On Tuesday, lawyers for RealPage asked that the U.S. District Court for the Middle District of North Carolina dismiss the antitrust lawsuit brought against it by the Department of Justice and eight states. 

In August, the DOJ and the states alleged that RealPage's revenue management software is an “unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market.” The civil suit said that the Richardson, Texas-based software and data firm violated the Sherman Act, which prohibits unfair monopolies. 

RealPage pointed to class action suits, now centered in the U.S. District Court for the Middle District of Tennessee, where it said the court rejected the theory that its revenue management system was a price-fixing conspiracy that is unlawful under antitrust laws in December 2023.

After the court rejected those allegations, RealPage said the DOJ pivoted to Sections 1 and 2 of the Sherman Act, which focus on anticompetitive behavior and monopolization. The agency did not reply to an email from Multifamily Dive asking for comment on RealPage’s filing.

Anticompetitive pushback

RealPage said in the filing that the DOJ’s complaint lacks factual allegations that the company’s conduct caused anticompetitive effects in any alleged relevant market because its software doesn’t have the power to raise rents above the competitive level. To do that, 30% or 40% of the units in a market would need to use the company’s AI Revenue Management or YieldStar software programs. The plaintiffs aren’t challenging the company’s Lease Rent Options product. 

“DOJ has not been able, despite conclusions and labels, to articulate a theory of facts that shows anticompetitive effects, such as higher prices than a competitive market would sustain,” RealPage Outside Counsel Stephen Weissman, global co-chair of law firm Gibson Dunn’s Antitrust and Competition Practice Group, said on a call with reporters on Wednesday.

When looking at market share, the DOJ didn’t limit its market calculations to AI Revenue Management and YieldStar, according to Weissman.

“What they tried to do is inflate, improperly in our view, the market shares for those products by trying to loop in other products that are non-revenue management products that RealPage has, most notably a product called OneSite,” Weissman said. “It’s not a revenue management product, doesn't recommend rents, and many OneSite users don't use a revenue management product of RealPage, much less the two products that DOJ is focused on.”

Monopolization dispute

The DOJ’s complaint alleged that RealPage maintains a monopoly over commercial revenue management software for apartments in the U.S., with an approximately 80% market share. 

However, RealPage argued that it's simply operating its business, and it does not prevent competitors from adopting the same model. 

“To have a Section 2 claim, you need a firm that has monopoly power, or at least market power, for an attempt-to-monopolize claim,” Weissman said. “Plus, very importantly here, [you need] some conduct that is exclusionary — that excludes companies trying to compete in the market from actually doing so and offering their product. You have neither here.”

Additionally, Weissman said that the DOJ narrowed that competitive landscape by excluding in-house systems developed by multifamily operators and traditional methods for pricing apartments. With those options included, it’s much harder to argue RealPage has a smaller market share. 

“What DOJ has done is they've alleged, in conclusory terms, that RealPage’s revenue management software has a large percentage of what they refer to as commercial revenue management software products, and they claim that's a well-defined, relevant market,” Weissman said.

The antitrust landscape

Despite RealPage’s motion, Michelle Lowery, a partner who focuses on antitrust and competition matters at Chicago-based law firm McDermott Will & Emery, thinks the case will probably proceed.

“While RealPage makes very compelling arguments, in my view, I think it will be quite difficult to get a DOJ complaint dismissed at the motion-to-dismiss stage and more likely that this case proceeds through discovery,” Lowery said.

The Biden administration had been focused on cracking down on what it sees as anticompetitive activity in several sectors, targeting multifamily, hotels and other industries. However, there are many questions about whether the incoming Trump administration will continue with this practice.

Weissman said it’s “hard to predict” what will happen with the new administration’s stance on antitrust issues. “We're hopeful, obviously, that this administration or the future administration will appreciate the pro-competitive virtues of our product,” he said.

However, he also left open the possibility for more discussions with the DOJ. “If there are ways to address DOJ concerns, we're open to that, and that will remain our position, whether it's this administration or next,” Weissman said.