Algorithmic pricing scheme harms millions: the DOJ is now suing

The US Department of Justice has sued six of America’s largest landlords for allegedly participating in algorithmic pricing schemes that harmed millions of renters across the country.

The Justice Department (DOJ) said in a statement that the lawsuit was filed against software company RealPage and landlords Greystar Real Estate Partners LLC, Blackstone’s LivCor LLC, Camden Property Trust, Cushman & Wakefield Inc., Pinnacle Property Management Services LLC, Willow Bridge Property Company LLC, and Cortland Management LLC.

The filing alleges that the rental companies took part in an unlawful scheme to decrease competition among landlords in apartment pricing, which caused harm to millions of renters in the US.

Put together, the six aforementioned companies operate more than 1.3 million units in 43 states and Washington DC. The landlords allegedly used RealPage’s anti-competitive pricing algorithms.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” said acting assistant attorney general Doha Mekki of the DOJ’s Antitrust Division.

That’s right – the landlords were not only colluding with the help of pricing algorithms but also sharing each other’s competitively sensitive information.

This phenomenon isn’t new. In October, the DOJ said that a federal judge made a legal error when it dismissed a pricing algorithm case against Caesars and other hotel companies operating on the Las Vegas strip.

The judge earlier ruled that using the same price-setting software wasn’t enough to call it a conspiracy to fix prices. The DOJ disagreed, saying that an agreement among competitors to use the same pricing algorithms is per se illegal.

Legal scholars are in fact mixed on whether companies, just by virtue of using the software, can be said to be colluding on pricing. However, in the case of the landlords now being sued by the DOJ, they were doing much more, the filing says.

The landlords allegedly directly communicated with each other’s senior managers about rents and occupancy, and regularly conducted “call-arounds” to share competitively sensitive information about pricing strategies and discounts.

Finally, they participated in “user groups” hosted by RealPage, where landlords would discuss how to modify the software’s pricing methodology as well as their own pricing strategies.