at least the company itself wasn’t running around promoting the product as a vector for collusion.
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Oh wait… what’s this?
In fact, as RealPage’s Vice President of Revenue Management Advisory Services described, “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down” (emphasis added). As he put it, if enough landlords used RealPage’s software, they would “likely move in unison versus against each other” (emphasis added). To RealPage, the “greater good” is served by ensuring that otherwise competing landlords rob Americans of the fruits of competition—lower rental prices, better leasing terms, more concessions. At the same time, the landlords enjoy the benefits of coordinated pricing among competitors.
And…
RealPage has built a business out of frustrating the natural forces of competition. In its own words, “a rising tide raises all ships.” This is more than a marketing mantra. RealPage sells software to landlords that collects nonpublic information from competing landlords and uses that combined information to make pricing recommendations. In its own words, RealPage “helps curb [landlords’] instincts to respond to down-market conditions by either dramatically lowering price or by holding price when they are losing velocity and/or occupancy. . . . Our tool [] ensures that [landlords] are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions” (emphases added).
While antitrust authorities work on algorithmic solutions to find violators employing new terminology to avoid tripping the well-worn buzzwords, RealPage and its customers were just throwing around “price-fixing” and “rising tide raises all ships” and even writing that the product “required cooperation among the comp[etitor]s….”
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Seriously, did they even attempt to consult with a lawyer? Because they should have, especially considering that RealPage is owned by Thoma Bravo — a private equity that already got slapped down by Canadian antitrust authorities for attempting to control oil and gas software. Maybe that should’ve been a sign to beef up on antitrust counsel?
Even when the company acknowledged antitrust law, it did so with a smile. Literally…
One landlord whose correspondence made it into the complaint recognized that RealPage anonymized data because landlords knowing which competitors charged which rents could be seen as collusion. But, what the DOJ is alludes to in the above passage, is that RealPage created an auto-accept function, allowing landlords to just take the company’s recommendation on pricing which obviates any anonymization and just outsources the collusion.
Good thing they’re putting it all in writing!
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
