BY CLINT COMBS
The DOJ and the Minnesota Attorney General have been engaged in a lengthy legal battle with RealPage over alleged antitrust violations. In response, Minneapolis is taking swift action to protect renters through a proposed ordinance to ban the use of algorithmic pricing models by landlords and property management companies. This ordinance, introduced by Council Member Robin Wonsley, seeks to address concerns that these algorithms are driving up rental prices and stifling competition.
Robin Wonsley
Wonsley, who represents a district with major property management companies like Greystar, expressed urgency for local action after learning about the DOJ’s case against RealPage. “After learning about the Department of Justice case against RealPage last year, I immediately reached out to several of my colleagues. Several of which are now my co-authors on an ordinance we’re bringing forward,” Wonsley said. The proposed ordinance would prohibit the use of rental algorithms in Minneapolis, directly addressing the impact of pricing models like those used by RealPage.
RealPage provides software that helps landlords set rental prices by analyzing data such as competitor pricing, occupancy rates, and lease terms. Critics argue that algorithms like RealPage’s make it easier for landlords to collude on prices, effectively reducing competition. “I’m excited to continue using the tools that we have available at the local level to complement the actions that you all are taking,” Wonsley added, stre14ssing her commitment to tackling the issue through city legislation.
Brendan Benedict, an antitrust lawyer with Benedict Law Group PLLC, believes that using algorithms to set rental prices may violate antitrust laws. “The most troublesome part of what plaintiffs around the country are alleging about RealPage is this ability for landlords to opt into automatic rental price increases,” Benedict said. “This might look more like an agreement to coordinate on price.” He noted that antitrust law prohibits explicit agreements between competitors to fix prices, comparing RealPage’s practices to traditional price-fixing. Benedict further explained, “If two landlords called each other up and said, ‘Hey, let’s charge the exact same price for, you know, the same square footage apartment, that’s price-fixing, plain and simple, kind of an open and shut case. In this situation, you know the auto-accept feature means that landlords are basically using RealPage’s algorithm as like an intermediary to set prices for them, and without making an independent pricing decision, if they agree to just follow whatever the recommendation is, because other landlords are doing that too. They’ve, in effect, agreed to charge the same price that other landlords are charging. So that’s how it starts to get into the neighborhood of looking like an agreement not to compete on price.”
Minnesota, along with seven other states and the DOJ, has filed a lawsuit against RealPage, accusing the company of facilitating price-fixing among landlords. RealPage collects sensitive data — such as lease terms, occupancy rates, and pricing information — from landlords, which is used to generate pricing recommendations. These recommendations lead to uniformity in rental prices, potentially fostering anti-competitive behavior. “We allege that these landlords are fully aware that their competitively sensitive data will be used in RealPage’s software to generate pricing recommendations for their rivals.”
Recognizing the slow pace of the courts, local government officials, including Wonsley, have pushed for quicker action. The proposed ordinance provides a local solution to prevent the harmful effects of algorithmic pricing on renters. Wonsley emphasized that the ordinance gives Minneapolis the power to act while waiting for the legal case to unfold. “The ordinance, independent of the lawsuit, really gives the city an opportunity to ensure that this harmful technology is essentially not a barrier to our city’s goal in making sure that our housing market is both equitable and affordable,” Wonsley said.
While the ordinance will not fully resolve the issue, it is an important step toward addressing the negative effects of algorithmic pricing. Wonsley described the ordinance as a way to “hold exploitative and bad-faith actors accountable.”
While the case against RealPage moves slowly through the courts, Wonsley’s ordinance offers a timely solution for the city’s renters. “It’s about giving the city the power to act now, instead of waiting for the courts to intervene,” Wonsley concluded. The proposed ordinance could reshape the housing market in Minneapolis, ensuring more equitable and affordable housing for renters.
