By Makenzy Mohrman, Capstone Financial Services analyst

Alleged price-fixing schemes have evolved over the last several decades, and so has the policy response to it. With the dawn of the digital age, backroom hushed conversations at industry conferences about pricing, supply, and everything in between have largely been replaced by technological middlemen. Algorithm-based “information-sharing” platforms have quietly become the preeminent sources for participants across various industries—including real estate, hotels, health care, and even meat processing—to make pricing and supply decisions. The phenomenon is not new, but a series of converging policy and economic problems—including a prolonged lack of housing affordability, inflationary pressure, and a collective and bipartisan disdain for Big Tech—has brought the trend to the attention of top antitrust regulators.

Algorithm-based “information-sharing” platforms have quietly become the preeminent sources for participants across various industries—including real estate, hotels, health care, and even meat processing—to make pricing and supply decisions.

The RealPage Issue

On October 15, 2022, the investigative reporting website ProPublica published a report raising several concerns regarding potential anti-competitive practices by property managers and RealPage, Inc. This algorithm-based information-sharing platform uses property manager data to make pricing and supply recommendations to landlords. The article set several things into motion.

The article invited an onslaught of class actions brought by renters alleging that RealPage and its property manager customers violated federal antitrust law (now consolidated in multidistrict litigation, or “MDL,” in the US District Court for the Middle District of Tennessee). Public reporting indicates that the Department of Justice (DOJ) opened a civil investigation into RealPage as early as November 2022. In November 2023, the DOJ filed a statement of interest in the MDL, arguing that the alleged conduct is “per se” unlawful. Conduct determined to be “per se” unlawful requires no further inquiry by a judge or jury regarding market impact. To win the case, the prosecution must only prove that the conduct occurred. We believe the DOJ intervened to set the stage for its own suit. In March 2024, Politico reported that the DOJ had also launched a criminal investigation into RealPage, raising the industry’s stakes.

Sector-Agnostic Scrutiny

While this all may have started with RealPage, antitrust regulators are now pulling on the thread of information-sharing platforms used to facilitate collusion among competitors, and that it is leading them to many other industries.

Following the ProPublica article release, in February 2023, the DOJ Antitrust Division withdrew its support for a handful of long-standing policy statements that had until now provided legal safe harbors for certain information-sharing practices across industries. In remarks accompanying the withdrawal of support, DOJ Principal Deputy Assistant Attorney General (PDAAG) Doha Mekki said, “One factor in the safety zones is the use of a third-party intermediary to facilitate information exchanges. However, exchanges facilitated by intermediaries can have the same anticompetitive effect as direct exchanges among competitors. In some instances, data intermediaries can enhance – rather than reduce – anticompetitive effects.”

While this all may have started with RealPage, antitrust regulators are now pulling on the thread of information-sharing platforms used to facilitate collusion among competitors, and that it is leading them to many other industries.

On March 5^th, President Biden announced the establishment of a new Strike Force on Unfair and Illegal Pricing that will be co-chaired by the DOJ and the Federal Trade Commission (FTC). The new initiative is designed to “strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anticompetitive, unfair, deceptive, or fraudulent business practices.” The DOJ and FTC will focus efforts within key sectors, including “prescription drugs and health care, food and grocery, housing, financial services and more.”

There has been some action across the other highlighted industries. On September 28, 2023, the DOJ filed an antitrust lawsuit against Agri Stats Inc. for organizing and managing “anticompetitive information exchanges” among broiler chicken, pork, and turkey processors. The complaint alleges the company violated federal antitrust law by “collecting, integrating, and distributing competitively sensitive information related to price, cost, and output among competing meat processors.” On March 28, 2024, the DOJ filed a statement of interest in a class action brought against many of the largest casino hotels in the industry and Cendyn Group, LLC—owner of the Rainmaker Group, which operates an algorithm-based information-sharing platform used by casino hotels to make room rate and occupancy decisions. Similar to its statement of interest in the RealPage suit, the DOJ argues that using the platform to fix and inflate prices is “per se” unlawful.  

A Bipartisan Problem

A change of administration is unlikely to end antitrust regulators’ newfound fascination with information-sharing exchanges. We believe these platforms sit at the unfortunate intersection of 1) inflating prices for consumers and 2) using Big Tech—popular targets for both Democrats and Republicans. As such, we believe these new and emerging antitrust issues are here to stay, with RealPage acting as an important bellwether for action across other sectors in the coming years.

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