The U.S. Justice Department and eight state attorneys general today filed an antitrust lawsuit against RealPage Inc., a major provider of property management software.

The complaint revolves around two main arguments. First, the Justice Department charges that RealPage’s software unlawfully decreases competition among landlords and thereby drives up rent prices. The lawsuit’s other core allegation is that the company monopolizes the market for rental revenue management software.

Richardson, Texas-based RealPage sells a broad array of applications for landlords. Property managers use its software to create marketing websites for rental listings, promote them through ads and manage data about deal opportunities. RealPage also promises to ease a variety of related tasks such as property maintenance and supplier management.

The company’s software suite is underpinned by a price recommendation algorithm. Landlords share property data such as rental rates, discounts and amenities with RealPage. The algorithm uses this information to generate rental price recommendations that are updated on a daily basis.

The Justice Department charges that RealPage’s price suggestions reduce competition among landlords and thereby harm renters. “RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents,” said Attorney General Merrick Garland. “Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability.”

The Justice Department collected sworn testimony and internal documents from RealPage ahead of the lawsuit. In some of the collected materials, the company allegedly acknowledged its software is aimed at “driving every possible opportunity to increase price.” Furthermore, the lawsuit charges that some of the documents show RealPage trained landlords to limit renter concessions such as discounts.

The second goal of the lawsuit is to establish that the company maintains an illegal monopoly in the market for rental revenue management software. According to RealPage’s website, its applications are used to manage more than 24 million properties worldwide. In the U.S., it’s the top provider of revenue management software for multifamily properties, with a 80% market share. 

According to the Justice Department, the arrangement whereby landlords agree to share data such as rental rates with RealPage in exchange for price recommendations creates a “self-reinforcing feedback loop.” The complaint makes the case that this feedback loop strengthens the company’s market position and makes it more difficult for rivals to compete.

The Justice Department filed the lawsuit with the U.S. District Court for the Middle District of North Carolina. It’s asking the court to declare that “RealPage has acted unlawfully to restrain trade in conventional multifamily rental housing markets.” Additionally, Justice Department officials are seeking an order that would require the company to change the business practices in question. 

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