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The U.S. DOJ sues RealPage, alleging it enabled price-fixing on rents
The Justice Department on Friday filed an antitrust lawsuit against RealPage, a property management software provider, alleging it enabled a collusion among landlords to inflate rents for millions of Americans.
The complaint claims that the Richardson, Texas-based company and its competitors engaged in a price-fixing scheme by sharing nonpublic, sensitive information, which RealPage’s algorithmic pricing software used to generate pricing recommendations. The company replaced competition with rent coordination to the detriment of renters across the U.S., according to the suit, monopolizing the market through its revenue management software which was used by landlords to determine rent costs.
The DOJ is joined by the attorneys general of California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee and Washington. The complaint alleges that RealPage violated sections 1 and 2 of the Sherman Act, an antitrust law.
“Americans should not have to pay more in rent because a company has found a new way to scheme
with landlords to break the law,” Attorney General Merrick B. Garland said in a statement Friday. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive
information and align their rents. Using software as the sharing mechanism does not immunize this
scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce
the antitrust laws and protect the American people from those who violate them.”
Deputy Attorney General Lisa Monaco said RealPage violated a century-old law in a modern way, by using an AI-powered algorithm to coordinate rent prices, “undermining competition and fairness for consumers in the process.”
“Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct,” she said in a statement.
RealPage claims the allegations against the company are false, and insists that RealPage customers decide their own rent prices and can reject the algorithm’s recommendations. The company added that it uses data responsibly.
“RealPage’s revenue management software is purposely built to be legally compliant, and we have a history of working constructively with the DOJ to show that,” a spokesperson for the company said in a statement to CBS News.
The lawsuit comes as Americans struggle to afford necessities from housing to groceries, with high housing costs contributing to persistent inflation.
“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition – not RealPage – should determine what Americans pay to rent their homes.”
RealPage acknowledged that its product was designed to maximize profits for landlords, according to the suit, by describing it as “driving every possible opportunity to increase price.”
A landlord praised RealPage’s software, saying the liked it because the algorithm “uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”
— CBS News’ Robert Legare contributed reporting
Tupperware and some of its subsidiaries filed for Chapter 11 bankruptcy protection, the once-iconic food container maker said in a statement late Tuesday.
The company has suffered from dwindling sales following a surprise surge during the COVID-19 pandemic, when legions of people stuck at home tried their hands at cooking, which increased demand for Tupperware’s colorful plastic containers with flexible airtight seals.
A post-pandemic rise in costs of raw materials and shipping, along with higher wages, also hurt Tupperware’s bottom line.
Last year, it warned of “substantial doubt” about its ability to keep operating in light of its poor financial position.
“Over the last several years, the Company’s financial position has been severely impacted by the challenging macroeconomic environment,” president and CEO Laurie Ann Goldman said in a statement announcing the bankruptcy filing.
“As a result, we explored numerous strategic options and determined this is the best path forward,” Goldman said.
The company said it would seek court approval for a sale process for the business to protect its brand and “further advance Tupperware’s transformation into a digital-first, technology-led company.”
The Orlando, Florida-based firm said it would also seek approval to continue operating during the bankruptcy proceedings and would continue to pay its employees and suppliers.
“We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process,” Goldman said.
The firm’s shares were trading at $0.5099 Monday, well down from $2.55 in December last year.
Tupperware said it had implemented a strategic plan to modernize its operations and drive efficiencies to ignite growth following the appointment of a new management team last year.
“The Company has made significant progress and intends to continue this important transformation work.”
In its filing with the U.S. Bankruptcy Court for the District of Delaware, Tupperware listed assets of between $500 million and $1 billion and liabilities of between $1 billion and $10 billion.
The filing also said it had between 50,000 and 100,000 creditors.
Tupperware lost popularity with consumers in recent years and an initiative to gain distribution through big-box chain Target failed to reverse its fortunes.
The company’s roots date to 1946, when chemist Earl Tupper “had a spark of inspiration while creating molds at a plastics factory shortly after the Great Depression,” according to Tupperware’s website.
“If he could design an airtight seal for plastic storage containers, like those on a paint can, he could help war-weary families save money on costly food waste.”
Over time, Tupper’s containers became popular that many people referred to any plastic food container as Tupperware. And people even threw “Tupperware parties” in their homes to sell the containers to friends and neighbors.
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