[Federal Register Volume 90, Number 92 (Wednesday, May 14, 2025)]
[Notices]
[Pages 20501-20505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08464]
[[Page 20501]]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States et al. v. RealPage, Inc. et al.
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that the Response of Plaintiff
United States to Public Comment on the Proposed Final Judgment in
United States of America et al. v. RealPage et al., Civil Action No.
24-cv-00710-WLO-JLW, in regards to Defendant Cortland Management, LLC.,
has been filed in the United States District Court for the Middle
District of North Carolina, together with the response of the United
States to the comment.
Copies of the public comment and the United States' Response are
available for inspection on the Antitrust Division's website at http://www.justice.gov/atr.
Suzanne Morris,
Deputy Director Civil Enforcement Operations, Antitrust Division.
In the United States District Court for the Middle District of North
Carolina
United States of America, Plaintiff, vs. Cortland Management,
LLC, Defendant.
No. 1:24-cv-00710-WLO-JLW
Response of Plaintiff United States to Public Comment on the Proposed
Final Judgment
Pursuant to the Antitrust Procedures and Penalties Act (the
``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), the United States
submits this response to the one public comment received regarding the
proposed Final Judgment in this case as to Defendant Cortland
Management, LLC (Doc. 49-1).
After careful consideration of the submitted comment, the United
States continues to believe that the proposed Final Judgment will
provide an effective and appropriate remedy for the antitrust
violations alleged in the Complaint against Cortland and is therefore
in the public interest.
After this Response has been published in the Federal Register,
pursuant to 15 U.S.C Sec. 16(d), the United States will move that the
Court enter the proposed Final Judgment.
I. Procedural History
On August 23, 2024, the United States and eight states
(``Plaintiffs'') filed a civil antitrust Complaint against RealPage,
Inc. (``RealPage'') (Doc. 1). On January 7, 2025, Plaintiffs amended
their civil Complaint (the ``Complaint'') to add Cortland Management,
LLC (``Cortland'') and five other landlords as Defendants (Doc. 47)
alleging that Cortland Management, LLC's (``Cortland'') agreements with
RealPage and other landlords to share information and align pricing
violate Section 1 of the Sherman Act, 15 U.S.C. 1. The Complaint seeks
to enjoin Defendants from sharing and exploiting competitively
sensitive data.
Along with the amended Complaint, the United States filed a
proposed Final Judgment (Doc. 49-1) as to Cortland, which is designed
to remedy the loss of competition alleged in the Complaint due to
Cortland's conduct, and a Stipulation and Proposed Order (Doc. 49), in
which Cortland consented to entry of the proposed Final Judgment after
compliance with the requirements of the Tunney Act.\1\ On January 23,
2025, the United States filed a Competitive Impact Statement describing
the proposed Final Judgment as to Cortland. (Doc. 63)
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\1\ The Stipulation and Proposed Order, and the proposed Final
Judgment, pertain only to Cortland's conduct. They do not propose to
resolve the anticompetitive conduct alleged in the Complaint against
any other Defendant. Nor do they resolve the claims of any other
Plaintiff besides the United States.
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The United States arranged for the publication of the Complaint,
proposed Final Judgment, and Competitive Impact Statement in the
Federal Register on January 30, 2005, see 15 U.S.C. 16(b)-(c); 90 FR
8560 (January 30, 2025), and caused notice regarding the same, together
with directions for the submission of written comments relating to the
proposed Final Judgment, to be published in the Washington Post from
January 29 to February 4, 2025, and in the Greensboro News and Record
from January 29 to February 3, 2025, and on March 1, 2025. The 60-day
period for public comment has now ended. The United States received one
comment in response, which is described below and attached as Exhibit 1
hereto.
II. Standard of Judicial Review
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in cases brought by the United States under the
antitrust laws be subject to a 60-day comment period, after which the
Court shall determine whether entry of the proposed Final Judgment ``is
in the public interest.'' 15 U.S.C. 16(e)(1). In making that
determination, the Court, in accordance with the statute as amended in
2004, is required to consider:
(A) the competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B).
In considering these statutory factors, the Court's inquiry is
necessarily a limited one, because the government is entitled to
``broad discretion to settle with the defendant within the reaches of
the public interest.'' United States v. Microsoft Corp., 56 F.3d 1448,
1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., Inc., 38 F.
Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the ``court's inquiry is
limited'' in Tunney Act settlements); United States v. InBev N.V./S.A.,
No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11,
2009) (noting that a court's review of a consent judgment is limited
and only inquires ``into whether the government's determination that
the proposed remedies will cure the antitrust violations alleged in the
complaint was reasonable, and whether the mechanism to enforce the
final judgment are clear and manageable''); United States v. Keyspan
Corp., 763 F. Supp. 2d 633, 637-38 (S.D.N.Y. 2011); see SEC v.
Citigroup Global Markets Inc., 673 F.3d 158, 168 (2d Cir. 2012) (``We
are bound in such matters to give deference to an executive agency's
assessment of the public interest.'').
As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA, a court considers, among other
things, the relationship between the remedy secured and the specific
allegations in the government's complaint, whether the proposed Final
Judgment is sufficiently clear, whether its enforcement mechanisms are
sufficient, and whether it may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62; United States v. Apple, Inc., 889 F.
Supp. 2d 623, 631 (S.D.N.Y. 2012) (citing Microsoft, 56 F.3d at 1458,
1461-62). With respect to the adequacy of the relief secured by the
decree, a court may ``not make de novo determination of facts and
issues.''
[[Page 20502]]
United States v. W. Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993)
(quotation marks omitted); see also Microsoft, 56 F.3d at 1460-62;
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001);
United States v. Enova Corp., 107 F. Supp. 2d 10, 16 (D.D.C. 2000);
InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Instead, ``[t]he balancing
of competing social and political interests affected by a proposed
antitrust consent decree must be left, in the first instance, to the
discretion of the Attorney General.'' W. Elec. Co., 993 F.2d at 1577
(quotation marks omitted). ``The court should bear in mind the
flexibility of the public interest inquiry: the court's function is not
to determine whether the resulting array of rights and liabilities is
one that will best serve society, but only to confirm that the
resulting settlement is within the reaches of the public interest.''
Microsoft, 56 F.3d at 1460 (quotation marks omitted); see also United
States v. Deutsche Telekom AG, No. 19-2232 (TJK), 2020 WL 1873555, at
*7 (D.D.C. Apr. 14, 2020). More demanding requirements would ``have
enormous practical consequences for the government's ability to
negotiate future settlements,'' contrary to congressional intent.
Microsoft, 56 F.3d at 1456. ``The Tunney Act was not intended to create
a disincentive to the use of the consent decree.'' Id.\2\
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\2\ See also BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass'').
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The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'') (internal
citations omitted); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case''). In determining
whether a proposed settlement is in the public interest, a district
court ``is not permitted to reject the proposed remedies merely because
the court believes other remedies are preferable.'' United States v.
Morgan Stanley, 881 F. Supp. 2d 563, 567 (S.D.N.Y. 2012) (quoting
United States v. Abitibi-Consol. Inc., 584 F. Supp. 2d 162, 165 (D.D.C.
2008)). The ultimate question is whether ``the remedies [obtained by
the Final Judgment are] so inconsonant with the allegations charged as
to fall outside of the `reaches of the public interest.' '' Microsoft,
56 F.3d at 1461 (quoting W. Elec. Co., 900 F.2d at 309).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); United States v. Keyspan Corp., 763 F. Supp. 2d 633 637-38
(S.D.N.Y. 2011) (``The Court's function is not to determine whether the
proposed [d]ecree results in the balance of rights and liabilities that
is the one that will best serve society, but only to ensure that the
resulting settlement is `within the reaches of the public interest.' ''
(quoting United States v. Alex. Brown & Sons, Inc., 963 F. Supp. 235,
238 (S.D.N.Y. 1997)); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the
`public interest' is not to be measured by comparing the violations
alleged in the complaint against those the court believes could have,
or even should have, been alleged''). Because the ``court's authority
to review the decree depends entirely on the government's exercising
its prosecutorial discretion by bringing a case in the first place,''
it follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60. See also Heckler v. Chaney, 470 U.S. 821, 832 (1985)
(quoting U.S. Const. art. II, Sec. 3) (recognizing that the decision
about which claims to bring ``has long been regarded as the special
province of the Executive Branch.'').
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of using consent judgments proposed
by the United States in antitrust enforcement, Public Law 108-237, 221,
and added the unambiguous instruction that ``[n]othing in this section
shall be construed to require the court to conduct an evidentiary
hearing or to require the court to permit anyone to intervene.'' 15
U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required to hold an evidentiary hearing
or to permit intervenors as part of its review under the Tunney Act).
This language made explicit what Congress intended when it first
enacted the Tunney Act in 1974. As Senator Tunney explained: ``[t]he
court is nowhere compelled to go to trial or to engage in extended
proceedings which might have the effect of vitiating the benefits of
prompt and less costly settlement through the consent decree process.''
119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). ``A court can
make its public interest determination based on the competitive impact
statement and response to public comments alone.'' U.S. Airways, 38 F.
Supp. 3d at 76 (citing Enova Corp., 107 F. Supp. 2d at 17) see also
United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000)
(noting that the ``Tunney Act expressly allows the court to make its
public interest determination on the basis of the competitive impact
statement and response to comments alone''); S. Rep. No. 93-298 93d
Cong., 1st Sess., at 6 (1973) (``Where the public interest can be
meaningfully evaluated simply on the basis of briefs and oral
arguments, that is the approach that should be utilized.'').
III. The Complaint and the Proposed Final Judgment
The Complaint alleges that, by unlawfully sharing its confidential
and competitively sensitive information with RealPage for use in its
and competing landlords' pricing, Cortland violated Section 1 of the
Sherman Act, 15 U.S.C. 1. Under their licensing agreements with
RealPage, Cortland and competing landlords have provided RealPage with
daily, competitively sensitive, nonpublic information relating to their
leasing businesses, including details like how many leases have been
renewed, for what terms, and at what price. The transactional data that
Cortland and other landlords have agreed to provide to RealPage
includes current, forward-looking, granular, and highly competitively
sensitive
[[Page 20503]]
information. RealPage has used Cortland's competitively sensitive,
nonpublic information to influence rental prices and other
recommendations across rental properties managed by competing
landlords. Cortland's rental prices and related recommendations were
also influenced by its competitors' competitively sensitive, nonpublic
information. In each relevant market, RealPage and participating
landlords, including Cortland, have sufficient market power, including
market and data penetration, to harm renters and the competitive
process through this unlawful sharing of confidential and competitively
sensitive information. Moreover, Cortland and other landlords can
achieve any purported procompetitive objective of revenue management
software without sharing this kind of information.
The Complaint also alleges that Cortland and other landlords, by
adopting and using RealPage's revenue management software, have agreed
with RealPage and each other to align their pricing and thereby violate
Section 1 of the Sherman Act, 15 U.S.C. 1. RealPage has entered into
agreements with Cortland and its competing landlords relating to how to
price rental units, including through the licensing of its revenue
management software--AI Revenue Management (``AIRM''), YieldStar, and
Lease Rent Options (``LRO'')--to landlords, and the provision by
landlords of their competitively sensitive, nonpublic transactional
data to RealPage for training and running its revenue management
software. Common adoption and use of RealPage's revenue management
software by Cortland and other landlords has the likely effect of
aligning their pricing processes, strategies, and pricing responses,
and Cortland and other landlord users understand this likely effect.
The Complaint also alleges monopolization and attempted
monopolization claims in violation of Section 2 of the Sherman Act, 15
U.S.C. 2, against RealPage, but not against Cortland or any of its
competing landlords. Through its licensing agreements, RealPage has
amassed a massive reservoir of competitively sensitive data from
competing landlords. RealPage has ensured that other providers of
revenue management software cannot compete on the merits unless they
enter into similar anticompetitive agreements with landlords, thereby
obstructing them from competing with products that do not harm the
competitive process.
The proposed Final Judgment provides effective and appropriate
remedies for this competitive harm. These include several requirements
and restrictions on Cortland that address the United States'
anticompetitive concerns regarding Cortland's conduct alleged in the
Complaint. Among other terms:
i. Cortland must move from RealPage revenue management software to
its proprietary revenue management software within 30 days of entry of
the Stipulation and Order;
ii. Cortland's revenue management software cannot use any third-
party nonpublic data, including in training its models or in the
runtime operation;
iii. Cortland's revenue management software cannot pool pricing
information across its different owners;
iv. The supply and demand models for Cortland's revenue management
software cannot be trained using rental pricing, concessions,
discounts, occupancy rates or capacity, or other rental pricing terms
data across different owners;
v. Cortland cannot disclose, solicit, or use competitively
sensitive information from competitors that can be used to set rental
prices or generate pricing;
vi. Cortland must cooperate in this civil antitrust proceeding
(United States et al. v. RealPage et al.) with respect to its prior use
of RealPage's products and the monopolization and attempted
monopolization claims against RealPage;
vii. Cortland must adopt a written antitrust compliance policy and
designate a chief antitrust compliance officer who will train Cortland
employees on the policy, enforce the policy, and perform annual audits
for compliance with the policy;
viii. Cortland must allow the United States to perform inspections
of its documents, code, and pseudocode relating to its proprietary
revenue management software as well as to interview its employees to
ensure compliance with the Final Judgment;
ix. Cortland cannot license or use any third-party revenue
management software without the appointment of a compliance monitor who
will have the ability to seek information from Cortland's employees to
ensure compliance with certain restrictions related to use of third-
party revenue management software and communications between Cortland
and other property management companies;
x. Even with the oversight of a compliance monitor, Cortland cannot
license or use any third-party revenue management software that (i)
uses third-party nonpublic data to recommend or set prices or (ii)
pools information across Cortland properties with different owners; and
xi. Cortland will also be subject to the appointment of a
compliance monitor if the Court finds that Cortland has violated the
terms of the proposed Final Judgment.
The proposed Final Judgment provides that it will expire four years
from the date of its entry.
Under the terms of the Stipulation and Proposed Order, Cortland
agreed to abide by and comply with the provisions of the proposed Final
Judgment during the pendency of the Tunney Act proceedings, until the
Final Judgment is entered by the Court or until the time for all
appeals of any Court ruling declining entry of the proposed Final
Judgment has expired.
The United States and Cortland have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
Tunney Act. Entry of the proposed Final Judgment will terminate this
action with respect to Cortland, except that the Court will retain
jurisdiction to construe, modify, or enforce the provisions of the
proposed Final Judgment and to punish violations thereof by Cortland.
IV. Summary of the Public Comment and the United States' Response
The United States received one public comment in response to the
proposed Final Judgment from the Center for Democracy & Technology
(``CDT''). CDT expresses concern over the use of ``algorithm-powered
systems to collect and analyze'' current and future prices and
occupancy from competing landlords to then provide recommendations to
all participating landlords. CDT notes that ``this kind of information
is competitively sensitive'' and should be ``closely guarded, not
shared.'' (Exhibit 1 at 2). CDT explains that, in its view, the
proposed Final Judgment's ``carefully designed'' obligations aim to
``ensure that it makes its own independent business decisions regarding
rental prices'' and ``materially help[]'' the Division's
``investigation and enforcement action.'' (Exhibit 1 at 6).
Having carefully reviewed CDT's comment, the United States
continues to believe that the proposed Final Judgment ``appropriately
addresses the anticompetitive concerns underlying this enforcement
action'' against Cortland and, therefore, ``is in the public
interest.'' Nothing in this comment warrants a change to the proposed
Final Judgment or indicates that the proposed Final Judgment is not in
the public interest. As required by the APPA, the comment and this
response
[[Page 20504]]
will be published in the Federal Register.
V. Conclusion
After reviewing the public comment, the United States continues to
believe that the proposed Final Judgment, as drafted, provides an
effective and appropriate remedy for the antitrust violations alleged
in the Complaint against Cortland, and is therefore in the public
interest. The United States will move this Court to enter the proposed
Final Judgment after the comment and this response are published in the
Federal Register.
Dated: May 1, 2025
Respectfully submitted,
By:
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Henry C. Su,
David A. Geiger,
Danielle Hauck,
Kris A. P[eacute]rez Hicks,
Attorneys, United States Department of Justice, Antitrust Division,
450 Fifth Street NW, Suite 7100, Washington, DC 20530, Telephone:
(202) 307-6200, Email: [email protected]
Exhibit 1
Comments of Center for Democracy & Technology, United States v.
RealPage, Inc., et al., No. 1:24-cv-00710-LCB-JLW
United States District Court for the Middle District of North Carolina
Proposed Consent Decree With Cortland Management, LLC
March 24, 2025
Aaron Hoag
Chief, Technology and Digital Platforms Section
Antitrust Division
United States Department of Justice
450 Fifth St. NW, Suite 7100
Washington, DC 20530
By [email protected]
Dear Mr. Hoag:
The Center for Democracy & Technology (CDT) \3\ respectfully
submits these comments in support of the Justice Department's
proposed consent decree with Cortland Management, Inc. In our view,
the proposed decree would effectively and appropriately restore
competition in Cortland's apartment rental activities, guard against
recurrence of anticompetitive conduct by Cortland, and secure
Cortland's assistance with the Department's continuing investigation
of and enforcement against RealPage and the other apartment landlord
defendants. It is therefore in the public interest, consistent with
the requirements of the Antitrust Procedures and Penalties Act, 15
U.S.C. 16(b)-(h) (APPA), also known as the Tunney Act.
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\3\ The Center for Democracy & Technology is a non-profit
organization founded 30 years ago, when the commercial internet was
just getting underway, to fight for democratic values and human
rights in the digital age. Protecting and enabling an online
marketplace where competition can thrive, and enhance choice for all
and encourage innovation, is essential to that objective, as well as
to the broader objective of fostering a strong economy and widely-
shared prosperity.
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The Department's antitrust enforcement action,\4\ filed August
23, 2024, along with eight states, charged RealPage with using an
algorithm to organize and coordinate a scheme among apartment
landlords to inflate rental prices in violation of the section 1 of
the Sherman Act. The allegations set forth what appears to be a
textbook example of using artificial intelligence to supercharge
anticompetitive collusion,\5\ a capability that CDT has written
about previously.\4\ The Department also charged RealPage with
monopolizing multi-family apartment revenue management software in
violation of section 2 of the Sherman Act.
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\4\ www.justice.gov/d9/2024-08/424422.pdf. Eight states joined
the complaint as co-plaintiffs. These comments often refer to the
Department's complaint or allegations or enforcement action.
\5\ See www.cdt.org/insights/justice-department-goes-after-algorithm-fueled-price-fixing-in-apartment-rentals/.\4\ www.cdt.org/insights/is-artificial-intelligence-a-new-gateway-to-anticompetitive-collusion/.
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In the amended complaint,\6\ filed January 7, the Department and
plaintiff states added seven major multi-family apartment landlords
as defendants. The amended complaint and the February 25 Response
\7\ in Opposition to Defendant RealPage's Motion to Dismiss also
added new factual allegations and analysis in support of the
charges. As stated in the Response, the amended complaint clearly
sets forth the requisite ``plausible claim for relief.'' \8\
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\6\ www.justice.gov/atr/media/1383471/dl.
\7\ www.justice.gov/atr/media/1390941/dl?inline.
\8\ See Robertson v. Sea Pines Real Estate Companies, Inc., 679
F.3d 278, 284 (4th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S.
662, 679 (2009)).
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The Unlawful Anticompetitive Scheme Charged Under Section 1 of the
Sherman Act
As charged in the complaint, RealPage has created and advertised
to apartment landlords an algorithm-powered system to collect and
analyze, on a daily basis, current rental prices and planned future
prices, and current availabilities and projected future
availabilities, for all participating landlords. This information is
separately categorized for each individual rental unit, according to
size, floor plan, layout, and amenities. RealPage makes explicitly
clear to the landlords that it will analyze this information and
provide pricing recommendations to each landlord based on this
information. This kind of information is competitively sensitive,
and in a lawfully competitive marketplace it is closely guarded, not
shared.
RealPage's alleged system has the hallmarks of a classic
anticompetitive ``hub-and spoke'' \9\ arrangement, under which
competitors coordinate pricing and output decisions through a
central clearinghouse ``hub.'' This kind of arrangement has been
found to violate section 1 of the Sherman Act, which prohibits
contracts, combinations, or conspiracies in restraint of trade,
provided that the evidence sufficiently demonstrates that the
competitors along the ``rim'' had a ``conscious commitment to a
common scheme designed to achieve an unlawful objective.'' \10\ It
is not necessary that the competitors along the ``rim'' have direct
communication with each other regarding the anticompetitive scheme,
because they are communicating effectively through the ``hub'' as
``spokes.''
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\9\ E.g., United States v. Apple, Inc., 791 F.3d 290, 314 (2d
Cir. 2015).
\10\ E.g., id. at 315. See Interstate Circuit v. United States,
306 U.S. 208, 227 (1939) (``Acceptance by competitors, without
previous agreement, of an invitation to participate in a plan, the
necessary consequence of which, if carried out, is restraint of
interstate commerce, is sufficient to establish an unlawful
conspiracy under the Sherman Act.''); American Column & Lumber Co.
v. United States, 257 U.S. 377 (1921).
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Here, per the Department's allegations, RealPage created the
``hub'' and advertised it to landlords, encouraging them to join up.
RealPage explained that it would calculate pricing recommendations
for them, based on pricing data submitted on a daily basis by every
participating landlord in the market area. And RealPage further
explained that the recommendations would be guided by the highest
prices being charged, which would enable each landlord to
confidently increase its own rental prices in line with the high end
of prices being charged by its competitors.
So, per those allegations, the landlords were well aware that
they would be ``spokes'' to RealPage's ``hub,'' participating along
with their competitors, and that the result would be pricing
recommendations that would result in inflated prices. Or, as
RealPage regularly put it, would ``raise all ships.'' A RealPage
revenue management vice president elaborated that this phrase means
that ``there is greater good in everybody succeeding versus
essentially trying to compete against one another in a way that
actually keeps the industry down.'' And even more pointedly, that
landlords using RealPage's software would ``likely move in unison
versus against each other.''
Thus, based on the allegations, the landlords who joined up were
consciously committing themselves to a common scheme not to compete.
Their commitment includes paying RealPage a hefty fee in recognition
of the value they are receiving.
In the words of the Department, the landlords are ``knowing and
willing participants.''
But RealPage has allegedly gone beyond just creating and
advertising the hub that enabled and facilitated a conscious
commitment to unlawful pricing coordination. It has taken a number
of calculated steps to make sure landlords follow through on that
commitment. It constantly nudges landlords to follow each other's
price increases. It actively monitors prices charged on literally
millions of apartment units--not only to calculate new pricing
recommendations, but also to determine which landlords are complying
with its recommendations and which landlords are not.
According to the complaint, each day, RealPage sends updated
pricing recommendations to each landlord. RealPage makes it easy for
the landlord to accept the
[[Page 20505]]
recommendations in bulk--it can be done with a single keystroke, or
even programmed for auto-accept, which RealPage strongly encourages
landlords to adopt. Diverging from the recommendation, in contrast,
requires more work: the landlord's property manager must
affirmatively give RealPage a ``strong sound business-minded''
justification for each divergence, based on something the algorithm
is not accounting for, such as local construction or renovations
occurring in the building. Further, whenever RealPage disagrees with
the proffered justification, which is usually, the matter is
escalated to the property manager's supervisor, and upward, with
increasing assertiveness.
The result, according to the amended complaint: more than 85% of
final floor plan prices are within 5% of RealPage's recommendation.
The Department further charges that RealPage reinforces its
algorithm-driven coordinated upward pricing recommendations by
discouraging landlords from offering renters discount
``concessions''--such as a free month's rent or waived fees--as
landlords in a healthy competitive marketplace would naturally have
incentives to offer. In its ``best practices'' for landlords,
RealPage's guidance is simple: ``Eliminate concessions.'' Each
landlord's agreement to refuse to offer concessions is bolstered by
its awareness that competing landlords are receiving the same advice
from RealPage.
Cortland Management's Proposed Agreement
Cortland Management, LLC is one of the participating apartment
landlords added as defendants in the amended complaint.
Headquartered in Atlanta, Georgia, it is one of the largest
apartment managers in the United States--managing, as of 2024, more
than 80,000 units and more than 220 properties in the United States.
Taking the Department's well-supported allegations as correct,
as the law requires,\11\ the proposed consent decree with Cortland
materially advances the public interest by helping to ensure that
rents that Cortland charges to consumers will be set based on market
factors, rather than based on a conspiracy leading to inflated
rents.
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\11\ E.g., Advanced Health-Care Servs., Inc. v. Radford
Community Hosp., 910 F.2d 139, 145 (4th Cir. 1990).
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To remove itself from RealPage's anticompetitive scheme,
Cortland has agreed:
to stop using RealPage revenue management software, and
switch to using only its own proprietary revenue management
software;
to stop using any non-public data in its possession
obtained or derived from RealPage; and
not to use in its own software any third-party
nonpublic data, including from RealPage.
To guard against any relapse into anticompetitive pricing,
Cortland has further agreed:
not to disclose, solicit, or use competitively
sensitive information from competitors, or between Cortland
properties with different owners, that could be used to set or
generate rental prices.
not to train its own proprietary software using rental
pricing, concessions, discounts, occupancy rates, capacity, or other
rental pricing terms data from Cortland properties with different
owners;
not to license or use any third-party revenue
management software that (1) uses third-party nonpublic data to
recommend or set prices or (2) pools information across Cortland
properties with different owners;
not to license or use any third-party revenue
management software that (1) generates a rental price floor or a
limit on rental price decreases or (2) requires or incentivizes
Cortland to accept any recommended rental prices;
certify at the outset and annually that any such third-
party software is in compliance;
not to license or use any third-party revenue
management software until after court appointment of an independent
compliance monitor, who will have full authority to seek information
from Cortland's employees to ensure compliance with specified
restrictions to ensure that the software will not be used to
anticompetitively coordinate pricing, amenities, or availability;
to adopt a written antitrust compliance policy, and
designate a chief antitrust compliance officer who will train
Cortland employees on the policy, enforce the policy, and perform
annual audits for compliance with the policy;
for its general counsel to certify to the Department
annually, under penalty of perjury, its compliance with the policy
and with the consent decree; and
to allow the Department to perform inspections of its
documents, and its algorithmic code and descriptions for its
proprietary revenue management software, and to interview its
employees, to ensure compliance.
And, also importantly, Cortland agrees to fully and actively
cooperate with the Department's investigation and enforcement as it
continues.
These obligations are carefully designed to end Cortland's
involvement with RealPage; to ensure that it makes its own
independent business decisions regarding rental prices and
availability, immediately becoming a strong competitive force in the
markets where it operates; and to ensure that it materially helps
the Department pursue the investigation and enforcement action to
conclusion. In all these respects, the decree can be expected to
have a significant positive impact for consumers, who will have the
benefit of apartment rental prices determined by competition rather
than collusion.
Conclusion
For the foregoing reasons, the Proposed Final Judgment
appropriately addresses the anticompetitive concerns underlying this
enforcement action, is in the public interest, and should be
approved by the Court.
Respectfully,
George P. Slover,
Senior Counsel for Competition Policy, Center for Democracy &
Technology
[FR Doc. 2025-08464 Filed 5-13-25; 8:45 am]
BILLING CODE 4410-11-P