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In a startling development, the U.S. Department of Justice (DOJ) is weighing the possibility of issuing a statement of interest in a series of class action lawsuits centering on allegations of antitrust violations by RealPage and property owners. The claim asserts that RealPage's software solutions were employed to manipulate rental prices across national housing markets.

The Justice Department, in a filing made public on Thursday in a Tennessee federal court, emphasized its particular interest in the application of the Sherman Act regarding the utilization of algorithms by businesses to influence pricing. This has become an increasingly significant concern in a world where companies use algorithms for price setting, often with the aim of raising prices, further complicating the terrain of antitrust regulation.

The lawsuit, which was consolidated in a Tennessee federal court in April, focuses on a specific category of RealPage products, encompassing revenue management software solutions. Both RealPage and property owners stand accused of breaching the Sherman Act, in addition to infringing antitrust and consumer protection laws in over 40 states.

According to an amended consolidated class action complaint filed on September 7, multifamily housing operators seeking access to RealPage's rental pricing tools were obliged to provide "non-public, competitively sensitive data to RealPage's data pool" and align their rental rates with the pricing structure generated by the software.

Prominent names in the defendant lineup include major apartment landlords such as Equity Residential, Greystar Real Estate Partners LLC, and Lincoln Property Co.

In a parallel amended class action suit, a group of student housing owners also faces allegations of participating in a similar price-fixing arrangement through their use of RealPage's revenue management tools.

In August, U.S. District Judge Waverly D. Crenshaw denied early dismissal motions by some property owners without prejudice and granted the plaintiffs until September 7 to file updated complaints.

In accordance with the judge's directives, the defendants recently filed a fresh round of dismissal motions. RealPage and the multifamily housing landlords contended in an October 9 filing that the plaintiffs have failed to sufficiently allege a "plausible horizontal price-fixing conspiracy" and have not provided evidence that each individual defendant entered into any agreement with the software company.

The DOJ has signaled that it may potentially file a statement of interest by November 15, pending the plaintiffs' responses to the latest dismissal motions expected to be filed a week earlier.

Patrick Coughlin, interim co-lead counsel for the tenants, conveyed their appreciation for the DOJ's interest in the RealPage litigation, emphasizing their eagerness to hear the DOJ's stance on the application of Section 1 of the Sherman Act to the use of algorithms in pricing by competitors.

Coughlin anticipates that the agency's reasoning will echo a statement by former acting Federal Trade Commission Chairperson Maureen K. Ohlhausen in 2017, who questioned the ethical implications of a person or an algorithm collecting confidential pricing data from market participants and instructing them on how to set prices.

At the time of reporting, the defendants' representatives had not responded to requests for comments.

The DOJ is represented by Michael C. Tackeff and Yixi Cheng from the U.S. Department of Justice.

The multifamily and student tenants are represented by Herzfeld Suetholz Gastel Leniski & Wall PLLC, Scott + Scott Attorneys at Law LLP, Robins Kaplan LLP, and Hausfeld LLP.

RealPage is represented by Jay Srinivasan, Daniel G. Swanson, Stephen Weissman, Michael J. Perry, Stephen C. Whittaker, and Ben A. Sherwood of Gibson Dunn & Crutcher LLP, and Thomas H. Dundon of Neal & Harwell PLC.

The defendants are represented by Gibson Dunn & Crutcher LLP.