DOJ sues RealPage over alleged landlord hire worth collusion software program

The U.S. Department of Justice and eight states on Friday accused software company RealPage of unlawfully scheming to undermine competition among landlords and create a monopoly that harms millions of renters.

RealPage “allows landlords to manipulate, distort, and subvert market forces,” the Justice Department said in a civil complaint in U.S. District Court in North Carolina.

“At bottom, RealPage is an algorithmic intermediary that collects, combines, and exploits landlords’ competitively sensitive information,” the antitrust lawsuit said.

“And in so doing, it enriches itself and compliant landlords at the expense of renters who pay inflated prices and honest businesses that would otherwise compete,” the DOJ alleged.

Attorney General Merrick Garland in a press conference Friday morning put it more bluntly: “Everybody knows the rent is too damn high, and we allege this is one of the reasons why.”

The lawsuit marks the first time that the government has accused a company of working to systematically subvert the rules of free-market competition using mathematical algorithms.

Read more CNBC politics coverage

“Antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert,” Garland said.

“And Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law.”

The DOJ is joined in its lawsuit by the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington.

RealPage, which is owned by the private-equity firm Thoma Bravo, in a statement on X vowed to defend itself against the accusations, and called the lawsuit a “distraction” from the real economic and political issues causing inflation.

“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” RealPage said.

The company added that its revenue management software “is purposely built to be legally compliant, and we have a long history of working constructively with the DOJ to show that.”

The lawsuit, which Garland said followed a nearly two-year investigation, arrives in the middle of a U.S. presidential election cycle where high housing and rental prices have emerged as a key issue.

Democratic nominee Kamala Harris last week unveiled an economic plan that aims to lower rental costs in part by cracking down on the companies behind price-setting tools that let landlords collude.

The White House declined to comment on the DOJ’s antitrust suit against RealPage.

But it provided a statement from national economic advisor Lael Brainard, who said President Joe Biden and Vice President Harris “know that too many Americans feel squeezed by high rents.”

“The Biden-Harris Administration has made clear that no one should pay higher prices because of corporate lawbreaking and continues to support fair and vigorous enforcement of the antitrust laws to prevent illegal collusion,” Brainard said.

— CNBC’s Eamon Javers contributed to this report.

Don’t miss these insights from CNBC PRO