Company that makes rent-setting software for landlords sued for collusion

RealPage worked with some of the nation’s largest landlords to raise rents, says lawsuit.

Read the whole story

 

[Faustius23]

Once again, I should have read the complaint before posting my reply to JohnDeL above! It appears that there actually IS an explicit agreement to follow the algorithm's pricing recommendations. At least if the complaint is correct:

"If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. "

Also, the firm representing the plaintiff's has some heavyweight antitrust/economics (incl TWO PhDs!) lawyers on board. I think that I'll buy some popcorn; this one should be fun to watch!

"participating Lessors must adopt RealPage’s pricing at least 80% of the time."

Wow. I wonder what the "or else" is. It sure seems like there is an "or else".

 

[Faustius23]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

If everyone is using the same consultant, yeah, the same price fixing and collusion arguments would apply.

Can you cite the law?

IANAL, but I believe horizontal price fixing is illegal under section 1 of the Sherman Act. Under CA law it violates Business & Professions Code § 16726.

But you could have Googled that yourself. So I assume you're leading up to making some kind of argument that price fixing isn't illegal?

If so, go for it.

 

[Faustius23]

A lot of people are wondering in the comments if this is illegal or just a innovative use of software.

If you read the pro-publica article, it's clearly collusion.

All these landlords (mostly big companies, but not all of them) are giving their data to an algorithm, and that algorithm tells them what prices they should be selling at.

Now replace the word "algorithm" with "a guy named Bob."

All these landlords are giving their data to a guy named Bob, and Bob is telling them what prices they should be selling at.

If it's illegal for "a guy named Bob" to do then it's also illegal for an algorithm to do.

Agreed.

Which Federal law exactly is Bob violating though?

As far as I'm aware, that would just be called a 'pricing consultant' or a 'pricing analyst' and that is a legal career path with many available jobs as a quick Google search will show.

What is a Pricing Analyst?

A pricing analyst is responsible for analyzing competitor pricing matched with market expectations to determine the ideal target price for products of the business. Duties include providing thorough analytical breakdowns of pricing structures and sales funnels of similar competitor products and services and identifying specific strategies used in pricing models of the same. Reports are written in order to evaluate the findings and to propose the results to the relevant departments for effect. Depending on the company, pricing analysts may progress into managerial roles involving financial account management and analysis.

https://www.glassdoor.com/Job-Descripti ... nalyst.htm

As far as I can tell that is exactly what the software is doing.

Are you saying the entire field is illegal somehow and nobody has noticed, or am I missing your point?

If everyone is using the same consultant, yeah, the same price fixing and collusion arguments would apply.

Can you cite the law?

IANAL, but I believe horizontal price fixing is illegal under section 1 of the Sherman Act. Under CA law it violates Business & Professions Code § 16726.

But you could have Googled that yourself. So I assume you're leading up to making some kind of argument that price fixing isn't illegal?

If so, go for it.

No, 'price fixing' is illegal, but I'm not sure this actually qualifies.

This is just pricing analysis.

For one example of similar behavior which is entirely legal, and does not constitute price fixing, the airline industry works together to raise and lower their prices without directly colluding. How? Pricing analysts.

I will let the Atlanta Journal Constitution break it down.

The industry usually moves together on general fare increases, with one or two initiating them and then waiting to see if others follow. If so, the increase sticks. If not, it’s typically withdrawn.

https://www.ajc.com/business/airlines-n ... dcG2oIGCP/

That's 100% legal. If I own Jacks Lobster House and I'm across the street from you, and you own Crunchy's Crustacean Nation, and I put up a sign that says 'DUE TO LOBSTER COST INCREASES OUR PRICES HAVE DOUBLED,' and you see that sign and decide 'hey, that's a good idea' and double your prices also, that's 100% legal. That's not price fixing. That's not collusion.

The burden of proof is on those claiming collusion. They do not have to prove themselves innocent. Challengers here must prove that communications exist which support an allegation of collusion. In the case above, that's not collusion even if you can prove Crunchy raised his price as a direct result of seeing Jack's sign. You would have to additionally prove that Jack intended that result by putting up his sign, which would be nearly impossible without Jacks confession.

I've never heard of an analyst that requires management to justify why they are departing from the analyst's recommendation.

This implies a relationship is of a different nature than just advisory.

Would be interesting to know what happens if a company signs up for this service then repeatedly refuses to keep properties off the market when instructed, and refuses to not undercut the recommended prices.

We'll probably learn that during discovery.

 

[Faustius23]

I've never heard of an analyst that requires management to justify why they are departing from the analyst's recommendation.

This implies a relationship is of a different nature than just advisory.

Would be interesting to know what happens if a company signs up for this service then repeatedly refuses to keep properties off the market when instructed, and refuses to not undercut the recommended prices.

We'll probably learn that during discovery.

Nah, we won't, because those records are private records of free expression.

Ohh No! Now we have sovereign citizen corporations!

"Your honor, I don't have any business records to turn over during discovery. I just have private records of free expression."