The Justice Department, along with attorneys general from eight states, filed a civil antitrust lawsuit Friday alleging the property management software company RealPage engaged in an illegal scheme that allowed landlords to collude to hike rents across the country by using its software.

According to the complaint, which was filed after a nearly two-year Justice Department investigation, landlords who pay to use RealPage’s software, YieldStar, share confidential information about rental prices, lease terms and occupancy rates. That software then uses that data in an algorithm that generates recommendations on what landlords should charge tenants for rent, often leading to higher rates than what would ordinarily be offered in a competitive market, the plaintiffs charge.

That’s because, without the software, landlords would compete independently against each other to attract renters by potentially offering lower rent rates, discounts, concessions or other perks, the complaint says. RealPage’s alleged conduct has harmed millions of Americans, the Justice Department said.

The lawsuit also alleges RealPage, which is based in Richardson, Texas, uses the data to create “a self-reinforcing feedback loop” that allows it to maintain a monopoly in the market of commercial revenue management software. RealPage holds an 80% share of the market, company internal documents say, according to the complaint.

The lawsuit filed in U.S. District Court in the Middle District of North Carolina alleges RealPage violated two sections of the Sherman Antitrust Act.

“When the Sherman Act was passed [in 1890], an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting,” Attorney General Merrick Garland said Friday morning. “Today, it looks like landlords using mathematical algorithms to align their rents.

“Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law,” the attorney general added.

The states that joined with the Justice Department on the lawsuit are North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington. 

RealPage has not responded to a request for comment from Spectrum News. A spokeswoman for the company told The New York Times it plans to “vigorously” defend itself against the lawsuit and insisted its software was “purposely built to be legally compliant.”

But the lawsuit alleges internal documents and sworn testimony from RealPage and landlords prove the objective was to maximize rental prices and profitability at the expense of renters.

“In advertising its service to landlords, RealPage frequently says that a ‘rising tide raises all ships,’” Garland said. “As a RealPage vice president explained, this phrase means that ‘there is greater good in everybody succeeding versus essentially trying to compete against one another.’

“But ‘essentially trying to compete against one another’ is what our free-market economy is all about. And ensuring such competition what our antitrust laws are all about.”

According to the lawsuit, one landlord commented about the software: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing.”

The Justice Department and attorneys general are seeking a decree that RealPage acted illegally, an end to the company’s allegedly anticompetitive practices, an unspecified sum of money to cover the cost of bringing the suit and any additional relief the court believes is warranted.

In a statement, White House National Economic Advisor Lael Brainard said that President Joe Biden and Vice President Kamala Harris "know that too many Americans feel squeezed by high rents, and they are working every day to bring down housing costs. We do not have a comment on the DOJ’s antitrust suit against RealPage."

"The Biden-Harris Administration has made clear that no one should pay higher prices because of corporate lawbreaking and continues to support fair and vigorous enforcement of the antitrust laws to prevent illegal collusion," Brainard said. "We continue to take all available actions to lower housing costs, from enacting the largest increase in federal rental assistance in decades to freeing up federal lands for affordable housing."