California Attorney General Rob Bonta
SACRAMENTO - A management company that operates more than 300 multifamily rental properties in California has agreed to pay California and eight other states $7 million to settle litigation accusing the company of using software that fostered price collusion.
Greystar Management Services LLC, which manages close to 1 million rental units nationwide, agreed to the settlement, which state Attorney General Rob Bonta said on Nov. 18 requires Greystar to stop using RealPage software that sought to align rental prices using illegally shared confidential rental data from competitors.
“Whether it's through smoke-filled backroom deals or through an algorithm on your computer screen, colluding to drive up prices is illegal,” Bonta said in a prepared statement. “Families across the country are staring down an affordability crisis. Companies that intentionally fuel this unaffordability by raising prices to line their own pockets can be sure I will use the full force of my office to hold them accountable.”
Greystar denied any wrongdoing and offered no admission of liability in the settlement. But the Attorney General’s Office reported the settlement requires the company to stop using any anticompetitive software that creates pricing recommendations to subscribers using rivals’ private rental data.
Bonta’s office also pointed out that the demand for housing in the state has outpaced housing production over the past 40 years.
“Housing costs have skyrocketed, making it harder for Californians to keep a roof over their heads,” the office said in a news release. “California's 17 million renters spend a significant portion of their paychecks on rent, with an estimated 700,000 Californians at risk of eviction.”
Under the settlement agreement, the $7 million will be turned over to California before it’s apportioned to the other states involved in the litigation – North Carolina, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, Oregon and Tennessee.
“We are pleased this matter is resolved and remain focused on serving our residents and clients,” Greystar said in a statement emailed to the Southern California Record.
The settlement was followed on Nov. 24 by an agreement between the U.S. Department of Justice and RealPage that ends the sharing of confidential rental data among property managers in what is supposed to be a free market.
That agreement provides for no financial penalties, damages or admissions of wrongdoing, but it forces Texas-based RealPage to stop the use of sensitive competitive information in its revenue-management software and to reconfigure software features that tended to limit price decreases, according to the U.S. Justice Department.
“Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement,” Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division said in a statement.
RealPage said the software changes the company agreed to were in line with modifications to its revenue-management tools that the company has put in place over the past year. In addition, the settlement avoids the prospect of protracted litigation, according to the company.
“There has been a great deal of misinformation about how RealPage’s software works and the value it provides for both housing providers and renters,” the company’s attorney, Stephen Weissman of the Gibson Dunn law firm, said. “We believe that RealPage’s historical use of aggregated and anonymized nonpublic data, which include rents that are typically lower than advertised rents, has led to lower rents, less vacancies and more procompetitive effects.”