The Justice Department, along with its state co-plaintiffs, filed an amended complaint today in its antitrust lawsuit against RealPage to sue six of the nation’s largest landlords for participating in algorithmic pricing schemes that caused harm renters.
The amended complaint alleges that the 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 unlawful scheme to reduce competition among landlords in apartment pricing, thereby harming millions of American renters. 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, raising the total number of State and Commonwealth co-plaintiffs to 10. At the same time, the Justice Department filed a proposed consent decree with landlord Cortland that mandates it to cooperate with the government, cease using its competitors’ sensitive data to set rents, and stop utilizing the same algorithm as its competitors without corporate oversight monitor.
The amended complaint alleges that the six landlords actively engaged in a scheme to set their rents by using each other’s competitively sensitive information through shared pricing algorithms. In addition to employing RealPage’s anticompetitive pricing algorithms, these landlords coordinated through various means, including:
• Directly communicating with competitors’ senior managers about rents, occupancy, and other competitively sensitive topics. In one example, Greystar supplied Camden with information not only about very recent renewal rates, but also its approach to pricing for the upcoming quarter, its acceptance of RealPage’s pricing recommendations, use of concessions and competitively sensitive information about occupancy. Likewise, executives at Camden and LivCor communicated over the course of months about their pricing strategies, including plans for certain price increases.
• Regularly conducting “call arounds.” During these discussions, euphemistically referred to as “market surveys,” property managers called or emailed competitors to share, and sometimes discuss, competitively sensitive information about rents, occupancy, pricing strategies and discounts.
• Participating in “user groups” hosted by RealPage. For instance, landlords discussed via user groups how to modify the software’s pricing methodology, as well as their own pricing strategies. In one example, LivCor and Willow Bridge executives participated in a user group discussion of plans for renewal increases, concessions and acceptance rates of RealPage rent recommendations.
• Sharing information with competitors about parameters in RealPage’s software. As an example, at the request of Willow Bridge’s director of revenue management, Greystar’s director of revenue management supplied its standard auto-accept parameters for RealPage’s software, including the daily and weekly limits and the days of the week for which Greystar used “auto-accept.”
The Justice Department also announced a proposed consent decree that, if approved by the court, would resolve its claims against Cortland, a landlord managing over 80,000 rental units across 13 states. Under the proposed consent decree, Cortland would cooperate with the Justice Department’s investigation and litigation and be prohibited from, among other things:
• Using competitors’ competitively sensitive data to train or run any pricing model;
• Using third-party software or algorithms to price apartments without the supervision of a court-appointed monitor; and
• Soliciting, disclosing or using any competitively sensitive information with any other property manager as part of setting rental prices or generating rental pricing recommendations.
Co-plaintiffs in the case are the Attorneys General of California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington.
Greystar is headquartered in Charleston, South Carolina; LivCor and Cushman & Wakefield (whose residential property management business formerly operated independently as Pinnacle) are headquartered in Chicago; Willow Bridge (formerly known as Lincoln Residential) is headquartered in Dallas; Camden is headquartered in Houston; and Cortland is headquartered in Atlanta. All manage multifamily apartment buildings; several own some or all of the properties under their management.
