Antitrust Violations, Their Harmful Effect On The Population, And The RealPage Litigation
20/03/2024
Antitrust laws play a crucial role in the fabric of American society. These laws were designed to prevent monopolistic practices, collusion among competitors, and any other activities that might stifle competition in the marketplace. Violations of antitrust laws undermine the principles of a fair and competitive economy, and are among the most egregious offenses. Such violations can lead to the concentration of economic power in the hands of a few, stunting innovation, limiting choices for consumers, and driving up prices. The disruption caused by antitrust violations has far-reaching consequences, impacting businesses, the overall health of the economy, and disproportionately impacting Americans from lower income households.
This is why the lawsuit against all the major landlords in the United States and RealPage, the property management software for rentals, owned by private equity firm Thoma Bravo, is getting so much attention. The landlords are accused of agreeing to fix prices, using RealPage’s software to share information. The algorithm of RealPage’s revenue management tool allegedly uses the pricing data shared by landlords to falsely boost rental prices.
Impacting lower income households
Antitrust laws are critical for protecting Americans by fostering fair pricing in the market. Regardless, there are companies that violate these laws, and unfortunately these types of violations are particularly difficult for even the best lawyers to uncover.
The impact of anti-competitive behavior from businesses impacts all Americans, however there is no denying the disproportionate impact on those from lower socioeconomic backgrounds. Everyone feels increases in prices, however while for some this means saving a lower sum each month, for others this means not being able to afford, often very necessary, products and services. Rental prices are a prime example of this. Violations such as the one RealPage is accused of have an enormous impact on those Americans with less disposable income and could mean the difference between being able to afford a place to live, and not. In addition, inflating rental prices in large metropolitan areas, especially those that offer better job opportunities and better schools, essentially means these cities become places for the wealthy, further impacting the socio-economic disparities in the United States.
However identifying anti-competitive practices requires extensive research, economic analysis, and legal expertise. The technologies and algorithms used by corporations, or even in some cases just conversations between CEOs, can be complex and challenging for even the most seasoned lawyers to uncover and decipher. But technology can be harnessed for good as well, and AI systems such as those we use at Darrow, are able to sift through enormous datasets, employing advanced algorithms to detect patterns and anomalies, and uncover potential antitrust violations.
The RealPage litigation
Some of the largest landlords in America are accused of driving up rental prices, using RealPage’s software to share information. The multi-district litigation (MDL) is being litigated in Tennessee under Judge Waverly D. Crenshaw, Jr., and litigated by lead firms Scott & Scott LLP, Robins Kaplan LLP, and Hausfeld LLP. The case contends that landlords conspired to share confidential pricing information through RealPage’s software, causing them to act in an uncompetitive fashion which resulted in rental prices going up significantly across the country.
In cases of this scale where over 20 cases were filed against RealPage by dozens of top US plaintiff firms, made for a tough battle for leading the litigation. Out of dozens of firms that invested extensive resources to file these cases, only three were chosen for leadership roles. While securing leadership depends on a plethora of different considerations and circumstances, one prominent consideration is the proprietary nature of a firm’s investigation and evidence being put forward in its complaint. The significance of holistic evidence is also essential in determining and successfully executing the litigation strategy, and enabling a firm to strategically file in jurisdictions where the largest affected market shares are, which again furthers the likelihood of securing a leadership role.
Another notable aspect of this case revolves around the nature of the alleged violation, and the impact technology has on competition. In the past, to be considered an anti-competitive act, businesses would need to get in a room and collude together to decide on a certain price they would all uphold. As shown by the allegations against RealPage, this is not necessarily the case today. When a property manager takes on an artificially inflated price suggestion, even if the price was just a suggestion, and not a mandatory pricing requirement – courts may consider this to be an anti-competitive practice. For example In the Flat Glass case, 385 F.3d 350 at 362-63, the judge ruled that “an agreement to fix list prices is a per se violation of the Sherman Act even if most or for that matter all transactions occurred at lower prices.” By Suggesting inflated prices via technology property managers are led to believe they can actually achieve these inflated rates. As a result, they are inclined to select prices that are in that inflated range, thus maintaining and even increasing these elevated rates. This is an interesting example of how important it is to keep data objective and “clean” of interference, to enable a more just and equitable economy.
The outcome of this antitrust case may reshape the dynamics of the rental market, influencing how property management companies employ algorithmic pricing strategies and impacting the affordability of housing for millions of Americans.
Everyone deserves a place to live
Antitrust violations can have a detrimental effect on the population. While RealPage is just one company accused of antitrust violations, the case also beggars the question: Are other revenue management tools, or any other tools for that matter, that provide data to support a business decision in other industries doing something similar?
Cases like these are difficult for plaintiffs themselves to identify; how could they know if their service provider is using a revenue management tool, and what data that tool provides? It is up to attorneys to find these violations – with the help of AI and other legal tech tools – secure damages for plaintiffs, hold companies accountable, and uphold justice.