By Rebecca Picciotto
The Justice Department is adding six major apartment landlords to its lawsuit against real-estate software company RealPage, expanding the scope of its allegations that the rent-setting algorithm enabled illegal price fixing.
These apartment owners used RealPage's rent-pricing algorithm to artificially inflate rents nationwide, the Justice Department alleged in an amended civil complaint filed on Tuesday.
The department alleged that the firms conducted phone and email "call arounds" and participated in "user groups" hosted by RealPage to gather confidential rental data from each other, according to the complaint.
The defendants are among the country's largest apartment landlords and together oversee more than 1.3 million units throughout the U.S., the Justice Department said. The list includes Greystar Real Estate Partners, Blackstone's LivCor, Willow Bridge Property and Camden Property Trust.
Pinnacle and its parent, the real-estate services firm Cushman & Wakefield, were also named as defendants. The sixth apartment landlord, Cortland, said it has agreed to a proposed settlement with the government.
Many renters are still feeling their budgets squeezed by steep rent increases that occurred during the pandemic. Americans have frequently cited high housing costs as among their chief concerns.
"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 Doha Mekki, the Justice Department's acting assistant attorney general of antitrust, in a Tuesday press release.
Greystar denied the Justice Department's accusations and said it plans to "vigorously defend" itself in the lawsuit. Other defendants also denied the allegations or didn't respond to a request for comment.
The initial complaint, filed by the Justice Department and eight states against RealPage in August, is one of the most sweeping legal actions ever taken by the federal government against a private company in the rental housing industry. Illinois and Massachusetts joined the lawsuit as plaintiffs in the amended complaint.
The suit alleged that RealPage stifles competition through its algorithm and maintains an illegal monopoly over rent-setting software.
RealPage has denied the allegations. The company has said that its landlord customers aren't required to use its price recommendations and that its software can recommend lowering rents.
Some of the defendants, such as Greystar, the biggest apartment owner in the U.S., and Cushman & Wakefield, have already faced private-sector lawsuits from tenants and prosecutors alleging that they colluded on rent increases using the RealPage algorithm.
Those private cases could get a boost now that the federal government is publicly suing these landlords with parallel claims, said Diana Moss, vice president and competition policy director at the Progressive Policy Institute.
The DOJ's expanded lawsuit creates a "mutually reinforcing effect of public and private enforcers working together," she said.
At the time of the initial lawsuit, the Justice Department mentioned six apartment landlords but didn't disclose the companies and didn't sue them. Tuesday's announcement was the first time the federal government revealed those unnamed landlords and added them as defendants.
Over the past several years, the Justice Department's antitrust division has been on the front lines of the Biden administration's regulatory crackdown.
The department has sued companies across various sectors like technology, healthcare and live-event ticketing for allegedly engaging in anticompetitive practices, blaming them at least partly for the price surges in the wake of the pandemic.
Suing major landlords in the expanded RealPage lawsuit is one of the final opportunities for the Biden administration to push its antitrust priorities with President-elect Donald Trump set to take office on Jan. 20.
"I think the goal is to make sure the issue doesn't go away, that it's harder for a Trump [Justice Department] coming in to ignore these cases, " Moss said.
RealPage filed a motion to dismiss the civil suit in December. But so far, antitrust experts and industry analysts don't expect the Trump administration to drop the lawsuit.
Trump tapped Gail Slater to take over as the Justice Department's assistant attorney general for antitrust, and Andrew Ferguson to helm the Federal Trade Commission. Both are seasoned antitrust experts with experience in both the private and public sectors. Given their track records, experts don't expect antitrust enforcement to soften in Trump's second term.
Analysts at Capstone, a policy consultant, said in December that they expect the allegations in the RealPage lawsuit would "continue to be hard-fought" under the Trump administration. Specifically, they said that appointing Slater signaled Trump's intention to maintain an "aggressive antitrust agenda."
"I wouldn't expect to see a big shift in the enforcement posture," said David Kully, an antitrust lawyer at Holland & Knight who previously worked in the DOJ's antitrust division for 18 years.
Write to Rebecca Picciotto at Rebecca.Picciotto@wsj.com
(END) Dow Jones Newswires
January 07, 2025 15:40 ET (20:40 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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